Mr Generous Donated $100,000 to Excel Private School and Specified

question 29

Multiple Choice

Mr. Generous donated $100,000 to Excel Private School and specified that the principal amount not be spent but be maintained permanently. Interest on the invested funds can be used to award scholarships to those who excel in drama. How should the $100,000 contribution be presented on Excel Private School's financial statements?

• A)As a direct increase in net assets of the endowment fund
• B)As revenue of the operating fund
• C)As revenue of the endowment fund
• D)As deferred revenue of the operating fund

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Definitions:

Machine Hours

A measure of the amount of time a machine is operated during a given period, used as a basis for allocating manufacturing overhead.

Overhead Rate

The ratio used to allocate indirect costs to products or services, based on a specific base such as labor hours or machine hours.

Work In Process Account

A financial account used to track the costs associated with the production of goods that are not yet completed.

Two Stage Production

A production process divided into two distinct phases, each with its set of operations or focus areas, to complete the manufacture of a product or service.