In the Current Year National Pet Charities, Which Uses Fund-Type

question 2

Multiple Choice

In the current year National Pet Charities, which uses fund-type accounting to maintain its books and records, received a $30,000 contribution to help educate people on responsible pet ownership. During the current year, the entry to record this donation is

• A) UNRESTRICTED FUND. No entry. RESTRICTED FUND. Debit Cash $30,000; Credit Revenues $30,000.
• B) UNRESTRICTED FUND. No entry. RESTRICTED FUND. Debit Cash $30,000; Credit Net assets $30,000.
• C) UNRESTICTED FUND. Debit Cash $30,000; Credit Revenues $30,000. RESTRICTED FUND. No entry.
• D) UNRESTRICTED FUND. Debit Cash $30,000; Credit Net assets $30,000. RESTRICTED FUND. No entry.

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Definitions:

Percentage Depletion

A tax deduction method that allows an owner or operator of a mine or other natural resources to deduct a percentage of the resource's value as it is depleted.

Asset/Liability Method

An approach in accounting where income taxes are adjusted based on the differences between the financial reporting and tax bases of assets and liabilities.

Interperiod Tax Allocation

The process of apportioning income tax expenses between different accounting periods to match tax expense with the revenue that generated the tax.

Intraperiod Tax Allocation

The process of allocating income taxes within a single financial reporting period among different items that directly affect reported net income or loss.