Get 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. 0 Created on January 07, 2021 By Icon Systems Church Accounting Quiz This quiz will test a person's knowledge on church accounting. Your results are for personal use and only available to you. 1 / 15 Category: General Accounting Questions Question:Fund Accounting is an accounting system used by nonprofit organizations and governments. It places an emphasis on ___________ rather than profitability. paying debts increasing contributions accountability none of the above The definition of fund accounting that is used in non profits is the following:"Fund accounting is an accounting system for recording resources whose use has been limited by the donor, grant authority, governing agency, or other individuals or organizations or by law. It emphasizes accountability rather than profitability, and is used by Nonprofit organizations and by governments. In this method, a fund consists of a self-balancing set of accounts and each are reported as either unrestricted, temporarily restricted or permanently restricted based on the provider-imposed restrictions." 2 / 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. 3 / 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. 4 / 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. 5 / 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. 6 / 15 Category: General Accounting Questions Question:Are accounting funds and contribution funds different? Yes No Donation funds and accounting funds are different. You will want to review this article. Donation funds are reported on differently than accounting funds for example. Donation funds start over each year. Accounting funds carry a balance forward each year. This is just one difference. 7 / 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. 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: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. 10 / 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. 11 / 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. 12 / 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. 13 / 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. 14 / 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. 15 / 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. Enter your email and name then click the finish flag to see your results!We will send you fun and infrequent information. Your score is LinkedIn Facebook Twitter 0% Restart quiz This quiz can be shared with others with the proper given attribution to the creator Icon Systems, commonly called the CC BY license.