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. 51 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: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. 2 / 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. 3 / 15 Category: General Accounting Questions Question:In what section of the statement of activities is contributions recorded under? expenses revenues service fees Contributions (donations) is revenue to the church. 4 / 15 Category: General Accounting Questions Question:What are the disadvantages of using revenue accounts to track funds? The church is not able to produce financial statements by fund. The church is not properly reporting the Net Asset section of the Statement of Financial Position. Using revenue accounts for funds forces the church to have more than one checkbook to see balances, thus forcing the church to dedicate unnecessary resources to checkbook maintenance like monthly reconciliations for each checkbook. All of the above To fully understand this question the user must understand the fund accounting principles. They would want to review the What is Fund Accounting article. Simply stated using revenue accounts has too many problems to figure out how much each church function (ie mission) has to spend or has spent. 5 / 15 Category: General Accounting Questions Question:What is an example of an expense? Bank loan Entering donations into contribution revenue 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. 6 / 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. 7 / 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). 8 / 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. 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:The church can lose its tax exempt status if it doesn’t follow proper fund accounting guidelines? False True What typically happens is the church does one of two things which would start an IRS audit. They messed up on payroll taxes or they don't report Unrelated Business Income Tax (UBIT). A lot of churches charge rental fees throughout the year and over a certain amount, they must file the right forms to declare that income. In other words not all revenue is tax exempt for churches. Once the IRS sees a mistake they can open the audit which means it can turn into an almost limitless scope. According to the IRS Pub 1828,the types of required records frequently include organizing documents (charter, constitution, articles of incorporation) and bylaws, minute books, property records, general ledgers, receipts and disbursements journals, payroll records, banking records and invoices. The extent of the records necessary generally varies according to the type, size and complexity of the organization’s activities. 11 / 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. 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: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. 15 / 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. 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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