When recording the receipt of donated assets, the credit could be to

Question

Quizplus · Accepted Answer

When receiving a donated asset, the credit should be to Donated Capital. This account reflects the amount of contributed capital that the organization has received. Donations are considered a type of contributed capital, which means that this credit should increase the contributed capital account. The other options are not appropriate because retained earnings is typically used for profits, and gain on donations is a specific revenue account. A contra account to the asset would also not be appropriate because it would not reflect the contributed capital aspect of the donation.

When Recording the Receipt of Donated Assets, the Credit Could