A Donor Made an Unconditional Pledge in 2016 of

question 118

Multiple Choice

A donor made an unconditional pledge in 2016 of $ 50,000 to a private not-for-profit organization with the intent to pay the cash in 2017 for unrestricted use in 2017. The organization should:

• A) Record the pledge receivable and deferred revenue in 2016.
• B) Record the pledge as temporarily restricted revenue in 2016 and reclassify it to unrestricted in 2017.
• C) Record the pledge as unrestricted revenue in 2016.
• D) Record the pledge as temporarily restricted revenue in 2016 and reclassify it to unrestricted in 2017, but only in an amount equivalent to the amount that is spent in 2017.

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Definitions:

Public Borrowing

The process by which a government finances its expenditure by raising loans through the issuance of securities or borrowing from financial institutions.

Federal Deficit

The fiscal year difference when the U.S. Government's expenditures exceed its revenues, necessitating borrowing to cover the gap.

Real GDP

The measure of a country's economic output adjusted for inflation, reflecting the true value of goods and services produced.

Loanable Funds

A concept in economics that describes the market where borrowers obtain funds from savers, influenced by interest rates.