The Following Gifts Are Received in Year One by a Not-For-Profit

question 25

Multiple Choice

The following gifts are received in Year One by a not-for-profit organization:
I. $2,000 specified by the donor to be used to pay salaries.
II. $10,000 for new conference room furniture.
III. $5,000 to be held for one year before being expended.
The salaries are paid in Year Two and the conference room furniture is purchased in Year One.
How much should be shown as increases as Temporarily Restricted Net Assets in Year One?

• A) $2,000
• B) $7,000
• C) $12,000
• D) $15,000
• E) $17,000

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Definitions:

Total Costs

The aggregate amount of all expenses associated with the production of a good or service, including both fixed and variable costs.

Implicit Costs

These are the costs of using resources owned by the company for production that aren't directly paid for or incurred as a clear expense.

Explicit Costs

Direct payments made to others in the course of running a business, such as wages, rent, and materials.

Normal Rate

The normal rate often refers to a baseline or average level of interest or return expected on an investment or loan in economics and finance.