A group of citizens donate their time to construct a building to ...

[Frost2351]

A group of citizens donate their time to construct a building to provide shelter for the homeless, to be run by a not-for-profit entity.
 
  In this situation, what is the applicable accounting rule for recognizing the fair value of the services on the face of the financial statements?
   a. donations that take a form other than cash should not be recognized.
   b. the fair value of contributed services should not be recognized unless the services require specialized skills, are provided by individuals who have those skills, and which the entity would need to be purchased if not donated.
   c. contributed services should be recognized at the fair value of the assets they create.
   d. donations should be recognized on the face of financial statements only for cash, securities, and other tangible assets; all other donations should be described in the notes.

Question 2

A cash purchase of supplies should be recorded in the
 a. cash receipts journal
  b. purchase journal
  c. general journal
  d. cash payments journal

[Kaytorgator]

Answer to Question 1

b

Answer to Question 2

d

[Frost2351]

Correct answers!

[Kaytorgator]

Great! Please up vote