A donor contributed $100,000 in cash to Goodwill Industries in 2020. The donor specified that the contribution be held as a permanent endowment, and income from investment of the contribution be used for job training programs. Goodwill Industries invested the $100,000 in securities in 2020. During 2021, investment income of $3,000 was received in cash, and $2,500 was used for job training programs. How does Goodwill Industries report this on its 2021 statement of activities? Select one: A. $3,000 investment income increases net assets without donor restrictions; $2,500 expense decreases net assets without donor restrictions. B. $3,000 investment income increases net assets with donor restrictions; $2,500 net assets released from use restrictions decreases net assets with donor restrictions and increases net assets without donor restrictions; $2,500 expense reduces net assets without donor restrictions. C. $3,000 investment income increases net assets without donor restrictions; $2,500 expense reduces net assets with donor restrictions. D. $3,000 investment income increases net assets with donor restrictions; $3,000 net assets released from use restrictions decreases net assets with donor restrictions and increases net assets without donor restrictions; $2,500 expense reduces net assets without donor restrictions.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. A donor contributed $100,000 in cash to Goodwill Industries in 2020. The donor specified that the contribution be held as a permanent endowment, and income from investment of the contribution be used for job training programs. Goodwill Industries invested the $100,000 in securities in 2020. During 2021, investment income of $3,000 was received in cash, and $2,500 was used for job training programs.

How does Goodwill Industries report this on its 2021 statement of activities?

Select one:

A. $3,000 investment income increases net assets without donor restrictions; $2,500 expense decreases net assets without donor restrictions.

B. $3,000 investment income increases net assets with donor restrictions; $2,500 net assets released from use restrictions decreases net assets with donor restrictions and increases net assets without donor restrictions; $2,500 expense reduces net assets without donor restrictions.

C. $3,000 investment income increases net assets without donor restrictions; $2,500 expense reduces net assets with donor restrictions.

D. $3,000 investment income increases net assets with donor restrictions; $3,000 net assets released from use restrictions decreases net assets with donor restrictions and increases net assets without donor restrictions; $2,500 expense reduces net assets without donor restrictions.

2. Private NFP organizations report their financial results using what basis of accounting?

Select one:

A. full accrual basis

B. modified accrual basis

C. fund basis

D. cash basis

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