Concept Introduction:
Contribution Revenue for a not-for-profit organisation:
Revenue from contributions is the main source of income for a non-profit organisation. Contributions received can be restricted for use or can be unrestricted. Unrestricted contributions are those contributions for which user has not specified any restriction or purpose for which it should be used. Organisation can use unrestricted funds as per their discretion. Organisation should record revenue in the same year in which it received the contribution not in the year in which it spent the contribution as per donor specification.
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If the statement, ‘An organization on receiving donation in this year which it could not use till next year record it as debit to cash and credit to deferred revenue in net assets without donor restrictions, is true or false.
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- The following questions concern the appropriate accounting for a private not-for-profit health care entity. Write complete answers for each question. What is a third-party payor, and how have third-party payors affected the development of accounting principles for health care entities? What is a contractual adjustment, and how does a health care entity record this figure? How does a not-for-profit health care entity account for donated materials and services? How does a not-for-profit health care entity account for donated materials and services?arrow_forwardThe Watson Foundation, a private not-for-profit entity, starts 2020 with cash of $100,000, contributions receivable (net) of $200,000, investments of $300,000, and land, buildings, and equipment (net) of $200,000. Net assets without donor restrictions were reported as $400,000, the same figure as the net assets with donor restrictions. Of the restricted net assets, $300,000 was purpose restricted whereas the other $100,000 had to be held permanently, although the subsequently earned income is without restriction. Fifty percent of the purpose restricted net assets had to be used to help pay for a new building. The remainder was restricted to the payment of officer salaries. Donors made no stipulations about the eventual reporting of buildings and other long-lived assets when acquired. Watson has one program service (health care) and two supporting services (fundraising and administrative). During the current year, Watson Foundation has the following transactions. 1. Computed interest of…arrow_forwardHow does a voluntary health and welfare organization account for donated goods and cash contributed for operating purposes ? What types of revenues are recognized by voluntary health and welfare organizations ?arrow_forward
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