Nonprofit Accounting MCQs 2026

Direct material in accounting refers to

1. Amaterial traceable to a product✓
2. Bdirect material plus direct labour✓
3. Ccosting for distinct jobs or orders✓
4. Ddepartment or unit where costs accumulate✓

Direct labour in accounting refers to

1. Adirect labour plus manufacturing overhead✓
2. Bcosting for continuous homogeneous output✓
3. Callocating overhead to products using basis✓
4. Dlabour traceable to a product✓

Manufacturing overhead in accounting refers to

1. Aindirect factory costs✓
2. Bcosting for distinct jobs or orders✓
3. Cdepartment or unit where costs accumulate✓
4. Dpredetermined cost for control purposes✓

Prime cost in accounting refers to

1. Adirect material plus direct labour✓
2. Bcosting for continuous homogeneous output✓
3. Callocating overhead to products using basis✓
4. Dmaterial traceable to a product✓

Conversion cost in accounting refers to

1. Adepartment or unit where costs accumulate✓
2. Bpredetermined cost for control purposes✓
3. Cdirect labour plus manufacturing overhead✓
4. Dlabour traceable to a product✓

Job costing in accounting refers to

1. Aallocating overhead to products using basis✓
2. Bmaterial traceable to a product✓
3. Cindirect factory costs✓
4. Dcosting for distinct jobs or orders✓

Process costing in accounting refers to

1. Apredetermined cost for control purposes✓
2. Blabour traceable to a product✓
3. Ccosting for continuous homogeneous output✓
4. Ddirect material plus direct labour✓

Cost center in accounting refers to

1. Amaterial traceable to a product✓
2. Bdepartment or unit where costs accumulate✓
3. Cindirect factory costs✓
4. Ddirect labour plus manufacturing overhead✓

Overhead absorption in accounting refers to

1. Alabour traceable to a product✓
2. Bdirect material plus direct labour✓
3. Callocating overhead to products using basis✓
4. Dcosting for distinct jobs or orders✓

Standard cost in accounting refers to

1. Aindirect factory costs✓
2. Bdirect labour plus manufacturing overhead✓
3. Ccosting for continuous homogeneous output✓
4. Dpredetermined cost for control purposes✓

Nonprofit entity in accounting refers to

1. Acapital contributions without expectation of return✓
2. Bprogram costs divided by total expenses✓
3. Corganization not operated for profit distribution✓
4. Dnet assets in a particular fund✓

Restricted fund in accounting refers to

1. Aresources limited to specific donor purpose✓
2. Bpermanently restricted invested funds✓
3. Crecognizing grant when conditions met✓
4. Dexpenses grouped by program, admin, fundraising✓

Unrestricted fund in accounting refers to

1. Aprogram costs divided by total expenses✓
2. Bnet assets in a particular fund✓
3. Cresources available for general mission use✓
4. Dmission-driven objective of NPO✓

Donated capital in accounting refers to

1. Arecognizing grant when conditions met✓
2. Bexpenses grouped by program, admin, fundraising✓
3. Ccapital contributions without expectation of return✓
4. Dorganization not operated for profit distribution✓

Endowment in accounting refers to

1. Anet assets in a particular fund✓
2. Bmission-driven objective of NPO✓
3. Cresources limited to specific donor purpose✓
4. Dpermanently restricted invested funds✓

Program expense ratio in accounting refers to

1. Aprogram costs divided by total expenses✓
2. Bexpenses grouped by program, admin, fundraising✓
3. Corganization not operated for profit distribution✓
4. Dresources available for general mission use✓

Grant revenue recognition in accounting refers to

1. Amission-driven objective of NPO✓
2. Brecognizing grant when conditions met✓
3. Cresources limited to specific donor purpose✓
4. Dcapital contributions without expectation of return✓

Fund balance in accounting refers to

1. Aorganization not operated for profit distribution✓
2. Bresources available for general mission use✓
3. Cpermanently restricted invested funds✓
4. Dnet assets in a particular fund✓

Functional expense classification in accounting refers to

1. Aresources limited to specific donor purpose✓
2. Bexpenses grouped by program, admin, fundraising✓
3. Ccapital contributions without expectation of return✓
4. Dprogram costs divided by total expenses✓

Charitable purpose in accounting refers to

1. Aresources available for general mission use✓
2. Bpermanently restricted invested funds✓
3. Crecognizing grant when conditions met✓
4. Dmission-driven objective of NPO✓

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

1. Aignore the transaction until next fiscal year✓
2. Bdebit and credit both affected so the equation stays balanced✓
3. Crecord only one side of the entry✓
4. Dpost directly to retained earnings without analysis✓