A government establishes a Permanent Fund to account for a donation. The earnings from the donation are to be used to purchase books for the library but the donated amount must be maintained intact. How should the donation be reported in the Permanent Fund statement of revenues, expenditures and changes in fund balance?

Question

Quizplus · Accepted Answer

The donation should be reported as Revenue in the Permanent Fund statement of revenues, expenditures, and changes in fund balance because it represents an inflow of resources that the fund will use according to the specified purpose, which in this case is to purchase books for the library while maintaining the donated amount intact.

A Government Establishes a Permanent Fund to Account for a Donation