poihts total xYZ Charity receives a restricted gift from a donor in 20X1, which
ID: 2517715 • Letter: P
Question
poihts total xYZ Charity receives a restricted gift from a donor in 20X1, which must be spent on feeding hungry people. In 20x2, it spends the money for the intended purpose. How will the expenditure be shown in its financial statements? a. As an expense in the donor-restricted funds for 20x2 b. As an expense in the funds that are "without donor restrictions" in 20x2 The Charity has the option of showing the expense in either fund. Assume a charitable organization has an event that serves both to raise funds and to educate people about cancer. Which of the following facts would mean that the 2 organization MUST allocate ALL of the related costs to fundraising expenses: The materials ask people to get tested for cancer The materials given to people include a fundraising message in addition to educational materials b. c. The ma terials are given to people who are likely at high risk of getting cancer An employee of the charity gets a bonus equal to 20% of the net proceed from the event 3 A donor sends a check in fiscal 2017 to a nonprofit organization, and indicates that the money is to be spent to support a particular medical research program. This is an example of a a. Unrestricted donation b. Donation with both a time and purpose restriction Donation with only a purpose restriction Donation with only a time restriction c. d. 4 Assume a nonprofit university often offers scholarships to good students, without asking the students to perform any services. True or false -- Under GAAP the university should record tuition revenues at the full amount (without any deduction for scholarships), and should show scholarships to students as an expense. 5. Under the new standards issued by the FASB in 2016, nonprofit organizations must report what categories of net assets? Two categories: Endowments and non-endowments T wo categories: Restricted by donors and not restricted by donors a. c. Three categories: Unrestricted, temporarily restricted, and permanently restricted ee categories: Not restricted by donors or the board of directors, restricted by the board, and restricted by donors d. ThrExplanation / Answer
Answer to Q1: a) as an expense in donor restricted funds for 20x2, because:
i) the gift is to be used for restricted purposes
ii) donor has not attached any specific time limit restriction to it.
Answer to Q2: d) giving bonus to employee for 20% of the net proceeds from the event, as this is the only case which is entirely related to fundraising department
Answer to Q3 : c) donaion with only a purpose restriction as donor has stated that it has to be used for a medical research program & no time limitation has been attached to it
Answer to Q4: True, as this will reflect the true picture of accounts i.e. the utilization of scholarships and providing of school services