On the last day of the accounting period, a donor makes a permanently restricted

Question

On the last day of the accounting period, a donor makes a permanently restricted donation of $1 million. How would this transaction affect the financial statements that will be prepared (vis-a-vis last period's statements)?
A. the balance sheet would be affected, and the statement of operations would be unaffected.
B. The balance sheet would be unaffected, and the statement of operations would be affected.
C. Both the balance sheet and the statement of operations would be affected
D. There would be no effect on either the balance sheet or statement of operation

Explanation / Answer

If $1 million is added at the end of the accounting period, the balance sheet would be affected and the statement of operations would be unaffected because this donation would cause cash inflow which results in increase in cash account and increase in stockholder's equity. Therefore, the correct option is (A)

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