Which of the Following Statements Related to Accounting for Donated

question 35

Multiple Choice

Which of the following statements related to 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:

Direct Materials

Raw materials that are directly traceable to the production of specific goods.

Factory Overhead

All indirect manufacturing costs, including costs related to running the factory that cannot be directly tied to a specific product.

Prime Costs

The combination of direct material and direct labor costs that are directly involved in manufacturing a product.

Direct Labor

The work of factory employees that can be easily traced to the production of specific goods or services.