Question

Pahn, a nongovernmental not-for-profit organization, received an unconditional pledge of $50,000. The donor stipulated that the pledge must be used in the next fiscal year. Pahn received and spent the $50,000 in the next year. For the current fiscal year, what element of Pahn's statement of financial position will increase as a result of the unconditional pledge?

Answer 1

Answer:

The element of Pahn's statement that will increase as a result of the unconditional pledge will be pledge receivables.

Explanation:

In the question it is given that Pahn (a non governmental not for profit organization ) has received a unconditional pledge $50,000 from a donor , who has given the stipulation that this $50,000 must be spent in the next year, this will lead to increase in the pledge receivables.

Whenever a not for profit organizations receives a pledge , it is recorded as pledge receivables , with given donor restriction ( restriction here are temporary inn nature ).