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Houston Arts Alliance (HAA) is the city’s designated local arts and culture agency.

FINANCIAL LITERACY MONTH: TEST YOUR FINANCIAL LITERACY

CONTRIBUTOR: 
Houston Arts Alliance


April is Financial Literacy month. What exactly is Financial Literacy in the arts? It’s understanding financial fundamentals and how to apply them to your organization. Throughout the month of April, we’re bringing you insights on what financial literacy is, how to improve yours and resources that can help. (Read previous posts about Financial Literacy Month here.)

Today’s funders are placing more importance on financial accountability and transparency from organizations they support, yet arts organizations often struggle with understanding the full spectrum of financial responsibilities needed to run a successful business that leads to effective reporting and transparency of funds. Leadership may not recognize that the organization needs assistance or what kind of assistance they need.

Below is a sampling of questions from the Nonprofit Bookkeeping Assessment Test created by Dennis Walsh, CPA. This assessment of 21 questions can be used as a tool to assess areas of staff weakness, as well as part of the hiring process.

Sample Questions from Nonprofit Bookkeeping Assessment Test by Dennis Walsh, CPA:

Which of the following regarding the Statement of Financial Position is true?
a) It is also known as a balance sheet
b) It typically covers a one-year period
c) It includes expenses by functional category
d) Both a and b

Which of the following is included in the Statement of Activities?
a) Total fundraising expenses
b) Cash in bank
c) Cash flows from investing activities
d) None of the above

Costs of operating a vehicle for both program services and organization management should be included within which functional expense category?
a) Program services
b) Management & general
c) Allocate between program services and management & general on a reasonable basis
d) Fundraising

 

Which of the following is an example of an indirect cost that should be shared among functional expense categories?
a) Salary and benefits of the executive director who spends time on program, management, and fundraising duties
b) An information packet to be distributed to program recipients
c) Costs of producing a brochure advertising the annual fundraising dinner
d) Costs of lunch for a board meeting

Which of the following is not an example of an expense account?
a) Office supplies
b) Accounts payable
c) Depreciation
d) Bad debts

Which of the following should be charged to an expense account?
a) Purchase of a small lot for parking
b) Purchase of an office computer
c) Replacement of a paratransit van engine and transmission
d) None of the above

Which of the following sources of income are classified as a contribution (donation)?
a) A gift accompanied by restrictions as to its use
b) Program service revenue
c) Interest income
d) None of the above

The balance of loans and other liabilities are presented on which of the following financial statements?
a) Statement of cash flows
b) Statement of activities
c) Statement of financial position
d) Statement of functional expenses

To take the full assessment test, visit BlueAvocado.org.

FINANCIAL LITERACY MONTH: A RECAP

VOICES OF THE SPIRIT: REFLECTIONS

VOICES OF THE SPIRIT: REFLECTIONS