ExpertHard1 markMultiple Choice
CPA · Question 41 · Area 3: Select Transactions
A CPA volunteers to audit the books of a local charity. The work would typically cost $5,000. The charity also had volunteers serve meals, valued at $2,000. What amount of contribution revenue should be recognized?
A CPA volunteers to audit the books of a local charity. The work would typically cost $5,000. The charity also had volunteers serve meals, valued at $2,000. What amount of contribution revenue should be recognized?
Answer options:
A.
$7,000
B.
$0
C.
$5,000
D.
$2,000
How to approach this question
SOME criteria: Specialized skills, Otherwise needed, Measured Easily. Or creates non-financial asset. CPA = Yes. Serving meals = No.
Full Answer
C.$5,000✓ Correct
C
The audit services require specialized skills, were provided by a CPA, and would typically need to be purchased. Thus, $5,000 is recognized. General volunteer work (serving meals) is not recognized.
Common mistakes
Recognizing all volunteer hours.
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