1、  In a statement of activity of a voluntary health and welfare organization, depreciation expense should:
 
　　a. Be included as an element of other changes in a statement of activity.
 
　　b. Not be included.
 
　　c. Be included as an element of expense.
 
　　d. Be included as an element of support.
 
　　Explanation
 
　　Choice "c" is correct. Depreciation is included as an element of expense in a "statement of activity" of a voluntary health and welfare organization.
 
　　Choices "a", "d", and "b" are incorrect, per above.
       2、In Year 1, Community Helpers, a private voluntary health and welfare organization, received a bequest of a $100,000 certificate of deposit maturing in Year 11. The testator's only stipulations were that this certificate be held until maturity and that the interest revenue be used to finance salaries for a preschool program. Interest revenue for Year 11 was $8,000. When the certificate was redeemed, the board of trustees adopted a formal resolution designating $20,000 of the proceeds for the future purchase of equipment for the preschool program.
 
　　In regard to the certificate of deposit, what should be reported in the Year 11 statement of activities?
 
　　a. Legacies and bequests, $100,000.
 
　　b. Revenues control, $100,000.
 
　　c. Transfer to land, building, and equipment fund, $20,000.
 
　　d. Reclassification from temporarily restricted net assets of $100,000.
 
　　Explanation
 
　　Choice "d" is correct. When the certificate was redeemed, the $100,000 amount was reported in the Year 11 statement of activity as a reclassification from temporarily restricted net assets to unrestricted net assets on the face of the statement of activities.
 
　　Choice "a" is incorrect. The "contributions (revenue) - temporarily restricted" account was increased when the $100,000 was originally received in Year 1.
 
　　Choice "c" is incorrect. The maturity of the $100,000 CD represents a release from temporary restrictions not a transfer. In addition, there are no "funds" displayed for external reporting purposes in not for profit financial statements.
 
　　Choice "b" is incorrect. The $100,000 maturity of the CD is not revenues, it is, in this instance, a release from temporary restrictions. Temporarily restricted revenue would have been recorded in Year 1.
       3、Metro General is a municipally-owned and operated hospital and a component unit of Metro City. In Year 1, the hospital received $7,000 in unrestricted gifts and $4,000 in unrestricted bequests. The hospital has $800,000 in long-term debt and $1,200,000 in fixed assets.
 
　　Before the hospital's financial statements were combined with those of the city, the city's statements included data on one special revenue fund and one enterprise fund. The city's statements showed $100,000 in enterprise fund long-term debt, $500,000 in enterprise fund fixed assets, $1,000,000 in general long-term debt, and $6,000,000 in general fixed assets.
 
　　The hospital's long-term debt should be reported in the city's financial statements as:
 
　　a. A separate "discrete presentation" of $800,000 in the hospital column.
 
　　b. Long term debt in the component unit column of the government-wide long-term debt in the financial statements.
 
　　c. Part of $1,800,000 in long-term debt displayed in the governmental activities column of the government-wide statement of net position.
 
　　d. An $800,000 contra amount against fixed assets.
 
　　Explanation
 
　　Choice "b" is correct. The hospital's long-term debt should be reported in the city's financial statements as part of $900,000 component unit long-term debt in the government-wide financial statements.
 
　　Choice "d" is incorrect. Debt is not offset against assets.
 
　　Choice "c" is incorrect. The hospital is an enterprise fund component, not part of governmental activities.
 
　　Choice "a" is incorrect. There is no hospital column.
 
 


 
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