A Donated Collection Is Not Required to Be Capitalized

question 150

Multiple Choice

A donated collection is not required to be capitalized. If a government decides notto capitalize them, how will they be accounted for at the time of the donation?

• A) Debit revenue, credit expense/expenditure
• B) Debit collections, credit revenue
• C) Debit expense/expenditure, credit revenue
• D) Debit collections, credit cash

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Definitions:

Total Equity

The total net worth of a company, calculated as total assets minus total liabilities; represents the owners' claim after debts have been paid.

Profit Margin

A financial metric indicating the percentage of revenue that exceeds the costs of goods sold, demonstrating the profitability of a company.

P/E Ratio

The price-to-earnings ratio, a valuation measure comparing the current share price of a company to its per-share earnings.

Shares Outstanding

The total number of a company's shares of stock that are owned by shareholders, including those held by institutional investors and restricted shares held by company insiders.