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CPA FAR Not-for-Profit Entities, Financial Statements of Not-for-Profit Entities
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Private not-for-profit (NFP) entities follow FASB ASC 958, requiring full accrual accounting and specialized financial statements focused on accountability rather than profit. Core reports include the Statement of Financial Position (net assets), Statement of Activities, Statement of Cash Flows, and Statement of Functional Expenses. Net assets are classified into two categories: with donor restrictions and without donor restrictions.  Key Financial Statements (FASB ASC 958) Statement of Financial Position (Balance Sheet): Reports assets, liabilities, and net assets (equity).... Show more
CPA FAR Not-for-Profit Entities, Financial Statements of Not-for-Profit Entities
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25 Questions

1. Pry Corp. prepares its statement of cash flows under the direct method. For Year 13, Pry Corp. had revenue under accrual accounting of $200,000. Additional information is as follows from beginning to the end of Year 13: How much is cash received from customers for Year 13?
2. Traficante Corp. had the following equity transactions at December 31, Year 8:
What amount should Traficante Corp. recognize as net cash from investing activities in its statement of cash flows dated December 31, Year 8?
3. Which of the following would be included in the investing activities section of a statement of cash flows?
I. Making loans
II. Repaying amounts borrowed (principal)
4. Under the indirect method, which of the following would be added back to net income to arrive at net cash flows from operating activities?
I. Depreciation expense
II. Bond premium amortization
III. Gain on the early extinguishment of long-term debt
5. Dividends received may be reported as an investing or operating activity on the statement of cash flows under which of the following standards?
I. US GAAP
II. IFRS
6. In Year 9, Sonia Walton promised Orange College that she would provide 75% of the funds needed to construct a new parking deck if the not-for-profit could get the remaining 25% of the funds needed from other donors by April 1, Year 11. At December 31, Year 10, the board of directors had received donations from other donors for 20% of the cost of the new parking deck and believed that the probability of NOT getting the remaining 5% was remote. For the year ended December 31, Year 10, Walton’s promise would:
7. Supplemental information in the cash flow statement should be reported for which of the following?
I. Conversion of preferred stock
II. Cash flow per share
8. In July of Year 12, a storm damaged the roof of Homeless Shelters, a not-for-profit voluntary health and welfare organization. One supporter of Homeless Shelters, a one time homeless man himself, now a trained professional roofer, repaired the roof at no charge. In the statement of activities for Year 12, the damage and repair of the roof should be reported as:
9. Stewart Corp. acquired a building through the issuance of 25,000 shares of the corporation’s common stock. How should this transaction be reported in Stewart’s statement of cash flows if Stewart is preparing its statement in accordance with IFRS?
10. Not-for-profit (NFP) organizations include a wide array of organizations such as private colleges, hospitals, voluntary health and welfare organizations, and churches. Which of the following is the basis of accounting used for external reporting purposes for not-for-profit entities?
11. In the statement of financial position for a not-for-profit entity, how many categories of net assets (equity) appear?
12. The purchase of a three-month US Treasury bill, when an entity’s policy is to treat investment with maturities of three months or less as cash equivalents, would be reported in the entity’s cash flow statement as:
13. A private, not-for-profit organization prepares each of the following financial statements EXCEPT:
14. Jenkins Inc. is preparing its statement of cash flows for Year 5. The following information pertains. Net income for Year 5 is $190,000.
What amount should Jenkins Inc. include as net cash provided by operating activities using the indirect method?
15. If a debt repayment includes both principal and interest, how are the payments reported in a statement of cash flows prepared under US GAAP?
16. The Dabloo Free School is a calendar year, nongovernmental not-for-profit. On February 3 of Year 13, they received unconditional promises of $60,000 expected to be collected within 1 year. Based on past experience, the Dabloo Free School anticipates that 85% of unconditional pledges are actually received. By December 31, Year 13, $20,000 was actually received. What amount should Dabloo Free School record as contribution revenue in Year 13?
17. Salinger Corp. prepared its statement of cash flows at December 31, Year 13, using the direct method. The following amounts were used in the computation of cash flows from operating activities:
What amount should Salinger Corp. report as cash paid to suppliers?
18. Dabloo Center is a private not-for-profit educational organization in support of homeschooled kids. How should Dabloo Center report contributions of $1,000,000 in cash in the statement of cash flows if the money is donor-restricted for 5 years and then can be spent at the discretion of the governing body?
19. Which of the following items is included in the financing activities section of the statement of cash flows?
I. Cash effects of acquiring and disposing of property, plant, and equipment
II. Cash effects of transactions obtaining resources from owners and providing them with a return on their investment
20. Dickinson Corp. prepares its statement of cash flows using the indirect method. Dickinson’s unamortized bond premium account decreased by $18,000 during Year 10. How should Dickinson Corp. report the change in unamortized bond premium in its statement of cash flows for Year 10?
21. The statement of cash flows provides relevant information about which of the following?
I. The cash receipts and disbursements of an enterprise during an accounting period
II. A company’s ability to meet cash operating needs in the future
22. Calhoun Corp. had a beginning cash balance in Year 12 of $20,000. They had net cash provided by operating activities of $320,000 for Year 12, net cash used by investing activities of $402,000, and cash provided by financing activities of $262,000. During the year, there was a sale of a fixed asset that resulted in a loss of $10,000 and proceeds of $42,000 were received from the sale. What was Calhoun Corp.’s cash balance at the end of Year 12?
23. Which of the following is correct regarding the statement of cash flows prepared using the indirect method?
I. A loss from the sale of used equipment should be reported as a decrease to net income in the operating activities section.
II. The entire amount of cash proceeds from the sale of equipment (including the loss) should be shown in the investing section of the statement of cash flows.
24. On April 23, Year 4, Anderson, Inc. sold a building and received cash proceeds of $650,000. At the time of sale, the building had a net book value of $700,000. Anderson prepares its statement of cash flows using the indirect method. How should Anderson report the results of this transaction in its Year 4 statement of cash flows?
25. Desert Samaritan Hospital, a not-for-profit medical facility, would include which of the following as “nonoperating” revenue in the statement of activities?
I. Recovery room fees after spinal surgery
II. Parking fees and cafeteria income
III. Donated medicines and supplies
IV. Unrestricted gifts

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