Practice: Not-for-Profit Accounting Quiz Quiz | Financial Accounting & Reporting (FAR)

Question 1

What is the primary purpose of a not-for-profit (NFP) organization?

Answer

To maximize shareholder wealth

Answer

To fulfill a charitable, educational, religious, or similar mission

Answer

To generate the highest possible profit

Answer

To increase stock price

Question 2

Which characteristic distinguishes a not-for-profit organization from a for-profit business?

Answer

It prepares financial statements.

Answer

It collects revenue.

Answer

It has no ownership interests or shareholders.

Answer

It owns assets.

Question 3

Under current U.S. GAAP, net assets of a not-for-profit organization are classified into:

Answer

Net assets with donor restrictions and net assets without donor restrictions

Answer

Temporary and permanent net assets only

Answer

Earned and unearned net assets

Answer

Current and noncurrent net assets

Practice Quiz