Question

Which of the following is a condition that must be met for contributed services to a not-for-profit organization (NFP) to be recorded as both a contribution and as an expense?

1) The services create or enhance nonfinancial assets.
2) The services are provided by an individual with specialized skills.
3) The services are provided by a volunteer.
4) The services are provided by a board member.

Answer 1

The condition that must be met for contributed services to be recorded as both a contribution and an expense for a not-for-profit organization is that the services must create or enhance nonfinancial assets.

Step-by-step explanation:

In order for contributed services to a not-for-profit organization (NFP) to be recorded as both a contribution and as an expense, the condition that must be met is that the services create or enhance nonfinancial assets. This means that the services provided should add value to the organization's nonfinancial resources or assets, such as buildings, equipment, or intellectual property.

For example, if a volunteer architect donates their services to design and build a new community center for a NFP organization, the value of their services can be recorded as both a contribution and an expense because it is creating or enhancing a nonfinancial asset (the community center).

Answer 2

The condition that must be met for contributed services to a not-for-profit organization (NFP) to be recorded as both a contribution and as an expense is that the services create or enhance nonfinancial assets. Therefore, option 1 is the correct answer.

Step-by-step explanation:

In order for contributed services to a not-for-profit organization (NFP) to be recorded as both a contribution and as an expense, the condition that must be met is that the services create or enhance nonfinancial assets.

Contributed services provided by an individual with specialized skills or a volunteer may be recorded as a contribution, but it won't be recorded as an expense unless it creates or enhances nonfinancial assets.

Therefore, option 1 is the correct answer.