ExpertEasy1 markMultiple Choice
CPA · Question 17 · Area I: Financial Reporting
A nongovernmental not-for-profit entity incurs the following expenses:<br/>- Counseling services provided to indigent patients: $100,000<br/>- Fundraising mail campaign: $20,000<br/>- Management and general administrative staff salaries: $30,000<br/>- Cost of pharmacy drugs sold to patients: $50,000<br/><br/>What amount should be reported as Program Services expenses?
A nongovernmental not-for-profit entity incurs the following expenses:<br/>- Counseling services provided to indigent patients: $100,000<br/>- Fundraising mail campaign: $20,000<br/>- Management and general administrative staff salaries: $30,000<br/>- Cost of pharmacy drugs sold to patients: $50,000<br/><br/>What amount should be reported as Program Services expenses?
Answer options:
A.
$100,000
B.
$120,000
C.
$180,000
D.
$150,000
How to approach this question
Classify expenses into Program Services (mission-related) vs. Support Services (Fundraising, Management & General).
Full Answer
D.$150,000✓ Correct
Program Services:<br/>- Counseling: $100,000<br/>- Pharmacy drugs: $50,000<br/>Total: $150,000.<br/><br/>Support Services:<br/>- Fundraising: $20,000<br/>- Management/General: $30,000
Common mistakes
Including fundraising or admin costs in program services.
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