Author Question: If a business records revenue when it is received and records the purchase of a building as an asset ... (Read 42 times)

Caiter2013 · **on:** Jul 5, 2018

If a business records revenue when it is received and records the purchase of a building as an asset and makes adjustments to allocate the cost of the building over many accounting periods, the business accounting system is a(n)
a. accrual basis of accounting.
b. adjustment basis of accounting.
c. cash basis of accounting.
d. modified cash basis of accounting.

Question 2

A not-for-profit arts organization receives a 300,000 gift from a donor who specifies that the gift must be maintained in perpetuity, and the income from the gift is to be used only to take disabled persons to the theater.

The entity derives 20,000 from investing the gift, but has not spent it by year-end. How should the entity report the 20,000 of resources in the net asset section of its statement of financial position?
a. as unrestricted
b. as temporarily restricted
c. as permanently restricted
d. as permanently restricted, with a note describing how the resources will be used