Contributions to a Hospital [AICPA Adapted]
Alpha Hospital, a large not-for-profit organization, has adopted an accounting policy that does not imply a time restriction on gifts of long-lived assets.
Required
For items 1 through 6, indicate the effect of the transaction on Alpha’s financial statements by selecting the appropriate letter.
| Transactions |
| Effect |
1. | Alpha’s board designates $1,000,000 to purchase | A. | Increase in unrestricted revenues, |
| investments whose income will be used for capital |
| gains, and other support |
| improvements. | B. | Decrease in expense |
2. | Income from investments in item 1, which was not | C. | Increase in temporarily restricted |
| previously accrued, is received. |
| net assets |
3. | A benefactor provides funds for a building expansion. | D. | Increase in permanently restricted |
4. | The funds in item 3 are used to purchase a building |
| net assets |
| in the fiscal period following the period the funds | E. | No required reportable event |
| were received. |
| |
5. | An accounting firm prepares Alpha’s annual |
|
|
| financial statements without charge to Alpha. |
|
|
6. | Alpha receives investments subject to the donor’s |
|
|
| requirement that investment income be used to pay |
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| for outpatient services. |
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