Native Art Museum, a Not-For-Profit Entity That Elects Not to Capitalize

question 38

Multiple Choice

Native Art Museum, a not-for-profit entity that elects not to capitalize its collection items, purchased for $10,000 a wonderful totem pole for display near the door of the museum. As a result of this transaction, which of the following entries should be made?

• A) Debit Collection items $10,000; Credit Cash $10,000.
• B) Debit Collection expense $10,000; Credit Cash $10,000.
• C) Debit Unrestricted net assets $10,000; Credit Cash $10,000.
• D) No entry is required.

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