A Private Not-For-Profit Organization Received a Gift of $640,000 with Purpose

question 109

Multiple Choice

A private not-for-profit organization received a gift of $640,000 with purpose restrictions in 2014. In 2017 funds were expended for the purpose outlined in the gift, however, it was not possible to determine whether the restricted funds or unrestricted funds were used. The presumption should be:

• A) The restricted funds would have been used first.
• B) The unrestricted funds would have been used first.
• C) The restricted funds and unrestricted funds would have been used equally.
• D) The restricted funds and unrestricted funds would have been used, based on a weighted average of the amounts.

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Definitions:

Revenue Management

A strategic approach to selling a limited inventory of goods or services to maximize revenue, often used in airlines, hotels, and other sectors.

Expected Value

The weighted average of all possible values of a random variable, with the weights being the probabilities of occurrence.

Full-Fare Ticket

A type of airline or travel ticket that has no restrictions and is often refundable, representing the highest fare category.

Expected Value

The long-run average value of repetitions of the experiment it represents, essentially a mean of a random variable in probability and statistics.