Reference no: EM131585037
1. Which of the following statements about expenses are true under accrual basis of accounting?
a) Expenses represent the resources an organization uses during a period of time.
b) All expenses reflect cash outflows by the organization at the time they are recognized.
c) Expenses cannot be incurred before an organization pays for a resource.
d) Expenses result in a decrease in net assets for a non-profit organization.
2. Which of the following conditions must be met before revenue is recognized?
a) goods and/or services must be delivered to the customer
b) the amount to be collected must be objectively measurable
c) the customer must be happy with the service
d) there can be no possibility that the customer will not pay the bill
3. Which of the following statements about bad debts are true?
a) the amount of money in the allowance for bad debts must be equal to the current year’s bad debt expense
b) the amount of money that is written off in a given year must be equal to that year’s bad debt expense
c) the amount of money added to the allowance bad debts must be equal to the current year’s bad debt expense.
4. Which of the following statements about depreciation are correct?
a) depreciation represents the amount of cash that the organization paid out this year to use its long-lived assets.
b) depreciation expenses perfectly reflect the amount of long-lived assets that were used by an organization.
c) depreciation represents the allocation of the cost of a capital asset over its lifebased on a specific method of accounting (straight line, accelerated etc).
5. If the cost of medical supplies are rising and an organization chooses to use the LIFO method for valuing its medical supplies inventory, it medical-supply expenses will be ______________________ if it used FIFO.
a) greater than
b) equal to
c) less than
6. Non-profit organizations must segregate assets that are subject restrictions imposed by
a) management
b) board of trustees
c) customers
d) donors
7. Which of the following services would be recorded as both support and an expense in a non-profit organization?
a) a volunteer who comes in to help set up for the annual fund-raising ball
b) a parent who is an accountant who volunteers to keep the organization’s books
c) a physician who volunteers to serve on a community health service center’s board.