Pahn, a nongovernmental not-for-profit organization, received an unconditional pledge of $50,000. The donor stipulated that the pledge must be used in the next fiscal year. Pahn received and spent the $50,000 in the next year. For the current fiscal year, what element of Pahn's statement of financial position will increase as a result of the unconditional pledge?

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Business

Dominique Ingram

23 March, 04:05

Pahn, a nongovernmental not-for-profit organization, received an unconditional pledge of $50,000. The donor stipulated that the pledge must be used in the next fiscal year. Pahn received and spent the $50,000 in the next year. For the current fiscal year, what element of Pahn's statement of financial position will increase as a result of the unconditional pledge?

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Gemma Tate · Answer 1

The element of Pahn's statement that will increase as a result of the unconditional pledge will be pledge receivables.

Explanation:

In the question it is given that Pahn (a non governmental not for profit organization) has received a unconditional pledge $50,000 from a donor, who has given the stipulation that this $50,000 must be spent in the next year, this will lead to increase in the pledge receivables.

Whenever a not for profit organizations receives a pledge, it is recorded as pledge receivables, with given donor restriction (restriction here are temporary inn nature).