Computer Equipment Used in the Business Office of a Not-For-Profit

question 1

Multiple Choice

Computer equipment used in the business office of a not-for-profit organization was sold for $9,000. The original cost of the equipment had been $21,000 and there was $15,000 of accumulated depreciation as of the date of sale. How will the gain be reported?

• A) Gains are not recognized in not-for-profit organizations.
• B) Gain of $3,000 in changes in net assets without donor restrictions.
• C) Gain of $3,000 in changes in net assets with donor restrictions.
• D) Net assets released from restrictions of $3,000.

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Definitions:

Price Variance

The difference between the actual cost and the standard or expected cost of an item or service.

Direct Labor-Hours

The total hours of work directly spent on producing a specific product or service.

Variable Overhead

Overhead costs that fluctuate with changes in production level or business activity, such as utilities for machinery.

Efficiency Variance

The difference between the standard cost of labor or materials for actual production and the actual cost incurred, reflecting how efficiently resources are utilized.