When a Not-For-Profit Organization Uses the Deferred Contribution Method of Revenue

question 52

Multiple Choice

When a not-for-profit organization uses the deferred contribution method of revenue recognition and receives a donation restricted to the purchase of land, when should the donation be recognized as revenue?

• A) When the cash is received.
• B) When the land is purchased.
• C) When the land is put into service by the organization.
• D)It should not be recognized as revenue at all.

---

Definitions:

Operating Expenses

The costs associated with a company's main operational activities, excluding the cost of goods sold, interest, and taxes.

Income from Operations

The earnings generated from a company's core business operations, excluding any income from investments or other non-operational sources.

Net Sales

Revenue from sales after deducting returns, allowances for damaged goods, and discounts.

Income Before Taxes

Earnings of a company before income tax expense is deducted, indicating its profitability from operations.