425 Final Unit 4

48 Questions | Total Attempts: 102

SettingsSettingsSettings
Please wait...
425 Final Unit 4

Questions and Answers
  • 1. 
    A private not-for-profit health care organization has the following account balances:
    • revenue from newsstand....................................$50,000
    • amounts charged to patients............................. 800,000
    • interest income.....................................................   30,000
    • salary expense -- nurses.................................... 100,000
    • bad debts...............................................................   10,000
    • undesignated gifts................................................  80,000
    • contractual adjustments...................................... 110,000
    What is reported as the organization's net patient service revenue?
    • A. 

      680,000

    • B. 

      690,000

    • C. 

      800,000

    • D. 

      880,000

  • 2. 
    Pikachu and Charmander are both private not-for-profit organizations. They are combined to create Pikacharm, a private not-for-profit organization with an entirely new board of directors. Pikachu has land with a book value of $300,000 and a fair value of $400,000. Charmander has land with a book value of $500,000 and a fair value of $550,000. After Pikacharm has been formed, what is reported for land?
    • A. 

      $800,000

    • B. 

      $850,000

    • C. 

      $900,000

    • D. 

      $950,000

  • 3. 
    What is a contractual adjustment?
    • A. 

      The results of a cost allocation system that allows a health care entity to determine a patient's cost by department.

    • B. 

      A year-end journal entry to recognize all of a health care entity's remaining receivables.

    • C. 

      An increase in a patient's charges caused by revisions in the billing process utilized by a health care entity.

    • D. 

      A reduction in patient service revenues caused by agreements with third-party payors that allows them to pay a health care entity based on their determination of reasonable costs.

  • 4. 
    Darth Vader does volunteer work for a local not-for-profit organization as a community service. He replaces without charge an administrator who would have otherwise been paid $21,000. Which of the following statements is true?
    • A. 

      The organization should recognize a restricted gain of $21,000.

    • B. 

      The organization should recognize a contribution of $21,000 as an increase in unrestricted net assets as well as salary expense of $21,000.

    • C. 

      The organization should recognize a reduction in expenses of $21,000.

    • D. 

      The organization should make no entry.

  • 5. 
    A deceased individual owned a bond. Which of the following is included in the estate principal?
    • A. 

      Interest that was not collected prior to death is excluded from the estate principal.

    • B. 

      Interest earned prior to death is considered part of the estate principal even if received after death.

    • C. 

      All interest collected prior to distributing the bonds to a beneficiary is considered part of the estate principal.

    • D. 

      Only the first cash payment after death is included in the estate principal.

  • 6. 
    Which of the following is not a goal of probate laws?
    • A. 

      To gather and preserve all of the decedent's property.

    • B. 

      To ensure that each individual produces a valid will.

    • C. 

      To discover the decedent's intent for property held at death and then to follow those wishes.

    • D. 

      To carry out an orderly and fair settlement of all debts and distributions of property.

  • 7. 
    Michael died on January 1, 2012. All of his property was conveyed to beneficiaries on October 1, 2012. For federal tax purposes, the executor chose the alternate valuation date. On what date was the value of the property determined?
    • A. 

      January 1, 2012

    • B. 

      July 1, 2012

    • C. 

      October 1, 2012

    • D. 

      December 31, 2012

  • 8. 
    What is the difference between a testamentary trust and an inter vivos trust? 
    • A. 

      A testamentary trust conveys money to a charity; an inter vivos trust conveys money to individuals.

    • B. 

      A testamentary trust is created by a will; an inter vivos trust is created by a living individual.

    • C. 

      A testamentary trust conveys income to one party and the principal to another; an inter vivos trust conveys all monies to the same party.

    • D. 

      A testamentary trust ceases after a specified period of time; an inter vivos trust is assumed to be permanent.

  • 9. 
    The estate of Luke Skywalker reports the following information:
    • Value of estate assets.............................$1,400,000
    • Conveyed to spouse................................     700,000
    • Conveyed to children................................     100,000  
    • Conveyed to charities...............................     420,000
    • Funeral expenses.....................................      50,000
    • Administrative expenses.........................       20,000
    • Debts..........................................................      110,000
    What is the taxable estate value?
    • A. 

      $70,000

    • B. 

      $100,000

    • C. 

      $180,000

    • D. 

      $420,000

  • 10. 
    Reciprocal transfers where both parties give and receive something of value are
    • A. 

      Exchange transactions.

    • B. 

      Unconditional promises to give.

    • C. 

      Contributed services.

    • D. 

      Endowment transactions.

    • E. 

      Required contributions.

  • 11. 
    Which of the following types of health care organizations follow FASB Accounting Standards Codification for GAAP?
    • A. 

      Entry A

    • B. 

      Entry B

    • C. 

      Entry C

    • D. 

      Entry D

    • E. 

      Entry E

  • 12. 
    Which one of the following financial statements is not required by GAAP regarding a voluntary health and welfare organization?
    • A. 

      Statement of Operations

    • B. 

      Statement of Cash Flows

    • C. 

      Statement of Activities and Changes in Net Assets

    • D. 

      Statement of Financial Expense

    • E. 

      Statement of Financial Position

  • 13. 
    What are the three categories of net assets required by GAAP in reporting a not-for-profit organization?
    • A. 

      Restricted, Permanently Restricted, and Fund Balance.

    • B. 

      Unrestricted, Temporarily Restricted, and Permanently Restricted.

    • C. 

      Unrestricted, Restricted, and Fund Balance.

    • D. 

      Unrestricted, Temporarily Restricted, and Fund Balance.

    • E. 

      None of the above.

  • 14. 
    When are unconditional promises to give recognized as revenues? 
    • A. 

      In the period the promise is received.

    • B. 

      In the period the promise is collected.

    • C. 

      In the period in which the conditions on which they depend are substantially met.

    • D. 

      In the period in which the conditions on which they depend have begun to be met.

    • E. 

      Unconditional promises from potential donors are not revenues.

  • 15. 
    How are investments in equity securities with readily determinable market values and their related unrealized gains and losses reported by a not-for-profit organization?  
    • A. 

      Lower of cost or market, with unrealized losses in the Statement of Activities.

    • B. 

      Lower of cost or market, with unrealized losses in Temporarily Restricted Net Assets.

    • C. 

      Fair value, with unrealized gains and losses in the Statement of Activities.

    • D. 

      Cost, with unrealized gains and losses in the Statement of Activities.

  • 16. 
    When a person dies without leaving a valid will, how is the distribution of his or her property determined? 
    • A. 

      In accordance with a plan developed by the executor of the estate.

    • B. 

      In accordance with federal inheritance laws.

    • C. 

      In accordance with generally accepted accounting principles.

    • D. 

      In accordance with common law.

    • E. 

      In accordance with state inheritance laws.

  • 17. 
    When an estate does not have sufficient assets to satisfy all claims against it, what claim has the highest priority? 
    • A. 

      Expenses of administering the estate.

    • B. 

      Federal income taxes.

    • C. 

      State income taxes.

    • D. 

      Medical expenses of the final illness.

    • E. 

      Back wages owed to any employees.

  • 18. 
    What is the process of abatement? 
    • A. 

      An attempt to determine the deceased's intentions when the terms of the will are unclear.

    • B. 

      The establishment of how the creditors will be paid.

    • C. 

      A reduction of various bequests when the estate is not adequate to satisfy them completely.

    • D. 

      Selling of assets included in an estate to be able to pay creditors.

    • E. 

      Payment of the claims of creditors.

  • 19. 
    A demonstrative legacy is a
    • A. 

      Gift of personal property that is directly identified.

    • B. 

      Cash gift from a particular source.

    • C. 

       gift of estate property that remains after carrying out the other provisions of the will.

    • D. 

      Gift of real property.

    • E. 

      Gift of intangible property.

  • 20. 
    A gift that is specified in a will as "I leave my collection of baseball cards to my son" is a 
    • A. 

      General legacy.

    • B. 

      Specific legacy.

    • C. 

      Demonstrative legacy.

    • D. 

      Residual legacy.

    • E. 

      Devise.

  • 21. 
    A gift that is specified in a will as "I leave $5,000 in cash from my checking account to my daughter" is a 
    • A. 

      General legacy.

    • B. 

      Specific legacy.

    • C. 

      Demonstrative legacy.

    • D. 

      Residual legacy.

    • E. 

      Devise.

  • 22. 
    An estate has the following income:
    • Rental income................................................$5,000
    • Interest income..............................................   3,000
    • Dividend income............................................   1,000
    The interest income was immediately conveyed to the appropriate beneficiary. The dividends were given to charity as per the decedent's will. What is the taxable income of the estate?
    • A. 

      $4,400

    • B. 

      $5,000

    • C. 

      $8,000

    • D. 

      $8,400

  • 23. 
    In which of the following areas does the IASB allow firms to choose between two acceptable treatments?
    • A. 

      Measuring property, plant, equipment subsequent to acquisition.

    • B. 

      Presenting gains and losses as extraordinary on the face of the income statement.

    • C. 

      Recognizing development costs that meet criteria for capitalization as an asset.

    • D. 

      Recognizing prior (past) service costs related to pension benefits that have already vested.

  • 24. 
    In the United States, foreign companies filing annual reports with the SEC that are not prepared in accordance with U.S. GAAP must:
    • A. 

      Present financial statements that comply with international GAAP.

    • B. 

      Conform with U.S. GAAP or present a reconciliation to U.S. GAAP.

    • C. 

      Have a demonstrated need for capital to be used for operations in the U.S.

    • D. 

      Use the U.S. dollar as their reporting currency.

    • E. 

      Use IFRS, or use foreign GAAP and provide a reconciliation to U.S. GAAP.

  • 25. 
    Which of the following is not an IFRS pronouncement originally issued by the IASB? 
    • A. 

      Business combinations.

    • B. 

      Agriculture.

    • C. 

      First-time Adoption of IFRS.

    • D. 

      Financial Instruments: Disclosures.

    • E. 

      Operating Segments.

Related Topics
Back to Top Back to top