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

question 26

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 unrestricted net assets, $20,000.
• B) Expenses in changes in temporarily restricted net assets, $20,000.
• C) Net assets released from restrictions in the permanently restricted assets, $20,000.
• D) Expenses and net assets released from restriction in temporarily restricted net assets, $20,000.

Understand the concept of marginal private and social benefits and costs.

Identify the role of government intervention in correcting market failures due to externalities.

Explain how taxes, subsidies, and other policy measures can be used to achieve socially optimal levels of production and consumption.

Describe network externalities and their impact on market outcomes.

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Definitions:

Total Assets

The sum of all assets owned by an entity, including both current and non-current assets, reflecting the total resources at its disposal.

Fixed Asset Turnover

A financial ratio that measures a company's efficiency in using its fixed assets to generate sales.

Net Fixed Assets

The value of a company's property, plant, and equipment minus depreciation, indicating the tangible assets used in operations.

Receivables Turnover

A ratio that measures a company's efficiency in collecting its sales on credit over a period of time.