Question

A local CPA volunteered his time to prepare the Form 990 for an after-school development organization that serves disadvantaged children. If the services had not been donated the organization would have had to hire a CPA to prepare the return. In accordance with the FASB Codification, the value of the CPA's time devoted to helping the organization should be recorded as:

Answer 1

Answer: Support Expense

Step-by-step explanation:

FASB is financial accounting standards board

CPA is certified public accountant

CPA are certified by FASB and are therefore, able to conduct various authorized activities which also include preparing Form 990.

In the question, the local CPA had volunteered his time. If the organization had to hire a CPA then according to FASB codification the organization had to pay for his services. As the CPA would be providing them voluntary services therefore, the organization will treat this as support expense.