Nonprofit Accounting MCQs 2026

Direct material in accounting refers to

1. A material traceable to a product ✓
2. B direct material plus direct labour ✓
3. C costing for distinct jobs or orders ✓
4. D department or unit where costs accumulate ✓

Direct labour in accounting refers to

1. A direct labour plus manufacturing overhead ✓
2. B costing for continuous homogeneous output ✓
3. C allocating overhead to products using basis ✓
4. D labour traceable to a product ✓

Manufacturing overhead in accounting refers to

1. A indirect factory costs ✓
2. B costing for distinct jobs or orders ✓
3. C department or unit where costs accumulate ✓
4. D predetermined cost for control purposes ✓

Prime cost in accounting refers to

1. A direct material plus direct labour ✓
2. B costing for continuous homogeneous output ✓
3. C allocating overhead to products using basis ✓
4. D material traceable to a product ✓

Conversion cost in accounting refers to

1. A department or unit where costs accumulate ✓
2. B predetermined cost for control purposes ✓
3. C direct labour plus manufacturing overhead ✓
4. D labour traceable to a product ✓

Job costing in accounting refers to

1. A allocating overhead to products using basis ✓
2. B material traceable to a product ✓
3. C indirect factory costs ✓
4. D costing for distinct jobs or orders ✓

Process costing in accounting refers to

1. A predetermined cost for control purposes ✓
2. B labour traceable to a product ✓
3. C costing for continuous homogeneous output ✓
4. D direct material plus direct labour ✓

Cost center in accounting refers to

1. A material traceable to a product ✓
2. B department or unit where costs accumulate ✓
3. C indirect factory costs ✓
4. D direct labour plus manufacturing overhead ✓

Overhead absorption in accounting refers to

1. A labour traceable to a product ✓
2. B direct material plus direct labour ✓
3. C allocating overhead to products using basis ✓
4. D costing for distinct jobs or orders ✓

Standard cost in accounting refers to

1. A indirect factory costs ✓
2. B direct labour plus manufacturing overhead ✓
3. C costing for continuous homogeneous output ✓
4. D predetermined cost for control purposes ✓

Nonprofit entity in accounting refers to

1. A capital contributions without expectation of return ✓
2. B program costs divided by total expenses ✓
3. C organization not operated for profit distribution ✓
4. D net assets in a particular fund ✓

Restricted fund in accounting refers to

1. A resources limited to specific donor purpose ✓
2. B permanently restricted invested funds ✓
3. C recognizing grant when conditions met ✓
4. D expenses grouped by program, admin, fundraising ✓

Unrestricted fund in accounting refers to

1. A program costs divided by total expenses ✓
2. B net assets in a particular fund ✓
3. C resources available for general mission use ✓
4. D mission-driven objective of NPO ✓

Donated capital in accounting refers to

1. A recognizing grant when conditions met ✓
2. B expenses grouped by program, admin, fundraising ✓
3. C capital contributions without expectation of return ✓
4. D organization not operated for profit distribution ✓

Endowment in accounting refers to

1. A net assets in a particular fund ✓
2. B mission-driven objective of NPO ✓
3. C resources limited to specific donor purpose ✓
4. D permanently restricted invested funds ✓

Program expense ratio in accounting refers to

1. A program costs divided by total expenses ✓
2. B expenses grouped by program, admin, fundraising ✓
3. C organization not operated for profit distribution ✓
4. D resources available for general mission use ✓

Grant revenue recognition in accounting refers to

1. A mission-driven objective of NPO ✓
2. B recognizing grant when conditions met ✓
3. C resources limited to specific donor purpose ✓
4. D capital contributions without expectation of return ✓

Fund balance in accounting refers to

1. A organization not operated for profit distribution ✓
2. B resources available for general mission use ✓
3. C permanently restricted invested funds ✓
4. D net assets in a particular fund ✓

Functional expense classification in accounting refers to

1. A resources limited to specific donor purpose ✓
2. B expenses grouped by program, admin, fundraising ✓
3. C capital contributions without expectation of return ✓
4. D program costs divided by total expenses ✓

Charitable purpose in accounting refers to

1. A resources available for general mission use ✓
2. B permanently restricted invested funds ✓
3. C recognizing grant when conditions met ✓
4. D mission-driven objective of NPO ✓

Nonprofit scenario 10: a Pakistani education trust must correctly handle restricted fund accounting

1. A ignore the transaction until next fiscal year ✓
2. B debit and credit both affected so the equation stays balanced ✓
3. C record only one side of the entry ✓
4. D post directly to retained earnings without analysis ✓