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

question 40

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 reclassified on the Statement of Activities in Year Two from the Temporarily Restricted column to the Unrestricted column?

• A) $2,000.
• B) $5,000.
• C) $7,000.
• D) $10,000.
• E) $12,000.

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Definitions:

Marginal Social Benefit

The additional benefit to society from consuming one more unit of a good or service, considering both private and external benefits.

Marginal Social Cost

The additional cost to society as a whole for producing one more unit of a good or service.

Public Good

A product or service that is available for all people to consume, regardless of whether any individual pays for it or not, typically provided by the government.

Common Resource

A natural or man-made resource that is non-excludable and rivalrous, such as fish in the ocean or a public park, which can lead to overuse and depletion.