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Simplex Games, a Not-For-Profit Entity Organized to Provide Athletic Competition

question 24

Multiple Choice

Simplex Games, a not-for-profit entity organized to provide athletic competition opportunities for high school students, utilizes a number of volunteers in carrying out its mission. At the 2017 Games 50 volunteers provided a total of 1,000 hours of service performing tasks such as picking up litter and delivering water to the athletes. A local CPA firm donates its services to prepare the annual tax return and other federal and state required paperwork which must be filed to maintain its status as a tax-exempt organization. During 2017 the CPA firm provided 50 hours of service. If purchased, the CPA services would have cost $60 per hour and the game workers would have cost $6 per hour. How much contributed service revenue should Simplex Games recognize in 2017?

Definitions:

Not-for-profit Organization

An organization that operates for purposes other than generating profit, typically focusing on social, educational, or charitable objectives.

Endowment Contribution

A donation made to an organization, often a nonprofit or educational institution, with the stipulation that the principal amount is to be kept intact while the investment income generated is used for specific purposes.

Unrestricted Contribution

Donations made to a not-for-profit organization without specified restrictions, allowing the organization to use the funds for any purpose.

Operating Contribution

The portion of revenue that remains after variable expenses are subtracted, indicating how much contributes to covering fixed costs and generating profit.