Which of the Following Is a Reason Why an Not-For-Profit

question 18

Multiple Choice

Which of the following is a reason why an not-for-profit organization might fail to qualify for tax-exempt status?

• A) It is operated primarily for the benefit of its members.
• B) Its officers are paid excessive wages.
• C) Its primary purpose is to promote the passage of legislation favorable to institutions of higher education.
• D) It has unrelated business income.

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account used to estimate the portion of accounts receivable that is expected not to be collected.

Bad Debts Expense

The cost associated with accounts receivable that a company is unable to collect, recognized as an expense.

Aging Analysis

An accounting process that categorizes accounts receivable based on the length of time an invoice has been outstanding.

Bad Debts

Accounts receivable that a company determines it will not be able to collect.