CAF-1 · Chapter 13 · Question 7 of 15
An NPO receives a donation of medicines to be distributed to a community at no charge. How should this inventory be measured in the financial statements?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) At the lower of cost and current replacement cost.
Explanation
An NPO shall measure inventories at the lower of cost and current replacement cost when they are held for distribution at no charge or for a nominal charge.
More Accounting for NPOs MCQs
- Q9If an NPO decides to write off unpaid subscriptions from members who have left the club, how is this transaction recorded?
- Q10At year-end, the statement of income and expenditure shows a 'Surplus'. Where is this surplus transferred?
- Q11When an NPO uses fund accounting, how is depreciation expense treated?
- Q12An NPO sets up a specific fund strictly to contribute to the school fees of local children using a grant of Rs. 24 million. How are these…
- Q13Which of the following is typically NOT a source of income for a Non-Profit Organization?