Simplex Games, a Not-For-Profit Entity Organized to Provide Athletic Competition

question 6

Multiple Choice

Simplex Games, a not-for-profit entity organized to provide athletic competition opportunities for high school students, utilizes a number of volunteers in carrying out its mission.At the 2002 Games 50 volunteers provided a total of 1000 hours of service performing tasks such as picking up litter and delivering water to the athletes.A local CPA firm donates its services to prepare the annual tax return and other federal and state required paperwork which must be filed to maintain its status as a tax-exempt organization.During 2002 the CPA firm provided 50 hours of service.If purchased, the CPA services would have cost $50 per hour and the game workers would have cost $5 per hour.How much contributed service revenue should Simplex Games recognize in 2002?

• A)$7,500.
• B)$5,000.
• C)$2,500.
• D)$0.

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Definitions:

Liberal Credit Terms

Credit conditions that are more favorable to the borrower, such as longer repayment periods or lower interest rates.

Operating Cycle

The duration between the acquisition of inventory by a business and the receipt of cash from accounts receivable, indicating how quickly a company turns its product into cash.

Carrying Cost

The total cost of holding inventory, including storage, insurance, and spoilage costs.