Magnifying GlassGet a free trial of IconCMO now! 30 days - No credit card required. Church Accounting Quiz To start the quiz, click the blue ‘Start’ button below. 27 Created on January 07, 2021 Church Accounting Quiz This quiz will test a person's church accounting knowledge. Your results are for personal use and only available to you. 1 / 15 Category: General Accounting Questions Question:What are the two accounting methodologies that organizations use? (select two) Hybrid Cash accounting The balancing method Accrual methodology There are two main accounting methods called cash accounting and accrual. See Investopedia. 2 / 15 Category: General Accounting Questions Question:What does GAAP stand for? generalized accounting and practice generally accepted accountant person generally accepted accounting principles generally applicable accounting principles GAAP stands for Generally Accepted Accounting Principles. See the definition at the CFA Institute. Keep in mind all churches must follow GAAP. 3 / 15 Category: General Accounting Questions Question:The church pays cash for a contractor's services to fix something in the building. Recording the withdrawal would result what kind of change in the accounting books? Increase in assets and increase in liabilities. Decrease in an asset and decrease in fund equity. Increase in one asset and a decrease in another asset. None of the above. When the church pays for a service, money leaves the organization from an asset account which indirectly lowers the equity (or fund balance). 4 / 15 Category: General Accounting Questions Question:What is the fundamental equation for the balance sheet, commonly called the statement of financial position in church accounting? Assets = Liabilities + Fund's Balance Fund's Balance X Assets = Liabilities Assets + Liabilities = Fund's Balance Liabilities/Assets = Fund's Balance This is an accounting 101 question. Please see Investopedia. This equation is not the same as Assets - Liabilities = Equity (or Fund's Balance). The equation has multiple formulations based on what is needed - ie balance sheet. 5 / 15 Category: General Accounting Questions Question:Who restricts the net assets for churches? Donors Chairman of the Board The Church Council The Government The only person that can restrict contributions are donors. While the church's council may say they are taking donations for a purpose, they can later change that purpose by another church's council vote or whatever procedure they have described in their by laws. 6 / 15 Category: Balance Sheet Questions Question:In fund accounting, the Statement of Financial Position is equivalent to the... income statement. balance sheet. the statement of owner's equity. the statement of cash flow. According to FAS Topic 958 the Statement of Activities is equivalent to the income statement that for profit industries use. 7 / 15 Category: Accounting Entries Question:You have to record an entry to pay for the monthly church van loan. Which accounts are needed? A loan liability, an interest expense, and checkbook account. A checkbook and loan liability account. A checkbook and expense account. A checkbook, revenue, and loan liability account. 8 / 15 Category: General Accounting Questions Question:What is an example of an expense? Bank loan Interest paid to a bank Paying down the principle of a loan Monthly garbage bill The other options while they are paid out of the church's accounting checkbook, they are not considered expenses. Paying a bank loan lowers the principle of a liability. 9 / 15 Category: General Accounting Questions Question:The financial statement that reports amounts as of a particular date (ie. an end date) is the? Statement of Financial Activities Statement of Financial Position Cash Flow Report Budget Report The statement of financial position is the only report that gives you the dollar amounts as of one point in time. This is commonly called the balance sheet in for profit companies. The other financial statements like statement of activities and cash flow report show how the money came into the company and left the company. The budget report is not considered a financial report. 10 / 15 Category: General Accounting Questions Question:At the end of accounting period the liabilities total $20,000, and equity totals $52,000, then what must be the total of the assets? $52,000 $32,000 $72,000 None of these Liabilities plus equity will equal assets. This comes down to the balance sheet equation where Liabilities + equity equals assets. 11 / 15 Category: General Accounting Questions Question:Should multiple checkbooks be used to track funds and their balances? No Yes When multiple checkbooks (or worst sub accounts of checkbooks) are used, that means the system can't do proper fund accounting. It can't take the assets account (the checkbook) and break it up into various funds - or equity pieces. Using any type of accounts in the chart of accounts to define the funds is incorrect. They belong in the equity section. To read more, check this article out. 12 / 15 Category: General Accounting Questions Question:Which account is not included on a statement of financial position? Accounts receivable Accounts payable Donation revenue Cash Donation revenue (or any revenue) accounts are not reported on the balance sheet. 13 / 15 Category: General Accounting Questions Question:Are churches exempt from all federal income taxes? No Yes Churches are not exempt from the UBIT (Unrelated Business Income Tax). If they have gross receipts of over $1,000.00 they must file a tax form. This pdf goes over what UBIT and gives some clear examples. As always consult a CPA for your church's unique operation. 14 / 15 Category: General Accounting Questions Question:Why shouldn't liability accounts be used for tracking fund balances in the chart of accounts? Liabilities don't clear their balances out each fiscal year. Liabilities are debts not yet paid, whereas funds are the balance of revenue minus expenses. Liabilities do clear their balances out each fiscal year. As stated in the correct answer, liabilities are what is owed to someone else. Funds and their balances are what the church currently owns - ie money in the bank so to speak. It is not a debt! The chart of accounts has five distinct areas - assets, liabilities, revenue, expenses, and equity. Funds are considered equity accounts according to FASB. These five areas have specific account types that belong within each one. In other words you wouldn't list an expense in the revenue section. Likewise you would list an equity account in the liability area. 15 / 15 Category: General Accounting Questions Question:Does QuickBooks follow the FASB (Financial Accounting Standard Board) standards for church accounting as outline in the FAS Topic 958? Yes No The work around for Quickbooks and funds is to use classes. However, according to Quickbooks own site they say this about classes.The Balance Sheet by Class report can’t classify some transactions in QuickBooks. Some of those transactions create unclassified amounts on the report.By not classifying every single transaction's disbursements, your balance sheet will never be right. Some of the transactions that can't be classified are journal entries with unbalanced classes, a payroll liability check, and transfer of funds between two church funds. Enter your email and name then click the finish flag to see your results!We will send you fun and infrequent information. 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