CPA REVIEW SCHOOL OF THE PHILIPPINES

MANILA

ADVANCED FINANCIAL ACCOUNTING AND REPORTING

NOT-FOR-PROFIT ORGANIZATION GUERRERO / GERMAN / DE JESUS / LIM / FERRER / LACO / VALIX

1. Psalm Hospital, a private nonprofit hospital, earned P500,000 revenues from its gift shop
located at the lobby and spent P100,000 on research during the year ended December
31,2020. The P100,000 spent on research was part of a P150,000 contribution received
during December of 2018 from a donor who stipulated that the donation be used for medical
research. None of the gift shop revenues were spent in 2020. What was the increase in
unrestricted net assets from the events that occurred during 2020?
a. 600,000
b. 400,000
c. 500,000
d. 550,000

2. AAA Hospital, a nonprofit hospital affiliated with a private university, reported the
following:
Cash contributions received from donors for acquisition of computer equipment 300,000
Proceeds from sales of hospital gift shop and snack bar 150,000
Dividend income not restricted by donor 50,000
What amount should be reported as “other revenue and gains” in the statement of activities?
a. 50,000
b. 150,000
c. 200,000
d. 500,000

3. Rev University, a nonprofit university assessed its students P600,000 for tuition and
miscellaneous fees for the 2020 summer session. The net amount realized was only P580,000
because of the following reductions:
Tuition remissions granted to faculty member families 6,000
Class cancelation refunds 14,000
How much unrestricted current fund revenues from tuition and miscellaneous fees should
Rev University report for the period?
a. 580,000
b. 586,000
c. 594,000
d. 600,000

4. The following expenditures were incurred by a nonprofit botanical society:

Printing of annual report 25, 000
Unsolicited merchandise sent to encourage contributions 50,000
What amount should be classified as fund-raising costs in the society’s activity statement?
a. 0
b. 25,000
c. 50,000
d. 75,000

5. The following funds were among those held by URS at December 31, 2020:
Principal Specified by the Donor as Non-Expendable 1,250,000
Principal Expendable After the Year 2020 750,000
Principal Designated from Current Funds 250,000
What amount should be classified as regular endowment funds?
a. 250,000
b. 750,000
c. 1,250,000
d. 2,250,000
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6. In 2020, the board of trustees of TCMC Private University designated P250,000 from its
current funds for college scholarships. Also in 2020, the university received bequest of
P500,000 from an estate of a benefactor who specified that the bequest was to be used for
hiring teachers to tutor handicapped students. None of the bequest has been spent. What
amount should be accounted for as restricted net assets?
a. 0
b. 250,000
c. 500,000
d. 750,000

7. In April 2020, Ruth donated P250,000 cash to her church, with the stipulation that the income
generated from this gift is to be paid to Claire during her lifetime. The conditions of this
donation are that, after Ruth dies, the principal can be used by the church for any purpose
voted on by the church elders. The church received interest of P20,000 on the P250,000 for
the year ended March 31, 2021 and the interest was remitted to Claire. In the church’s March
31, 2021 financial statements
a. P20,000 should be reported under support and revenue in the activity statement
b. P230,000 should be reported under support and revenue in the activity statement
c. P250,000 should be reported as deferred support in the balance sheet.
d. The gift and its terms should be disclosed only in notes to the financial statements.

8. Rizza Foundation, a non profit organization, received following cash contributions during the
year to support its child care center:
a. P50,000 restricted by the donor to be used for meals of children.
b. P37,500 received by subscriptions to a monthly child care magazine with a fair value to
subscribe of P25,000
c. P25,000 to be used only upon completion of a new playroom that was 75% complete at
current year-end.
What amount should be recorded as contribution revenue in current year?
a. 50,000
b. 62,500
c. 25,000
d. 27,500

9. In the first year of operations of a nonprofit organization, the following transactions

occurred:

 The nonprofit organization received P1,000,000 fund from a donor who stipulated that it
shall be invested indefinitely and the dividend from such investment shall be used for
research project of the organization. Dividend amounting to P150,000 was received during
the year but only P50,000 was spent for the research project.

 The nonprofit organization received P300,000 fund from a donor who stipulated that it shall
be used for the acquisition of service car. The nonprofit organization used P100,000 of the
fund for the acquisition of a service car with useful life of 5 years. The car was acquired at
the middle of the year.

 The nonprofit organization received P500,000 fund from a donor who stipulated that it shall
be used based on the discretion of the Board of Trustees of the nonprofit organization. The
nonprofit organization used P100,000 for the acquisition of souvenir items which were sold
by the nonprofit organization for P150,000. The remaining P400,000 was designated by the
Board of Trustees for future fundraising projects.
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1. What is the amount of permanently restricted net assets at the end of the first year?
a. 1,100,000
b. 1,300,000
c. 1,200,000
d. 1,000,000

2. What is the amount of temporarily restricted net assets at the end of the year?
a. 100,000
b. 300,000
c. 200,000
d. 700,000

3. What is the amount of unrestricted net assets at the end of the year?
a. 640,000
b. 540,000
c. 590,000
d. 630,000

10. An organization of high school seniors performs services for patients at Morong Doctors
Hospital. These students are volunteers and perform services that the hospital would not
otherwise provide, such as wheeling patients in the park and reading to patients. Morong
Doctors has no employer-employee relationship with these volunteers, who donated 500
hours of service. At the minimum wage rate, these services would amount to P46,875, while
it is estimated that the fair market value of these services was P62,500. In Hospital’s
statement of revenues and expenses, what amount should be reported as nonoperating
revenue?
a. 62,500
b. 46,875
c. 15,625
d. 0

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