According to the FASB Codification, Which of the Following Is

question 18

Multiple Choice

According to the FASB Codification, which of the following is a condition that must be met for contributed services to a not-for-profit organization (NFP) to be recorded as both a contribution and as an expense?

• A) The service creates or enhances nonfinancial assets, such as a carpenter renovating a building.
• B) The service requires a specialized skill and is provided by someone who possesses the specialized skill, such as a lawyer preparing contracts.
• C) The service supplements the management function, such as an auditor preparing a program audit, which is not normally done.
• D) All of the given conditions must be met for contributed services to be recognized as a contribution and an expense.

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Definitions:

Receivables Factoring

The process of selling a business's accounts receivable to a third party at a discount to quickly generate cash.

Bad Debts

Financial amounts owed to a company that are unlikely to be paid by debtors, often recognized as an expense on the company's income statement.

Discounted Amount

The present value of a future sum of money or stream of cash flows given a specific rate, reflecting the time value of money.

Shortage Costs

Shortage Costs are the costs incurred when demand exceeds supply, including lost sales, backorder costs, and potential deterioration of customer satisfaction.