ACCOUNTING 405 EXAM SCRIPT 2026 TEST
PAPER QUESTIONS AND SOLUTIONS
GRADED A+
●● Responsibility for establishing generally accepted accounting
principles (GAAP) for nongovernmental, not-for-profit organizations
rests with the FASB and was most clearly established:
Answer: A. By the FASB Codification.
●● Under FASB standards how would a not-for-profit organization
recognize a conditional pledge?
Answer: D. It would not recognize the conditional pledge until pledge
conditions are substantially met.
●● 35. The FASB Codification requires the following financial
statements for all not-for-profit organizations:
Answer: C. Statement of financial position, statement of activities, and
statement of cash flows.
●● Which of the following statements is true regarding fund accounting
for not-for-profit organizations (NFPs)?
Answer: B. Fund accounting can provide a good mechanism for
facilitating reporting to donors.
, ●● According to the FASB Codification, which of the following is a
condition that must be met for contributed services to a not-for-profit
organization (NFP) to be recorded as both a contribution and as an
expense?
Answer: B. The service requires a specialized skill and is provided by
someone who possesses the specialized skill, such as a lawyer preparing
contracts.
●● An example of an increase in net assets for a not-for-profit
organization that would be labeled revenue rather than support is:
Answer: B. Investment income.
●● A donor provides a large cash contribution that is to be used for
acquisition of a new building. Under FASB standards, how would this
contribution be reported by a not-for-profit organization on its statement
of cash flows?
Answer: C. Financing activity.
●● The FASB states that depreciation expense in a not-for-profit
organization should be:
Answer: A. Assigned to or allocated to the functions to which it relates.
●● A not-for-profit (NFP) organization acting as a financial intermediary
receives a contribution. Under the FASB Codification the NFP would be
most likely to recognize the contribution as a liability under which of the
following situations?
PAPER QUESTIONS AND SOLUTIONS
GRADED A+
●● Responsibility for establishing generally accepted accounting
principles (GAAP) for nongovernmental, not-for-profit organizations
rests with the FASB and was most clearly established:
Answer: A. By the FASB Codification.
●● Under FASB standards how would a not-for-profit organization
recognize a conditional pledge?
Answer: D. It would not recognize the conditional pledge until pledge
conditions are substantially met.
●● 35. The FASB Codification requires the following financial
statements for all not-for-profit organizations:
Answer: C. Statement of financial position, statement of activities, and
statement of cash flows.
●● Which of the following statements is true regarding fund accounting
for not-for-profit organizations (NFPs)?
Answer: B. Fund accounting can provide a good mechanism for
facilitating reporting to donors.
, ●● According to the FASB Codification, which of the following is a
condition that must be met for contributed services to a not-for-profit
organization (NFP) to be recorded as both a contribution and as an
expense?
Answer: B. The service requires a specialized skill and is provided by
someone who possesses the specialized skill, such as a lawyer preparing
contracts.
●● An example of an increase in net assets for a not-for-profit
organization that would be labeled revenue rather than support is:
Answer: B. Investment income.
●● A donor provides a large cash contribution that is to be used for
acquisition of a new building. Under FASB standards, how would this
contribution be reported by a not-for-profit organization on its statement
of cash flows?
Answer: C. Financing activity.
●● The FASB states that depreciation expense in a not-for-profit
organization should be:
Answer: A. Assigned to or allocated to the functions to which it relates.
●● A not-for-profit (NFP) organization acting as a financial intermediary
receives a contribution. Under the FASB Codification the NFP would be
most likely to recognize the contribution as a liability under which of the
following situations?
