Question

A not-for-profit organization maintains an endowment of $1 million, the income from which must be used for research into substance abuse. In a particular year, the endowment had income of $60,000, all of which was expended in accord with the donor’s specifications. The expense should be reported as a decrease in

		It is not recorded because it is not an expense
		Net assets with donor restrictions
		Net assets without donor restrictions
		None of the answers

Answer 1

The expense should be reported as a decrease in the unrestricted net assets as all the expenses are not restricted.

The other name of unrestricted net assets is "Net Assets without donor restrictions" is the correct option.

Option "It is not recorded because it is not an expense" is incorrect option, as is is an expense.

Option "Net assets with donor restrictions" is incorrect as there is no restrictions

Option "None of the answers" is incorrect, as option "Net Assets without donor restrictions" is the correct option.

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