On December 1, 2016, a College Received a Pledge of Support

question 40

Multiple Choice

On December 1, 2016, a college received a pledge of support for the general endowment. Which of the following is true with respect to this pledge??

• A) The contribution will be recognized as revenue in 2016 if the college is a public institution.
• B) The contribution will be recognized as revenue in 2016 if the college is a private institution.
• C) Both A and B are true
• D) Neither A nor B are true

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Definitions:

Net Income

The amount of profit left over, after all expenses and taxes have been subtracted from total revenue.

Tax Expense

Tax Expense is the total amount of taxes owed by an individual or corporation to the federal, state, and local government, reflecting in the financial statements of the period in which the tax is accrued.

Premium Amortization

The systematic reduction of a premium paid above the par value of a bond, allocated over the bond's life until maturity.

Bond Amortization Schedule

A schedule that details the reduction of a bond's principal amount over time, often including payments of both principal and interest.