A Good Measure of Whether a Not-For-Profit Organization Is Efficient

question 17

Multiple Choice

A good measure of whether a not-for-profit organization is efficient in its fund-raising efforts is

• A)Public support as a percentage of fund-raising expenses.
• B)Current ratio.
• C)Total revenues divided by total expenses.
• D)Percentage of total expenses spent on the program function as opposed to support function.

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Definitions:

Liability

An obligation arising from past transactions or events, which may result in an outflow of resources embodying economic benefits.

Provision

An amount set aside in the accounts to cover a probable future expense or liability, recognized for known obligations of uncertain timing or amount.

Onerous Contract

A contract where the unavoidable costs of meeting the obligations exceed the economic benefits expected to be received from it.

Unavoidable Costs

Costs that cannot be eliminated, reduced, or postponed, and must be incurred regardless of specific business decisions or changes in operations.