CPA REVIEW SCHOOL OF THE PHILIPPINES

Manila

ADVANCED FINANCIAL ACCOUNTING AND REPORTING GERMAN AND VALIX

1. Contributions whose availability is dependent upon the performance of a specific task, the
happening of a future event, or the passage of time is classified as:
A. Unrestricted contribution revenue
B. Temporarily restricted contribution revenue
C. Permanently restricted contribution revenue
D. Liability

2. An unconditional promise to give contributions are recognized by the NPO when _________.
A. the promise is received from the donor
B. the unconditional promise becomes conditional
C. the promise is actually kept
D. the promise is broken

3. Service received as a donation that was neither provided by a professional nor enhance a
non-financial asset __________.
A. is recognized as an asset
B. is recognized as an expense
C. is recognized as a contra-revenue
D. is not recognized

4. An entity need not recognize contributions of works of art, historical treasures, or other
similar assets if the item is added to a collection that meet all of the following conditions,
except:
A. Held for public exhibition, education, or research in furtherance of public service rather
than financial gain
B. Protected, kept unencumbered, cared for, and preserved
C. Proceeds from sales of collection items are to be used to acquire other items for
collections
D. None of the choices

5. Generally, a set of financial statement prepared by an NPO will include all of the following,
except:
A. Statement of Financial Position
B. Statement of Activities
C. Statement of Cash Flows
D. Statement of Functional Expenses

6. Under SFAS 117, the statement of financial position of a not-for-profit organization should
report separate peso amounts for net assets according to which of the following
classifications?
A. Unrestricted, temporarily restricted, and permanently restricted
B. With donor restrictions, and without donor restrictions
C. Unrestricted and temporarily restricted
D. Temporarily restricted and permanently restricted

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Part II: Problem Solving

Problem 1
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.

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

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Problem 2
Z Hospital, nonprofit hospital affiliated with a religious group, reported the following
information for the year ended December 31,2024:

Gross patient service revenue at the full rates 980,000

In Z Hospital’s statement of activities for the year ended December 31, 2024, what amount
should be reported as patient service revenue?
A. 875,910
B. 890,910
C. 855,000
D. 980,000

Problem 3
NPO Academy, a non-profit educational institution, assessed its students a total of P4,500,000 in
tuition and other fees. The following additional data were made available:
Estimated uncollectible amounts P150,000
Scholarships granted to student assistants P225,000
Discount given to graduate students accepting teaching assistantships P200,000
Full Scholarships granted to Deans’s Listers, and sister city endorsees P300,000
Refunds made P100,000
How much is the net tuition and other fees revenue of NPO Academy?
A. 3,950,000
B. 4,100,000
C. 3,900,000
D. 3,875,000

Problem 4

NPO Hospital, a nonprofit hospital, had the following cash receipts for 2024.
Patient service revenue 600,000
Gift shop revenue 50,000
Interest income restricted by donor for the acquisition of computer equipment 100,000
As a result of these cash receipts, the hospital’s statement of cash flows for 2024 would
report an increase in operating activities of what amount?
A. 650,000
B. 750,000
C. 700,000
D. 600,000

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Problem 5

On January 1, 2024, a nonprofit organization received P500,000 cash donation from a donor who
stipulated that the amount should be invested indefinitely in revenue producing investment. The
deed of donation also provided that the dividend income shall be used for the acquisition of
computers of the nonprofit organization.

On December 31, 2024, the nonprofit organization received P50,000 cash as dividend income
from the investment of the fund.

On January 1, 2025, the nonprofit organization acquired a computer at a cost of P10,000 with a
useful life of 5 years without residual value.

1. In the statement of activities of the NPO for the year ended December 31, 2024,
which of the following is the proper effect of the transactions?
A. Increase in temporarily restricted net assets by P50,000
B. Increase in unrestricted net assets by P500,000
C. Increase in unrestricted net assets by P8,000
D. Decrease in temporarily restricted net assets by P10,000

2. In the statement of activities of the NPO for the year ended December 31, 2025,
which of the following is the proper effect of the transactions?
A. Increase in temporarily restricted net assets by P50,000
B. Increase in unrestricted net assets by P500,000
C. Increase in unrestricted net assets by P8,000
D. Decrease in temporarily restricted net assets by P50,000

3. How should the cash flows be reported in NPO’s Statement of Cash Flows for the
year ended December 31, 2024?
A. Cash receipts from operating activities by P50,000.
B. Cash receipts from financing activities by P550,000.
C. Cash disbursements for investing activities by P25,000.
D. Cash disbursements for financing activities by P500,000

4. How should the cash flows be reported in NPO’s Statement of Cash Flows for the
year ended December 31, 2025?
A. Cash receipts from operating activities by P50,000.
B. Cash receipts from financing activities by P550,000.
C. Cash disbursements for investing activities by P10,000.
D. Cash disbursements for investing activities by P50,000.

END

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