Sydney Won a Lottery and Made a $500,000 Endowment Contribution

question 36

Multiple Choice

Sydney won a lottery and made a $500,000 endowment contribution to his alma mater to provide scholarships. Under the deferral method, in the year of contribution, the university should recognize the contribution as which of the following?

• A)Unrestricted revenue
• B)Restricted revenue
• C)Deferred revenue
• D)An increase to net assets

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Definitions:

Assets And Equity

Refers to the components of a company's balance sheet: assets represent what the company owns, and equity represents the owner's claims against those assets.

Balance Sheet Impact

Represents the effect of transactions and events on the financial position of a business as shown in its balance sheet.

Perpetual FIFO

A perpetual inventory system that continuously updates inventory records, using the "First In, First Out" method to determine the cost of goods sold and inventory valuation.

Ending Inventory

The final value of goods available for sale at the end of an accounting period.