Question

During the past year, registered nurses volunteered numerous hours at the Community Health Assistance Agency, a nongovernmental NFP. The nurses provided immunizations to infants and children from disadvantaged families, as well as other health-related services. Without the volunteered services, it would have been necessary for the agency to hire registered nurses to perform these tasks. The journal entry to record these volunteer services will include?

A) No journal entry is required for contributed services.
B) A debit to program expenses.
C) A credit to contributed revenues.
D) Both B and C.

Answer 1

The nonprofit health organization should record the volunteer services as both a debit to program expenses and a credit to contributed revenues since these volunteered nursing services provided a measurable economic benefit.

Step-by-step explanation:

The journal entry to record the volunteer services provided by registered nurses at a nonprofit health organization like the Community Health Assistance Agency would include both a debit to program expenses and a credit to contributed revenues. This is because the services provided by the volunteers would have otherwise required the organization to incur costs to hire professionals to perform these tasks. The value of these services can be measured and would be recognized in the financial statements of the nonprofit organization.

Such volunteered services are recognized since they create or add value to the assets of the organization or require specialized skills, provided by individuals possessing those skills, and would typically need to be purchased if not provided by donation. This accounting treatment reflects the economic benefit the nonprofit received from the nurses' volunteer labor, which is a key component of human capital.