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All expenses of a Non-profit organisation are reported as part of the changes in ___________________ net assets.
- a)Unrestricted
- b)Permanently restricted
- c)Temporarily restricted
- d)None
Correct answer is option 'B'. Can you explain this answer?
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All expenses of a Non-profit organisation are reported as part of the ...
The changes in a non-profit organization's net assets are reported under three categories: unrestricted, temporarily restricted, and permanently restricted.
Unrestricted Net Assets: This category includes all the funds that a non-profit organization has without any restrictions. These funds can be used for any purpose that the organization deems necessary.
Temporarily Restricted Net Assets: These funds are restricted for a specific purpose or time. For example, if a donor donates funds for a specific project, those funds will be considered temporarily restricted until the project is completed.
Permanently Restricted Net Assets: These funds are restricted permanently, meaning they cannot be used for any other purpose than the one specified by the donor. For example, if a donor asks that their funds be used to establish a scholarship fund, those funds will be considered permanently restricted.
In the given question, it is stated that all expenses of a non-profit organization are reported as part of the changes in permanently restricted net assets. This means that if the organization has any expenses, they must be paid from funds that are not permanently restricted. Expenses cannot be paid from funds that are restricted for a specific purpose or time.
Therefore, the correct answer is option 'B', as all expenses are not reported as part of the changes in unrestricted or temporarily restricted net assets.
Unrestricted Net Assets: This category includes all the funds that a non-profit organization has without any restrictions. These funds can be used for any purpose that the organization deems necessary.
Temporarily Restricted Net Assets: These funds are restricted for a specific purpose or time. For example, if a donor donates funds for a specific project, those funds will be considered temporarily restricted until the project is completed.
Permanently Restricted Net Assets: These funds are restricted permanently, meaning they cannot be used for any other purpose than the one specified by the donor. For example, if a donor asks that their funds be used to establish a scholarship fund, those funds will be considered permanently restricted.
In the given question, it is stated that all expenses of a non-profit organization are reported as part of the changes in permanently restricted net assets. This means that if the organization has any expenses, they must be paid from funds that are not permanently restricted. Expenses cannot be paid from funds that are restricted for a specific purpose or time.
Therefore, the correct answer is option 'B', as all expenses are not reported as part of the changes in unrestricted or temporarily restricted net assets.
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All expenses of a Non-profit organisation are reported as part of the ...
Permanently restricted
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All expenses of a Non-profit organisation are reported as part of the changes in ___________________ net assets.a)Unrestricted b)Permanently restrictedc)Temporarily restricted d)NoneCorrect answer is option 'B'. Can you explain this answer?
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