Finals Summative 1 Compilation + New (ver. 9)

GENERAL PRINCIPLES ON ACCOUNTING FOR NPES 1. Which of the following is not a condition to be satisfied for nonrecognition of contributed collection items? None of these 2. Income earned from permanent endowments that can be spent only on certain programs but has not yet been spent would be recorded in the statement of activities as Temporarily restricted 3. Which of the following is not a required external financial statement of an NPE? Management Discussion and Analysis 4. When are conditional promises to give cash recognized in the financial statements? When the promise becomes unconditional in status 5. The fair value of contributions cannot be determined by using None of the above 6. Which of the following contributions are recognized in the statement of activities? Contributions of services that enhance nonfinancial assets 7. Which of the following contributed services are not recognized in the financial statements? Contributed services performed by persons not having specialized skills 8. Which statement is not correct? Depreciation expense is not recognized by an NPE 9. Your answer should be a whole number. Do not use comma, decimal, and peso sign. Maxi Organization, an NPE disclosed the following in its 20x1 notes to the financial statements. a. Received shares valued at P8,000,000 to be retained with the dividends used to support current operations b. Net resources of P4,000,000 invested in plant assets c. Received equipment valued at P20,000,000 which is to be sold with the proceeds used to renovate the children’s playground d. Board-designated fund of P2,400,000 e. Received P80,000 cash from a donor who did not specify any purpose restrictions on the contribution however, the donor specified that the donation should be used until 20x2 f. Received P3,200,000 from a donor who stipulated that the contribution shall be invested indefinitely and that the earnings shall be used for scholarships. Investment income in 20x1 amounted to P200,000 The total permanently net assets is: 11200000 10. Your answer should be a whole number. Do not use comma, decimal, and peso sign. Use parentheses to indicate DECREASE. K2, an NPE, had the following transactions during 20x1: a. Received contribution of P800,000 to be used for student scholarships. Of this amount, P480,000 was expended during the year b. Expended P200,000 for student scholarships from a P240,000 grant received in previous year The net effect of the transactions in K2’s 20x1 unrestricted net assets is: 0 11. Your answer should be a whole number. Do not use comma, decimal, and peso sign to encode your answer. GreenThinkers Organization, a non-profit organization, received the following donations during the period: a. January 1, 20x1: Land with fair value of P4,000,000 to be used at the discretion of GreenThinkers b. February 15, 20x1: Cash of P8,000,000, restricted for the acquisition of a truck. The truck will be used in GreenThinker’s outreach programs c. March 1, 20x1: Investment in equity securities with fair value of P2,000,000 to be held indefinitely. Only the investment income shall be used by GreenThinkers on its current operations d. May 1, 20x1: JPIA and JPAMA members from different universities contributed services in a treeplanting activity initiated by GreenThinkers. Although the volunteers rendered their services for free, GreenThinkers estimates that the fair value of these services would amount to P20,000 On June 30, 20x1, GreenThinkers acquired a truck for P8,000,000 and received dividends of P240,000 from the equity securities. The net effect of the transactions in the year-end unrestricted net assets (ignore depreciation) is: 12240000 12. In the absence of donor’s stipulations, gains recognized on an endowment would be reported in the statement of financial activities as increases in Unrestricted net assets 13. Which of the following categories of net assets is not required to be shown in the statement of financial position? Board-restricted 14. A local citizen gives a not-for-profit entity a cash donation that is restricted for research activities. The money shall be returned to the donor if the NPE fails to meet the condition. The money should be recorded as Deferred revenue 15. Reciprocal transfers where both parties give and receive something of value are Exchange transactions 16. Your answer should be a whole number. Do not use comma, decimal, and peso sign to encode your answer. GreenThinkers Organization, a non-profit organization, received the following donations during the period: a. January 1, 20x1: Land with fair value of P4,000,000 to be used at the discretion of GreenThinkers b. February 15, 20x1: Cash of P8,000,000, restricted for the acquisition of a truck. The truck will be used in GreenThinker’s outreach programs c. March 1, 20x1: Investment in equity securities with fair value of P2,000,000 to be held indefinitely. Only the investment income shall be used by GreenThinkers on its current operations d. May 1, 20x1: JPIA and JPAMA members from different universities contributed services in a treeplanting activity initiated by GreenThinkers. Although the volunteers rendered their services for free, GreenThinkers estimates that the fair value of these services would amount to P20,000 On June 30, 20x1, GreenThinkers acquired a truck for P8,000,000 and received dividends of P240,000 from the equity securities. The permanently restricted contributions revenue is: 2000000

17. Which of the following is not a required characteristic of a private not-for-profit organizations per the definition given by GAAP An organization dedicated to service for the public good 18. Your answer should be a whole number. Do not use comma, decimal, and peso sign. Maxi Organization, an NPE disclosed the following in its 20x1 notes to the financial statements. a. Received shares valued at P8,000,000 to be retained with the dividends used to support current operations b. Net resources of P4,000,000 invested in plant assets c. Received equipment valued at P20,000,000 which is to be sold with the proceeds used to renovate the children’s playground d. Board-designated fund of P2,400,000 e. Received P80,000 cash from a donor who did not specify any purpose restrictions on the contribution however, the donor specified that the donation should be used until 20x2 f. Received P3,200,000 from a donor who stipulated that the contribution shall be invested indefinitely and that the earnings shall be used for scholarships. Investment income in 20x1 amounted to P200,000 The total unrestricted net assets is: 6400000 19. Your answer should be a whole number. Do not use comma, decimal, and peso sign to encode your answer. GreenThinkers Organization, a non-profit organization, received the following donations during the period: a. January 1, 20x1: Land with fair value of P4,000,000 to be used at the discretion of GreenThinkers b. February 15, 20x1: Cash of P8,000,000, restricted for the acquisition of a truck. The truck will be used in GreenThinker’s outreach programs c. March 1, 20x1: Investment in equity securities with fair value of P2,000,000 to be held indefinitely. Only the investment income shall be used by GreenThinkers on its current operations d. May 1, 20x1: JPIA and JPAMA members from different universities contributed services in a treeplanting activity initiated by GreenThinkers. Although the volunteers rendered their services for free, GreenThinkers estimates that the fair value of these services would amount to P20,000 On June 30, 20x1, GreenThinkers acquired a truck for P8,000,000 and received dividends of P240,000 from the equity securities. The temporarily restricted contributions revenue is: 8000000 20. Investments are reported by NPEs at Fair value 21. Your answer should be a whole number. Do not use comma, decimal, and peso sign to encode your answer. GreenThinkers Organization, a non-profit organization, received the following donations during the period: a. January 1, 20x1: Land with fair value of P4,000,000 to be used at the discretion of GreenThinkers b. February 15, 20x1: Cash of P8,000,000, restricted for the acquisition of a truck. The truck will be used in GreenThinker’s outreach programs c. March 1, 20x1: Investment in equity securities with fair value of P2,000,000 to be held indefinitely. Only the investment income shall be used by GreenThinkers on its current operations d. May 1, 20x1: JPIA and JPAMA members from different universities contributed services in a treeplanting activity initiated by GreenThinkers. Although the volunteers rendered their services for free, GreenThinkers estimates that the fair value of these services would amount to P20,000 On June 30, 20x1, GreenThinkers acquired a truck for P8,000,000 and received dividends of P240,000 from the equity securities. The net effect of the transactions in the year-end permanently restricted net assets is: 2000000 22. The following gifts are received in Year 1 by an NPE: a. P2,000 specified by the donor to be used to pay salaries b. P10,000 for new conference room furniture c. P5,000 to be held for one year before being expended The salaries are paid in Year 2 and the conference room furniture is purchased in Year 1. How much should be shown as increases in Temporarily Restricted Net Assets in Year 1? P7,000.00 23. Donor-restricted contributions are recognized in the financial statements when Received 24. The following gifts are received in Year 1 by an NPE: a. P2,000 specified by the donor to be used to pay salaries b. P10,000 for new conference room furniture c. P5,000 to be held for one year before being expended The salaries are paid in Year 2 and the conference room furniture is purchased in Year 1. How much should be reclassified on the Statement of Activities in Year 2 from the Temporarily Restricted Net Assets to the Unrestricted column? P7,000.00 25. Your answer should be a whole number. Do not use comma, decimal, and peso sign. Fighting Organization, an NPE, received the following contributions during 20x1: a. P400,000 cash restricted for the purchase of equipment b. P1,000,000 cash restricted for the renovation of an old building owned by Fighting Fighting made the renovation in 20x2 and acquired the equipment in 20x3. Net assets released from restrictions in Fighting’s 20x2 statement of activities is: 1000000 26. When are unconditional promises to give recognized as revenue? In the period the promise is received 27. Your answer should be a whole number. Do not use comma, decimal, and peso sign to encode your answer. GreenThinkers Organization, a non-profit organization, received the following donations during the period: a. January 1, 20x1: Land with fair value of P4,000,000 to be used at the discretion of GreenThinkers b. February 15, 20x1: Cash of P8,000,000, restricted for the acquisition of a truck. The truck will be used in GreenThinker’s outreach programs c. March 1, 20x1: Investment in equity securities with fair value of P2,000,000 to be held indefinitely. Only the investment income shall be used by GreenThinkers on its current operations

d. May 1, 20x1: JPIA and JPAMA members from different universities contributed services in a treeplanting activity initiated by GreenThinkers. Although the volunteers rendered their services for free, GreenThinkers estimates that the fair value of these services would amount to P20,000 On June 30, 20x1, GreenThinkers acquired a truck for P8,000,000 and received dividends of P240,000 from the equity securities. The “net assets released from restrictions” in 20x1 is: 8000000 28. A contribution is a(an) Unconditional transfer of cash 29. Unconditional promise to give that include promises of payments due in future periods are reported as Restricted revenues 30. A nonprofit organization’s restricted fund typically is established in rationale to Provisions of a contribution to the organization 31. On the financial statement of an NPE, “fund balance” is replaced by Net assets 32. Your answer should be a whole number. Do not use comma, decimal, and peso sign to encode your answer. GreenThinkers Organization, a non-profit organization, received the following donations during the period: a. January 1, 20x1: Land with fair value of P4,000,000 to be used at the discretion of GreenThinkers b. February 15, 20x1: Cash of P8,000,000, restricted for the acquisition of a truck. The truck will be used in GreenThinker’s outreach programs c. March 1, 20x1: Investment in equity securities with fair value of P2,000,000 to be held indefinitely. Only the investment income shall be used by GreenThinkers on its current operations d. May 1, 20x1: JPIA and JPAMA members from different universities contributed services in a treeplanting activity initiated by GreenThinkers. Although the volunteers rendered their services for free, GreenThinkers estimates that the fair value of these services would amount to P20,000 On June 30, 20x1, GreenThinkers acquired a truck for P8,000,000 and received dividends of P240,000 from the equity securities. The unrestricted contributions revenue is: 4000000 33. Alice makes a cash gift which has no strings attached to a political party. It is recorded as Revenue-unrestricted contribution 34. Which of the following donated services would not be recognized as contributions in the statement of activities? Services contributed by lay volunteers manning a phone bank 35. Contributions are reported in the statement of activities using all of the following categories except Board-restricted 36. Which of the following contributions are not recognized in the statement of activities? None of these 37. Income earned from temporary endowments that can be spent only on certain programs but has not yet been spent would be reported in the statement of activities as Temporarily restricted 38. Your answer should be a whole number. Do not use comma, decimal, and peso sign. Revlove Organization, an NPE, received the following during 20x1: a. Land with fair value of P40,000,000 to be sold to acquire a bus b. Shares of stocks with fair value of P12,000,000 to be retained indefinitely. The dividends from the shares will be used to support current operations. As a result of these donations, Revlove should report an increase in temporarily restricted net assets in the amount of: 40000000 39. One characteristic of NPEs that is comparable with that of government entities is Stewardship of resources 40. Your answer should be a whole number. Do not use comma, decimal, and peso sign. Maxi Organization, an NPE disclosed the following in its 20x1 notes to the financial statements. a. Received shares valued at P8,000,000 to be retained with the dividends used to support current operations b. Net resources of P4,000,000 invested in plant assets c. Received equipment valued at P20,000,000 which is to be sold with the proceeds used to renovate the children’s playground d. Board-designated fund of P2,400,000 e. Received P80,000 cash from a donor who did not specify any purpose restrictions on the contribution however, the donor specified that the donation should be used until 20x2 f. Received P3,200,000 from a donor who stipulated that the contribution shall be invested indefinitely and that the earnings shall be used for scholarships. Investment income in 20x1 amounted to P200,000 The total temporarily restricted net assets is: 20280000 41. How would the expiration of a prior-year donor restriction as to purpose be reflected in the current year’s statement of activities? A separate line item reclassification between the temporarily restricted and unrestricted categories 42. Which of the following contributions are credited to a Deferred Revenue account until spending occurs? None of these 43. Your answer should be a whole number. Do not use comma, decimal, and peso sign. Fighting Organization, an NPE, received the following contributions during 20x1: a. P400,000 cash restricted for the purchase of equipment b. P1,000,000 cash restricted for the renovation of an old building owned by Fighting Fighting made the renovation in 20x2 and acquired the equipment in 20x3. Total revenue recognized on the contributions in 20x1 is: 1400000 44. How would spending of money donated in the prior year for spending in the current year be reported in the statement of activities?

As an expense in the unrestricted category 45. Your answer should be a whole number. Do not use comma, decimal, and peso sign. Use parentheses to indicate DECREASE. K2, an NPE, had the following transactions during 20x1: a. Received contribution of P800,000 to be used for student scholarships. Of this amount, P480,000 was expended during the year b. Expended P200,000 for student scholarships from a P240,000 grant received in previous year The net effect of the transactions in K2’s 20x1 temporarily restricted net assets is: 120000 46. Your answer should be a whole number. Do not use comma, decimal, and peso sign to encode your answer. GreenThinkers Organization, a non-profit organization, received the following donations during the period: a. January 1, 20x1: Land with fair value of P4,000,000 to be used at the discretion of GreenThinkers b. February 15, 20x1: Cash of P8,000,000, restricted for the acquisition of a truck. The truck will be used in GreenThinker’s outreach programs c. March 1, 20x1: Investment in equity securities with fair value of P2,000,000 to be held indefinitely. Only the investment income shall be used by GreenThinkers on its current operations d. May 1, 20x1: JPIA and JPAMA members from different universities contributed services in a treeplanting activity initiated by GreenThinkers. Although the volunteers rendered their services for free, GreenThinkers estimates that the fair value of these services would amount to P20,000 On June 30, 20x1, GreenThinkers acquired a truck for P8,000,000 and received dividends of P240,000 from the equity securities. The net effect of the transactions in the year-end temporarily restricted net assets (ignore depreciation) is: 0 47. Unconditional transfers of cash or other resources to an NPE in a voluntary nonreciprocal transaction is the definition of Contributions 48. A gift in kind for which there is little or no discretion on disposition should be accounted for by an NPE as An agency transaction 49. Which of the following contributions are credited directly to the entity’s net assets when received? None of these 50. A pledge is unconditional if it Depends only on the passage of time (ITO ANG SAGOT KAPAG WALA SA CHIOCES YUNG NASA #51) 51. A pledge is unconditional if it Depends only on the passage of time or depends on the demand by the university to be paid

ACCOUNTING FOR NPES - HOSPITALS 1. The governing board of Simplicity Hospital, which is operated by a religious organization, designated P500,000 of cash for future expansion of the hospital. On the hospital's statement of financial position, the cash designated for future plant expansion would be disclosed in which of the following classes of net assets?  Unrestricted net assets 2. Faith Hospital, an NPE, rendered P2,400,000 in services to patients, P2,000,000 of which is charged to PhilHealth. It is estimated that only P2,120,000 will be collected. Of the P280,000 difference, P140,000 is the estimated contractual agreements with PhilHealth, P20,000 is allowance for discounts to hospital employees, P80,000 is charity care, and P40,000 is the uncollectible accounts. The net patient revenue is: 2160000 3. The following accounts are taken from ledger balances of Caring & Loving Hospital, an NPE: Gross patient service revenue, P11,049,200 Research grant revenue to the extent expended, P361,000 Revenues from sale of cafeteria meals to guest and employees, P108,000 Donated services of nurses and physicians (otherwise purchase), P145,000 Unrestricted gifts and grants, P100,200 Unrestricted endowment income, P12,000 Gifts restricted for equipment purchase, P540,000 Donor-restricted investments for permanent endowment, P150,000 Temporarily restricted endowment income, P25,000 Revenues from parking lot, P31,000 Revenues from vending machine, P68,000 Income on investment whose use is limited by the board for capital improvements, P207,000 Contributions restricted by donor for pediatric unit operations, P225,000 Contractual adjustments, P1,328,500 Courtesy allowances/staff discounts, P215,000 Provision for uncollectibles, P341,600   

The net patient revenue is: 9505700 The total operating revenue-unrestricted is: 10218700 The total operating revenue unrestricted & restricted is: 10443700

4. An NPE hospital received a donation of medicine from the Good Pharmaceutical Co. on March 15, 2020. The cost of the medicine to the company was P66,000, and its market value was P110,000. Twenty percent of the medicine was used by the hospital during the year ended December 31, 2020. On the hospital's statement of operations for the year ended December 31, 2020, the contribution of medicine would increase operating revenues by

110000 5. In 2020, World Hospital, received an unrestricted bequest of ordinary shares with a fair value of P50,000. The testator paid P20,000 for the shares. World should record the bequest to Increase unrestricted net assets by P50,000 6. Perseverance Hospital, an NPE, signed an agreement with Patience, Inc. to provide medical services to each of Patience’s 100 employees for P2,000 per month, per employee. During the month of April 2020, only 20 employees availed of the medical services. The premium revenue recognized in April 2020 is: 200000 7. Resilience Hospital, an NPE, had the following transactions during the period: a. Sales of P480,000 from gift shop and cafeteria b. Received P80,000 dividends from donated shares whose use is unrestricted. c. A computer consultant provided free services on the upgrading of Resilience’s information system which would have been purchase if not donated for P200,000 d. Purchased medicines from Unilove Pharma but was not charged because it was deemed donated to Resilience. In Resilience’’s statement of operations, total other revenues is recorded at: 800000 8. An NPE hospital has the following account balances Revenue from newsstand, P50,000 Amounts charged to patients, P800,000 Interest income, P30,000 Salary expense-nurses, P100,000 Contractual adjustments, P110,000 Undesignated gifts, P80,000 Bad debts, P10,000 The hospital’s net patient service revenue is: 690000 9.Care Hospital, an NPE, had the following receipts during the year. Net patient revenues, P1,000,000 Premium revenue, P200,000 Sales from canteen, P300,000 Investment income, P50,000 Contributions to be used in renovating the hospital, P400,000 The reported total revenues in the revenues section of the statement of operations is: 1550000 10. Under Clever Hospital’s established structure, it would have earned patient service revenue of P9,000,000 for the year ended December 31, 2020. However, P6,750,000 was collected because of charity allowances of P1,500,000 and discounts of P750,000 to third party payors. The amount that Clever should record as net patient revenue for the year ended December 31, 2020 is: 6750000 11. An NPE hospital receive the following restricted contributions and other receipts during the year ended December 31, 2020. a. for research, P300,000 b. for equipment acquisition, P200,000 c. Income from endowment to be used for new addition to hospital plant, P1,000,000 None of the contributions or other receipts were expended during the year ended December 31, 2020.  

For the year ended December 31, 2020, the amount that would be reported on the hospital’s statement of changes in net assets as an increase in temporarily restricted net assets is: 1500000 Assuming the P200,000 was expended to purchase a state-of-the-art x-ray machine, for the year ended December 31, 2020, the amount that would reported on the hospital’s statement of changes in net assets as an increase in temporarily restricted net assets is: 1300000

12. Brave Hospital, an NPE had the following receipts during the year: Billings to patients, P4,800,000 Sales from canteen, P1,000,000 Undesignated gifts, P200,000 Contractual adjustments, P1,200,000 Billings on capitation agreements, P240,000 Interest income, P80,000 Uncollectible accounts, P400,000 Salaries of doctors, P1,400,000 The net patient revenue is: 3600000 13. Under Diligent Hospital’s established rate structure, the hospital would have earned patient service revenue of P5,000,000 for the year ended December 31, 2020. However, Diligent did not expect to collect this amount because of contractual adjustments of P500,000 to third payors. In May 2020, Diligent purchased medical supplies from Happy Pharmacy at a cost of P1,000. However, Happy considered the P1,000 as donation to Diligent. On December 31, 2020, Diligent has board-designated assets of P40,000 cash and P700,000 investments.  

Diligent should report net patience revenue for the year ended December 31, 2020 in the amount of: 4500000 Diligent should report board-designated assets in unrestricted assets in the amount of: 740000

14. Justice Hospital, an NPE, has the following plant and equipment (net of depreciation): a. Land, P500,000 b. Building, P10,000,000 c. Movable equipment, P2,000,000 Justice should report restricted assets at an amount of: 0

15. Under Savior Hospital’s established rate structure, the hospital would have earned patient service revenue of P7,000,000 for the year ended December 31, 2020. However, it did not expect to collect this amount because of charity allowances of P1,000,000 and discounts of P500,000 to third party payors. In May 2020, Savior purchased bandages from Mercury Drug at a cost of P5,000. However, Mercury notified savior that the invoice was being cancelled and that the bandages were donated to Savior. The patient service revenue that Savior will record for the year ended December 31, 2020 is: 6000000 16. Hope Hospital, an NPE, had the following transactions during the period: a. Sales of P120,000 from gift shop and cafeteria b. Received P20,000 dividends from donated shares. The use of dividends is unrestricted. c. A computer consultant upgraded Hope’s information system for free. Hope would have paid P50,000 for those services if they had not been donated. d. Received donations of medicines worth P10,000 from a pharmaceutical company. The total other revenues to be presented in Hope’s statement of operations for the period is: 200000 17. The following information relate to Courage Hospital, an NPE. Answer the questions that follow.          

The net patience revenue is: 289000 The total operating revenue is: 344000 The total operating expenses is: 330000 The income from operations is: 14000 The total non-operating income-unrestricted is: 57000 The change in net assets-unrestricted is: 71000 The net assets-unrestricted, ending is: 109000 The net assets-temporarily restricted, ending is: 38000 The total assets is: 450000 The total net assets is: 397000

ACCOUNTING FOR NPES - COLLEGES AND UNIVERSITIES 1. Where should an alumnus contribution of P50,000 to pay for scholarships for international study be accounted for? Current restricted fund 2. Which of the following is not an example of general and educational expenses recorded by a college or university? Purchase of sweatshirts for sale in the college bookstore 3. A collection of first editions is donated to Southern Luzon State University for its library. Which is the correct credit? No entry is required 4. Calbayog Institute of Science and Technology, an NPE, as of June 30, 2020, and for the year ended: I. Unrestricted net assets comprised P7,500,000 of assets and P4,500,000 of liabilities (including deferred revenues of P15,000). Among the receipts recorded during the year were unrestricted gifts of P550,000 and restricted grants totaling P330,000, of which P220,000 was expended during the year for current operations and P110,000 remained unexpended at the close of the year. II. Volunteers from the surrounding communities regularly contribute their service to the school and paid nominal amounts to cover their travel costs. During the year, travel costs reimbursed to volunteers aggregated to P18,000. The gross value of services performed by the volunteers and determined by reference to equivalent wages available in that area for similar services amounted to P200,000. The school normally purchases these types of contributed services, and it believes that these services enhance its assets. At June 30, 2020, the school’s unrestricted net assets balance was P3,000,000 5. Calbayog Institute of Science and Technology, an NPE, as of June 30, 2020, and for the year ended: I. Unrestricted net assets comprised P7,500,000 of assets and P4,500,000 of liabilities (including deferred revenues of P15,000). Among the receipts recorded during the year were unrestricted gifts of P550,000 and restricted grants totaling P330,000, of which P220,000 was expended during the year for current operations and P110,000 remained unexpended at the close of the year. II. Volunteers from the surrounding communities regularly contribute their service to the school and paid nominal amounts to cover their travel costs. During the year, travel costs reimbursed to volunteers aggregated to P18,000. The gross value of services performed by the volunteers and determined by reference to equivalent wages available in that area for similar services amounted to P200,000. The school normally purchases these types of contributed services, and it believes that these services enhance its assets. For the year ended June 30, 2020, what amount should be included in the school’s revenue for the unrestricted gifts and restricted grants? P880,000 6. Endowment income was restricted to student aid activities. Cash is paid for all activities. Which is the credit necessary for classification? Reclassification in-temporarily restricted, satisfaction of program restrictions 7. What is the basis of accounting used in accounting for NPE college or university? Accrual basis 8. For the summer session of 2020, Ateneo de Manila University assessed its students P1,700,000 (net of refunds) covering tuition and fees for educational and general purposes. However, only P1,500,000 was expected to be realized because scholarships totaling P150,000 had been granted to students for which services are rendered, and tuition remissions of P50,000 had been allowed to faculty members’ children attending Ateneo. How much should Ateneo report for the summer session ended 2020 as net revenue from tuition and fees? P1,650,000 9. Unrestricted current funds of Malayan University designated by the governing board for a specific future purpose should be reported as part of Unrestricted net assets 10. An alumni donates P10,000 to University of the Philippines for a new Women’s Studies program. The alumni wants the principal to remain intact but the investment earnings can be used to support the Women’s Studies program. This donation would be accounted for in the: Endowment fund 11. The Divine Word College issues long-term debt to build a bridge over the gap between two main campuses. The debt would be accounted for in the Investment in plant 12. An NPE college received an offer from an engineer, an alumnus, to teach Engineering Math for one semester at no cost. This contribution of service Should be recorded as a revenue with an equivalent amount recorded as an expenditure 13. For the summer session of 2020, Ateneo de Manila University assessed its students P1,700,000 (net of refunds) covering tuition and fees for educational and general purposes. However, only P1,500,000 was expected to be realized because scholarships totaling P150,000 had been granted to students for which no services are rendered, and tuition remissions of P50,000 had been allowed to faculty members’ children attending Ateneo. What amount should Ateneo include as net revenues from student tuition and fees? P1,500,000 14. NPE college or university student unions, dormitories, and residence halls are considered Auxiliary enterprises 15. Unexpended plant fund accounts for: Assets allotted for future plant acquisition 16. A university’s long-term boards issued to build dormitories would be recorded in the Investment in plant fund 17. The quasi-endowment fund of St. Augustine University would account funds set aside by The governing board of the university for future purpose 18. Catarman University has the following information:

On December 31, 2020, the total liabilities amounted to: P1,130,000 19. A life income fund is used when All income earned on donated assets are to be paid to the donor for his/her lifetime 20. Catarman University has the following information:

On December 31, 2020, the total assets amounted to: P5,365,000 21. For the 1st semester of 2020, DLSU-D assessed its students P4,000,000 (net of refunds), covering tuition and fees for educational and general purposes. However, only P3,700,000 was expected to be realized because tuition remissions of P80,000 were allowed to faculty members’ children attending DLSU-D, and scholarships with services rendered to the university totaling P220,000 were granted to students. What amount should DLSU-D include in net revenue from student tuition and fees for the first semester ended 2020? P3,920,000 22. Which plant fund subgroup would consider the following transaction. A bond principal payment is made on a bond that was issued with the proceeds being designated for construction of a new gymnasium? Plant fund for retirement of indebtedness 23. For the summer session of 2020, Ateneo de Manila University assessed its students P1,700,000 (net of refunds) covering tuition and fees for educational and general purposes. However, only P1,500,000 was expected to be realized because scholarships totaling P150,000 had been granted to students for which no services are rendered, and tuition remissions of P50,000 had been allowed to faculty members’ children attending Ateneo. The increase in unrestricted net assets for the summer session ended 2020 amounted to P1,500,000 24. Private grants which are essentially pass through financial aid to students are accounted for as Agency transactions 25. For San Sebastian College-Recoletos, the receipt for operating activities that have external restrictions as to the purpose for which they can be used is recorded by crediting: Contribution Revenue 26. The loan fund of Pangasinan State University would account for loans To university students 27. Which of the following is not an example of general and educational revenues of an NPE college or university? Room and board fees received by the dormitory 28. In an NPE university, government grants given directly to students are an example of An agency transaction 29. For the 1st semester of 2020, DLSU-D assessed its students P4,000,000 (net of refunds), covering tuition and fees for educational and general purposes. However, only P3,700,000 was expected to be realized because tuition remissions of P80,000 were allowed to faculty members’ children attending DLSU-D, and scholarships with services rendered to the university totaling P220,000 were granted to students. What amount should DLSU-D include in educational and general current funds or gross revenues (net of refunds) from student tuition and fees? P4,000,000 30. Cebu Central University budget funds for the maintenance and repair of its building. These funds would be accounted for under Plant fund for renewals and replacements 31. The Board of Trustees decides to set aside P5,000,000 to consider purchasing additional land on the first month of the next fiscal year. What type of transfer is this? Discretionary 32. CALEB decides to contribute P1,000,000 to his alma mater. Southwestern Samar College agrees to pay CALEB a fixed amount every month for the next 20 years in exchange for the donation. CALEB’s donation would be accounted for in the Annuity fund 33. Which of the following is not correct? Expenses denote outlay of resources 34. Which of the following is not an example of the major categories of funds for an NPE college or university? Proprietary funds 35. Which of the following receipts should be recorded in the restricted current fund of an NPE university?

A cash donation to provide scholarships 36. Which of the following funds of an NPE university makes periodic payments of a fixed amount at equal intervals Annuity fund 37. In accounting for loan funds, revenue is recorded when the Contribution is received 38. The type of endowment fund for which the principal may be expended after the occurrence of an event specified by the donor is a/an None of these 39. Which university fund is most similar to the governmental general fund? Current-unrestricted 40. In a university, class cancellation refunds of tuition and fees should be recorded as I. Reduction of revenue from tuition and fees. II. Reduction of accounts receivable I only 41. The following funds were among those on Holy Spirit University’s books at December 31, 2020:  

Funds to be used for acquisition of additional property for university purposes (unexpended at 12/31/2020) – P3,000,000 Funds set aside for debt service charges and for the retirement of indebtedness on university’s property – P7,000,000

P10,000,000 42. All of the following are plant funds in colleges and universities except: Plant replacement and expansion fund 43. An alumnus made a donation of an adjoining land to a university. The university would record the gift as An unrestricted revenue 44. Admissions, counseling, and registration are considered to be: Student services 45. Calbayog Institute of Science and Technology, an NPE, as of June 30, 2020, and for the year ended: I. Unrestricted net assets comprised P7,500,000 of assets and P4,500,000 of liabilities (including deferred revenues of P15,000). Among the receipts recorded during the year were unrestricted gifts of P550,000 and restricted grants totaling P330,000, of which P220,000 was expended during the year for current operations and P110,000 remained unexpended at the close of the year. II. Volunteers from the surrounding communities regularly contribute their service to the school and paid nominal amounts to cover their travel costs. During the year, travel costs reimbursed to volunteers aggregated to P18,000. The gross value of services performed by the volunteers and determined by reference to equivalent wages available in that area for similar services amounted to P200,000. The school normally purchases these types of contributed services, and it believes that these services enhance its assets. For the year ended June 30, 2020, what amount should the school record as contribution revenue from the volunteers’ services? P200,000 46. Which of the following is an example of an inter-fund transaction? Cash is set aside for payment of a mortgage 47. Calbayog Institute of Science and Technology, an NPE, as of June 30, 2020, and for the year ended: I. Unrestricted net assets comprised P7,500,000 of assets and P4,500,000 of liabilities (including deferred revenues of P15,000). Among the receipts recorded during the year were unrestricted gifts of P550,000 and restricted grants totaling P330,000, of which P220,000 was expended during the year for current operations and P110,000 remained unexpended at the close of the year. II. Volunteers from the surrounding communities regularly contribute their service to the school and paid nominal amounts to cover their travel costs. During the year, travel costs reimbursed to volunteers aggregated to P18,000. The gross value of services performed by the volunteers and determined by reference to equivalent wages available in that area for similar services amounted to P200,000. The school normally purchases these types of contributed services, and it believes that these services enhance its assets. What amount of total revenue from the above-mentioned transactions would be recognized as revenues? P970,000 48. Any restrictions on gifts, grants, or bequests received by NPE university are imposed by Donors

49. NPE college or university student unions, dormitories, and residence halls are considered Auxiliary enterprises 50. Which of the following is a mandatory transfer by Ateneo de Naga University? Principal and interest payments on long-term debt 

DRILL 1 - NPE 1. A(n) conditional promise to give is not a contribution 2. Term endowments would be classified as temporarily restricted contributions. 3. Contributed services are recognized if they create or enhance nonfinancial assets or require specialized skills.

4. Contributions of monetary and nonmonetary assets are valued at their fair value. 5. The statement of cash flows may be prepared using the direct method (the preferred method) or the indirect method. 6. Contributions that create endowments are permanently restricted contributions. 7. A promise to give is a contribution if the promise is unconditional. 8. Promises with future payment dates would usually be classified as temporarily restricted contributions. 9. Contributed works of art, historical treasures, and similar assets are called collection items. 10. The three categories which contributions are to be reported are unrestricted, temporarily restricted, and permanently restricted. 11. Contributions are unconditional transfers of cash or other assets. 12. In general, contributions are recognized when received.

13. The statement of activities may be in columnar format or in layered format. 14. All expenses are shown in the unrestricted category in the statement of activities. 15. In general, revenues and expenses are reported at their gross amounts. 16. A transfer in which value is not received or given in exchange is a(n) nonreciprocal transfer. 17. Private NPOs must issue financial statements that focus on the NPO as a whole. DRILL 2 – NPE 1. Repairs made to a building on a volunteer basis by a plumber would not be recognized in the financial statements FALSE 2. Revenues from special events that are ongoing and major activities are reported net of related expenses FALSE 3. The statement of financial position must show total amounts for each classification of net assets. TRUE 4. Gifts in kind do not qualify as recognizable contributions FALSE 5. Contributions that create term endowments are classified as increasing temporarily restricted net assets TRUE 6. An unconditional promise to give must be in writing to qualify as a recognizable contribution. FALSE 7. Collection items need not be depreciated. TRUE 8. Fund accounting for internal record-keeping is specifically discouraged. FALSE 9. Assets transferred to a NPE where it has little or no discretion over their use may be accounted for as temporarily restricted. FALSE 10. Net assets with board-imposed restrictions are classified as temporarily restricted until conditions are met. FALSE 11. Board-restricted net assets must be shown separately in the statement of financial position FALSE 12. Contributed services are valued using the minimum wage. FALSE 13. All expenses are reported in the unrestricted category, even expenses incurred in satisfying donorimposed restrictions. TRUE 14. Contributed services are recognized only if they create or enhance nonfinancial assets FALSE 15. Income earned on endowments (other than term endowment) is reported as increasing permanently restricted assets FALSE 16. A purpose restriction is deemed to have expired when an expense has been incurred for that purpose. TRUE 17. Contributions that create endowments are always reported in the statement of activities and not as adjustments to equity. TRUE 18. The statement of financial position must show total assets, total liabilities, and total net assets. TRUE 19. Contributions with future payment dates usually would be classified as increasing temporarily restricted net assets TRUE 20. Collections items need not be capitalized under certain circumstances. TRUE 21. Expiration of restrictions must be reported separately in the statement of activities TRUE 22. Contributions received are measured at fair value. TRUE 23. Private NPOs must present financial statements that focus on the NPO as a whole. TRUE 24. Conditional promises to give are considered unconditional if the probability that the specified future event will occur is remote. FALSE 25. Unconditional promises to give are recognized in the financial statements when received not when collected. TRUE 26. Gains and losses on investments are always treated as increases or decreases in unrestricted net assets FALSE 27. The definition of contributions does not include conditional promises to give TRUE 28. Exchange transactions are the main source of revenues for most NPEs FALSE 29. A communication that is unclear as to whether it constitutes an unconditional promise to give is deemed an unconditional promise if it is legally enforceable

FALSE 30. The definition of contributions includes both reciprocal and nonreciprocal transfers. FALSE

DRILL 2: NPE HOSPITAL 1. ABC Hospital, an NPE health care provider, bills P600,000 for services rendered to patients, P500,000 of which is charged to Philhealth. It is estimated that only P530,000 will be collected. Of the P70,000 difference, P35,000 represent contractual adjustments with Philhealth, P5,000 for employee discounts, P20,000 for charity care, and P10,000 for uncollectible accounts. The entry to record the bill of P600,000 includes a o o o o o

Credit to patient service revenue, P540,000 Credit to patient service revenue, P560,000 Credit to patient service revenue, P600,000 Credit to net patient service revenue, P540,000 Credit to net patient service revenue, P540,000

2. An NPE hospital agreed to provide medical services to A Co’s 100 employees for P500 per month, per employee. In April 20x1, only 20 employees availed of the medical services. The entry to record revenue on April 30, 20xx1 includes a o o o o

Credit to patient service revenue, P50,000 Debit to cash, P10,000 Credit to premium revenue, P50,000 Debit to accounts receivable, P10,000

3. Hospital premium fees are: o o o o

Only earned to the extent of the services provided Charity care services Refundable to the subscriber if services are unused Revenues earned even if the standard change is above or below the fee

4. Danna makes a cash gift which has no strings attached to an NPE hospital. It is recorded as o o o o

Patient service revenue Non-operating revenue-unrestricted Other operating revenue-unrestricted A direct increase in net assets unrestricted

5. Donated medicines are classified as o o o o

Non-operating revenue Other operating revenue Premium revenues Patient service revenue

6. Which is not a financial statement of an NPE hospital? o o o o

Statement of changes in owner’s equity Statement of cash flows Statement of operations Statement of financial position

7. In accounting for NPE-hospital, what are third-party payors? o o o o

Friends and relatives who pay the medical costs of a patient Insurance companies and other groups that pay a significant portion of the medical fees Charities that supply medicines to hospitals and other health-care providers Doctors who reduce fees for indigent patients

8. A private NPE hospital received a cash contribution of P100,000 from Samantha Hicks on Nov. 14 20x8. Ms. Hicks specified the money be used to acquire equipment. On Dec 31, 20x8, the hospital had not expended any of Ms. Hicks’ contribution. On the statement of changes in net assets for the year ended, Dec 31, 20x8, the hospital should report the contribution as P100,000 increase in o o o o

Deferred revenue Fund balance Net assets with donor restrictions Net assets without donor restrictions

9. This refers to free services rendered to patients o o o o

Subsidy to indigents Contractual adjustments Charity care Premium expense

10. A private NPE hospital charged a patient P8,600 for services. It actually billed this amount to the patient’s third-party payor. The third-party payor submitted a check for P7,900 with a note stating that “the reasonable amount is paid in full per contract.” Which of the following statements is true? o o o o

The third-party payor retained the P700 and will convey it to the NPE hospital at the start of the next fiscal period. The NPE hospital recorded the P700 as a contractual adjustment that it will not collect The NPE hospital will bill the third-party payor again for the remaining P700 The patient is responsible to pay the remaining P700

11. A donor-restricted fund of an NPE hospital which may be specific-purpose fund, a term endowment fund, or a plant replacement and expansion fund o o o o

Permanently restricted fund General fund Temporarily restricted fund Particular fund

12. Gain on sale of a hospital van is classified as o o o o

Miscellaneous revenue Non-operating revenue Incidental revenue Other operating revenue

13. A fund restricted by the governing board for acquisition of equipment and construction of the hospital’s annex is classified as o o o o

Unrestricted Momentarily restricted Temporarily restricted Permanently restricted

14. What is the appropriate account to debit when reducing patient billings caused by arrangements with thirdparty payors? o o

Allowance for uncollectible and reduced accounts Contractual adjustments

o o o

Patient service revenues Accounts receivable third-party payors Accounts receivable-patients

15. An NPE hospital agreed to provide medical services to A Co.’s 100 employees for P500 per month, per employee. In April 20x1, only 20 employees availed of the medical services. This illustrates o o o o

Third-party payor agreement Marketing strategy Private partnership Capitation agreement

16. Yumilka makes a cash gift to an NPE hospital to be used to buy toys for the pediatric ward. It should be recorded as o o o o

Temporarily restricted Momentarily restricted Permanently restricted unrestricted

17. Other Operating Revenues include o o o o

Revenue from radiology services Revenues from nursing services for post-operative care Revenues from outpatient surgery Revenue from educational programs

18. Hospital courtesy allowances are o o o o

Charity care services Revenue deductions Expenses Revenue earned if the standard charge is above or below the allowance

19. ABC Hospital, an NPE health care provider, bills P600,000 for services rendered to patients, P500,000 of which is charged to Philhealth. It is estimated that only P530,000 will be collected. Of the P70,000 difference, P35,000 represent contractual adjustments with Philhealth, P5,000 for employee discounts, P20,000 for charity care, and P10,000 for uncollectible accounts. How much is the net patient service revenue? o o o o o o

P545,000 P540,000 P565,000 P600,000 P560,000 P575,000

20. ABC Hospital, an NPE health care provider, bills P600,000 for services rendered to patients, P500,000 of which is charged to Philhealth. It is estimated that only P530,000 will be collected. Of the P70,000 difference, P35,000 represent contractual adjustments with Philhealth, P5,000 for employee discounts, P20,000 for charity care, and P10,000 for uncollectible accounts. The entry to record the contractual adjustments includes a o o o o

Debit to third-party payor expense, P35,000 Debit to net patient service revenue, P35,000 Debit to agreements expense, P35,000 Debit to contractual adjustments, P35,000

LONG PROBLEM – DAYAG COLLEGE The preclosing trial balance of Dayag College of Business and the Arts shows the following balances:

1. In the statement of activities, unrestricted column, net assets at the end of the year is 395000 (please do not use peso sign, comma, or decimal) 2. In the statement of activities, temporarily restricted column, total revenues and gains excluding other support is 240000 (please do not use peso sign, comma, or decimal) 3. In the statement of activities, unrestricted column, decrease in net assets is 280000 (please do not use peso sign, comma, or decimal) 4. In the statement of activities, total unrestricted, temporarily restricted, and permanently restricted revenues and gains excluding other support is 4055000 (please do not use peso sign, comma, or decimal) 5. In the statement of activities, total expenses (expenditures) and losses (other deduction) is 3970000 (please do not use peso sign, comma, or decimal) 6. In the statement of activities, permanently restricted column, net assets at the end of the year is 3000000 (please do not use peso sign, comma, or decimal) 7. In the statement of activities, temporarily restricted column, decrease in net assets is 135000 (please do not use peso sign, comma, or decimal) 8. In the statement of activities, net assets (restricted and unrestricted) at the end of the year is 4235000 (please do not use peso sign, comma, or decimal) 9. In the statement of activities, unrestricted column, total revenues and gains excluding other support is 3315000 (please do not use peso sign, comma, or decimal) 10. In the statement of activities, unrestricted column, total revenues and gains and other other support is 3690000 (please do not use peso sign, comma, or decimal) 11. In the statement of activities, permanently restricted column, total revenues and gains excluding other support is 500000 (please do not use peso sign, comma, or decimal) 12. In the statement of activities, temporarily restricted column, net assets at the end of the year is 840000 (please do not use peso sign, comma, or decimal) 13. In the statement of activities, permanently restricted column, increase in net assets is 500000 (please do not use peso sign, comma, or decimal) 14. In the statement of activities, total net assets released from restrictions is 375000 (please do not use peso sign, comma, or decimal) 15. In the statement of activities, total (unrestricted and restricted) revenues and gains excluding other support is 4055000 (please do not use peso sign, comma, or decimal)

NEW QUESTIONS On December 31, 20x1, ABC Organization, a not-for-profit entity, received the following donations: 







Ms. Alpha made a pledge (promise) to give P12,000 to ABC Organization each year for the next five years starting on December 31, 20x2. The appropriate discount rate is 10%. The pledge is unconditional. Ms. Beta made a pledge (promise) to provide half of the needed funds to construct a new building for ABC Organization if ABC could get the remaining half of the funds needed from other donors by March 1, 20x2. As of December 31, 20x1, ABC has already accumulated 47% of the needed construction funds from donations and ABC’s Board of Trustees strongly believes that the remaining 3% will be received by the end of January 20x2. The estimated total costs of construction is P1,000,000. Mr. Charlie made a pledge (promise) to give ABC Organization a used offset printing equipment if ABC acquires a paper cutting equipment. The offset printing equipment has a fair value of P1,200,000. Because of recent cash flow problems, ABC’s Board of Trustees believes that it will not be able to acquire a paper cutting equipment in the near term. Mr. Delta gave ABC Organization P500,000 as a challenge grant. ABC Organization can keep the P500,000 if it can raise an additional P500,000 by the end of March 20x2. If ABC Organization fails to comply with the condition, it shall return the amount received to Mr. Delta.

1. The entry to record the promise of Ms. Alpha includes a credit to Contributions revenue – temporarily restricted support 2. The entry to record the promise of Mr. Charlie includes a credit to Contributions revenue – temporarily restricted support Contributions revenue – unrestricted support Liability for refundable advance None of these 3. The entry to record the promise of Mr. Delta includes a credit to Liability for refundable advance 4. The entry to record the promise of Ms. Beta includes a credit to Contributions revenue – temporarily restricted support ----------------------5. Private NPOs must present financial statements that focus on the NPO as a whole. True ----------------------ABC Hospital, an NPE health care provider, bills P600,000 for services rendered to patients, P500,000 of which is charged to Philhealth. It is estimated that only P530,000 will be collected. Of the P70,000 difference, P35,000 represent contractual adjustments with Philhealth, P5,000 for employee discounts, P20,000 for charity care, and P10,000 for uncollectible accounts. 6. The entry to record the contractual adjustments includes a Debit to Contractual Adjustments, P35,000 7. The entry to record the bill of P600,000 includes a Credit to Patient Service Revenue, P600,000 ----------------------8. Assets transferred to a NPE where it has little or no discretion over their use may be accounted for as temporarily restricted contributions. False An NPO disclosed the following in its 20x1 notes to financial statements: a. Received shares valued at P2,000,000 to be retained with the dividends used to support current operations. (permanently) b. Net resources of P1,000,000 invested in plant assets. (unrestricted) c. Received equipment valued at P5,000,000 which is to be sold with the proceeds used to renovate the children’s playground. (temporarily) d. Board-designated funds of P600,000. (unrestricted) e. Received P20,000 cash from a donor who did not specify any use restrictions on the contribution however, the donor specified that the donation should not be used until 20x2. (temporarily) f. Received P800,000 (permanently) from a donor who stipulated that the contribution shall be invested indefinitely and that the earnings shall be used for research purposes. Investment income in 20x1 amounted to P50,000. (temporarily) 9. The amount included in temporarily restricted net assets is: 5070000 10. The amount included in permanently restricted net assets is: 2800000 11. The amount included in unrestricted net assets is: 1600000 ----------------------12. A purpose restriction is deemed to have expired when an expense has been incurred for that purpose. True 13. On the statement of operations of a health care organization, expenses are deducted from Unrestricted revenues 14. On July 31, 2020, Valenzuela College, an NPE, showed the following amount to be used: Renewal and replacement of college properties Retirement of indebtedness on college properties Purchase of physical properties for college purposes, but unexpended at July 31, 2020

200,000 300,000 400,000

The total amount that should be included in Valenzuela’s plant funds at July 31, 2020 is: 900000 15. A private NPE hospital received a cash contribution of P100,000 form Samantha Hicks on Nov. 14, 20x8. Ms. Hicks specified the money be used to acquire equipment. On Dec. 31, 20x8, the hospital had not expended any of Ms. Hicks’ contribution. On the statement of changes in net assets for the year ended, Dec. 31, 20x8, the hospital should report the contribution as a P100,000 increase in Net assets with donor restrictions 16. Which is not a financial statement of an NPE hospital?

Statement of Changes in Owner’s Equity 17. The financial statements of a not-for-profit entity should focus on the Basic information on the organization as a whole 18. This refers to free services rendered to patients. Charity care 19. ABC Organization, a not-for-profit entity, received the following donations during 20x1:  Land with a fair value of P10,000,000 to be sold to acquire a bus.  Shares of stocks with fair value of P3,000,000 to be retained indefinitely. The dividends from the shares will be used to support current operations. As a result of the donations above, ABC should report as increase in temporarily restricted net assets an amount equal to: 10000000 20. In 2020, Bautista Hospital, an NPE, received P250,000 pure endowment grant. Also in the same year, Bautista’s governing board designated for special purposes, P300,000 which had originated form unrestricted gifts. The amount that should be accounted for as part of the unrestricted net asset class is: 300000 21. In accounting for NPE-hospital, what are third-party payors? Insurance companies and other groups that pay a significant portion of the medical fees 22. Your answer should be a whole number. Do not use comma, decimal, and peso sign. Revlove Organizations, an NPE, receive the following donations during 20x1:  

Land with fair value of P40,000,000 to be sold to acquire a bus. Shares of stocks with fair value of P12,000,000 to be retained indefinitely. The dividends from the shares will be used to support current operations.

As a result of these donations, Revlove should report an increase in temporarily restricted net assets in the amount of: 40000000 23. Contributions with future payment dates usually would be classified as increasing temporarily restricted net assets. True 24. Contributed services are valued using the minimum wage. False 25. Contributed services are recognized only if they create or enhance nonfinancial assets/ False 26. A donor-restricted fund of an NPE hospital which may be a specific-purpose fund, a term endowment fund, or a plant replacement and expansion fund. Temporarily restricted fund 27. Contributions that create term endowments are classified as increasing temporarily restricted net assets. True 28. Hospital courtesy allowances are Revenue deductions 29. An NPO received the following contributions in 20x1  P100,000 cash for the purchase of equipment.  P250,000 cash restricted for the renovation of an old building owned by the NPO. None of the contributions were used in 20x1. However, in 20x2, the entity acquired an equipment for P110,000. The contributions revenue recognized in 20x1 is 350000. 30. General purpose external financial reporting by a health care organization requires presentation of Statement of operation 31. In June 2020, Gatdula Hospital, an NPE, purchased medicines from Camutin Pharmaceutical Co. at a cost of P2,000. However, Camutin Pharmaceutical Co. notified Gatdula Hospital that the invoice was being canceled, and the medicines were being donated to Gatdula. Gatdula should record this donation of medicine as Other operating revenue of P2,000 32. All expenses are reported in the unrestricted category, even expenses incurred in satisfying donorimposed restrictions. True 33. On December 1, 20x1, ABC Organization, a non-profit entity, had the following transactions:  Purchased a vehicle costing P150,000 using unrestricted cash  Received a vehicle with fair value of P120,000 from donation ABC estimates that both of the vehicles have useful lives of 5 years and no residual value. ABC has an accounting policy implying a time restriction on gifts of long-lived assets. In ABC’s 20x1 statement of activities, the amount of depreciation expense that should be included under changes in unrestricted net assets is 4500 34. Medina Hospital, an NPE, would have earned patient service revenue of P9,000,000 for the year ended, December 31, 2020. However, only P6,750,000 was collected because of charity care services of P1,5000,000 and discounts of P750,000 to third-party payors. For the year ended December 31, 2020, Medina Hospital should record patient service revenues of 7500000. 35. Gain on sale of a hospital van is classified as Non-operating revenue 36. The statement of financial position must show total assets, total liabilities, and total net assets. True 37. Conditional promises to give are considered unconditional if the probability that the specified future event will occur is remote. False

38. A fund restricted by the governing board for acquisition of equipment and construction of the hospital’s annex is classified as Unrestricted 39. An NPO received the following contributions in 20x1  

P100,000 cash for the purchase of equipment. P250,000 cash restricted for the renovation of an old building owned by the NPO.

None of the contributions were used in 20x1. However, in 20x2, the entity acquired an equipment for P110,000. The net assets released from restrictions reported in the 20x2 statement of activities is 100000. 40. Collection items need not be depreciated. True 41. On the statement of activities of a private university, expenses are reported by Function 42. An unconditional promise to give must be in writing to qualify as a recognizable contributions. False 43. Contributions that create endowments are always reported in the statement of activities and not as adjustments to equity. True 44. A private NPE hospital charged a patient P8,600 for services. It actually billed this amount to the patient's third-party payor. The third-party payor submitted a check for P7,900 with a note stating that "the reasonable amount is paid in full per contract." Which of the following statements is true? The NPE hospital recorded the P700 as a contractual adjustment that it will not collect. 45. The following funds were among those held by Calahati College, an NPE, at December 31, 2020: Principal specified by the donor as nonexpendable

P500,000

Principal expendable after the year 2025

300,000

Principal designated from current funds

100,000

The amount that Calahati College should classify as regular endowment fund is 500000. 46. ABC Organization, a non-profit entity, acquired shares of stocks to be held as investment for P200,000 using unrestricted net assets. During the year, ABC received cash dividends of P10,000. At year-end, the shares have a fair value of P220,000. The effect of the transactions described above on the year-end statement of activities of ABC amount to 30000. 47. Which of the following statements related to pledges is incorrect? Pledges are generally enforceable contracts 48. The definition of contributions does not include conditional promises to give. True 49. A donor-restricted fund of an NPE hospital which may be a specific-purpose fund, a term endowment fund, or a plant replacement and expansion fund. Temporarily restricted fund 50. The machine of ABC Organization, a not-for-profit entity, has malfunctioned. Mang Tony, a professional mechanic, repaired the machine for free. The fair value of the services is estimated at P10,000. Which of the following statements is correct? This event has a zero net effect on ABC’s net assets 51. Yumilka makes a cash gift to an NPE hospital to be used to buy toys for the pediatric ward. It should be recorded as Temporarily restricted 52. A non-profit organization receives donation of services in-kind from an accountant who was consulted regarding the NPO’s financial reporting system. The NPO will most likely recognize those services as Expenses and revenues 53. Gains and losses on investments are always treated as increases or decreases in unrestricted net assets. False 54. When the donor has specified a particular date or event after which the principal of the Endowment fund may be expended, the Endowment Fund is referred to as a(an) Term endowment fund 55. An NPE college’s unrestricted current fund comprised the following. Asset

5,000,000

Liabilities (including deferred revenues of P100,000)

3,000,000

The fund balance of the NPE college’s unrestricted fund is 2000000 56. Board-designated funds should be accounted for as Unrestricted funds 57. The following expenditures were among those incurred by Barrientos university an NPE during 2020 Administrative data processing

P50,000

Scholarship and fellowship

P100,000

Operation and maintenance of physical plant

P200,000

The amount to be included in the functional classification “institutional support” expenditures account is 50000 58. Private not-for-profit organizations should report a statement of cash flows using the Either direct or indirect method 59. Collection items need not be capitalized under certain circumstances. True