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

question 4

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:

Consumption Function

The relationship in the economy between consumption and income, other things constant.

Saving Function

The relationship between the level of saving and the level of income, typically showing that saving increases as income increases.

Consumption Function

An economic formula that expresses the relationship between total consumption and gross national income, indicating how much households are likely to spend.

Disposable Income

Disposable income refers to the amount of money individuals or households have available to spend or save after income taxes are deducted.