United Charities Accepted a Contribution from a Donor and Agreed

question 53

Multiple Choice

United Charities accepted a contribution from a donor and agreed to transfer the assets to Aid for Friends, a not-for-profit that provides temporary shelter to the homeless.United Charities should debit cash or other assets and credit

• A)Unrestricted revenue.
• B)Temporarily restricted revenue.
• C)Liability to Aid for Friends.
• D)United Charities should not make an entry.

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Definitions:

Activity Method

A depreciation method where the asset’s expense is based on its usage or activity level, rather than the passage of time.

Unit Cost

The cost incurred by a company to produce, store, and sell one unit of a particular product or service.

Declining-Balance Method

A method of calculating depreciation that results in larger depreciation charges in the early years of an asset's life and smaller charges later on.

Straight-Line Method

A depreciation technique where an equal amount of depreciation expense is recognized for an asset over each year of its useful life.