Under the deferral method, how should contributions received in the current year but restricted for operating expenses for one or more future periods be reported in the current year?
A)As revenue in the statement of operations.
B)As a direct increase to net assets.
C)As deferred revenue on the balance sheet.
D)As a reduction of operating expenses on the statement of operations.

Question

Quizplus · Accepted Answer

Contributions received in the current year but restricted for operating expenses for one or more future periods should be reported as deferred revenue on the balance sheet. This is because the organization has not yet earned the revenue and cannot use it for current operating expenses. It should be recognized as revenue in the periods in which the expenses are incurred.

Under the Deferral Method, How Should Contributions Received in the Current