[DZagt]

NINJA Question –

A donor gives $10,000 to a nongovernmental, not-for-profit organization with instructions that it must be used to fund the organization’s general operating expenses during the following fiscal year. The donation will increase the organization’s:

A.

unrestricted net assets.

B.

temporarily restricted net assets.

C.

restricted net assets.

D.

restricted retained earnings.

(Correct answer is C, I chose B.)

“Only restrictions imposed by donors or grantors are considered restrictions in accounting for not-for-profit organizations. Donor and grantor restrictions may be time restrictions or use restrictions. Restrictions that can be satisfied by the passage of time or by the use of resources for a certain purpose (to finance expenses of a specific program or to construct a building, for example) are called temporary restrictions. Since the donor’s instructions will be satisfied in the following year, the donation is considered a time-restricted donation, and is classified as restricted net assets.”

It seems like its saying one thing in one sentence and another thing in the next. Wouldn’t the yearlong waiting period classify it as passage of time?

[Biff-1955-Tannen]

lol… I'll definitely be checking back in on this thread. I agree with you.

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

99% Ninja MCQ only

[EuroAddict]

I took FAR a year ago so I forget BUT is there a time consideration b/w temporary and restricted? Meaning it can only be temporary if used w/in that fiscal year and if it is intended for the following fiscal year, like this example, it must be classified as restricted.

-----------------------------
BEC - 77, 03/2015 (first try)
FAR - 79, 05/2015 (second try)
REG - 83, 12/2015 (first try)
AUD - 84, 03/2015 (first try)

I got 99 problems but the CPA ain't one.

[Biff-1955-Tannen]

@ EuroAddict, I don't think there is. I remember another problem that was temporarily restricted with 20 years

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

99% Ninja MCQ only

[DZagt]

Biff I know exactly what question you're talking about. That one is temp restricted.

[jeff]

Good catch – it's B ~ we're fixing this one.

[DZagt]

Ha! I knew I wasn't crazy! My test is tomorrow and this shook the foundation of everything I thought I knew lol.

[Author]

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