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20 July, 21:47

Belle, a nongovernmental not for profit organization, received funds during its annual campaign that were specifically pledged by the donor to another nongovernmental not for profit health organization. How should Belle record these funds

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  1. 20 July, 22:06
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    Answer: First, we will add the options:

    A. Increase in assets and increase in liabilities.

    B. Increase in assets and increase in revenue.

    C. Increase in assets and increase in deferred revenue.

    D. Decrease in assets and decrease in fund balance.

    Correct option is A.

    Explanation: This is because Belle is acting as an intermediary in this scenario, therefore it the donation will initially be recorded as an asset, because it is a plus for the company.

    However, we must not forget what the purpose of this donation is for, which is meant to be given to a nongovernmental not for profit health organization.

    Therefore be this would also be recorded as a liability because Belle is owing the not for profit health organization.
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