A donor makes a contribution of $1 million in cash to a private NFP organization and requires that this amount be invested. The organization may use investment income for any purpose. On the organization's statement of cash flows, the $1 million donation appears in which section?

Question

Quizplus · Accepted Answer

The $1 million donation is considered a financing activity because it involves a contribution to the organization with a specified requirement for the principal amount (to be invested), distinguishing it from regular operating or investing activities. Financing activities typically include transactions related to contributions, borrowings, and repayments of principal amounts of long-term debt, which affect the organization's capital structure.

A Donor Makes a Contribution of $1 Million in Cash