A Nongovernment Not-For-Profit Organization Received a Cash Donation of $100,000

question 10

Multiple Choice

A nongovernment not-for-profit organization received a cash donation of $100,000 restricted for a specific operating purpose. Only $20,000 of expenses related to the specific operating purpose was incurred during the current year. How should this activity be reported be in the statement of activities?

• A) Expenses in changes in net assets without donor restrictions, $20,000.
• B) Expenses in changes in net assets with donor restrictions, $20,000.
• C) Both revenues of $100,000 and expenses of $20,000 in changes in net assets without donor restrictions.
• D) Both expenses and net assets released from restrictions of $20,000 in changes in net assets with donor restrictions.

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Definitions:

Natural Monopoly

A market situation where a single supplier can provide a good or service more efficiently than any potential competitor, often due to high initial setup costs.

Local Phone Company

A telecommunications company that provides phone services primarily within a local or regional area.

Making a Profit

The financial gain realized when the revenue gained from a business activity exceeds the costs, expenses, and taxes involved in sustaining the activity.

Breaking Even

The point at which total costs and total revenues are equal, resulting in no net loss or gain.