Which of the Following Statements Related to the Accounting for Donated

question 30

Multiple Choice

Which of the following statements related to the accounting for donated goods and services for a not-for-profit (NFP) organization is true?

• A)Recording the value of donated goods and services could be useful in evaluating management performance.
• B)Recording the value of donated goods and services could result in inflated earnings.
• C)Recording the value of donated goods and services enhances stewardship reporting.
• D)Recording the value of donated goods and services is required by the CICA Handbook.

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Definitions:

Transfer of Assets

The act of transferring ownership of assets from one party to another, which can include both tangible and intangible assets.

Realized Portion

The segment of profits or losses that has been confirmed through completed transactions, such as the sale of goods or services, resulting in the actual receipt or payment of cash.

Commercial Substance

A characteristic of a business transaction where the risk, timing, or amount of future cash flows of the assets or liabilities of the entity will change as a result of the transaction.

Temporary Difference

Refers to differences between the carrying amount of an asset or liability in the balance sheet and its tax base that will result in taxable or deductible amounts in future periods.