Question

the FASB requires that a statement showing the relationship of functional expenses to natural classifications of expense be prepared by which of the following entities?

A. Colleges and universities

B. All not- for-profit entities

C. Voluntary health and welfare entities

D. Health care entities

Answer 1

Answer:B. All not- for-profit entities

Explanation:

With FASB’s issuance of Accounting Standards Update (ASU) 2016-14, Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities, all not-for-profit entities are now required to present the relationship between functional expenses (such as major classes of program services and supporting activities) and natural expenses (such as salaries, rent, electricity, supplies, interest, and depreciation).

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