Question

The appropriate classification of net assets on the statement of financial position for a nongovernmental not-for-profit college or university includes the categories of:

A) Unrestricted, reserved, and permanently restricted.
B) Unrestricted, restricted, and net investment in capital assets.
C) Temporarily restricted, permanently restricted, and unrestricted.
D) Unreserved fund balance, reserved fund balance.

Answer 1

Nongovernmental not-for-profit colleges and universities classify net assets as temporarily restricted, permanently restricted, and unrestricted, based on donor-imposed restrictions.

Option 'C' is the correct.

Step-by-step explanation:

The appropriate classification of net assets on the statement of financial position for a nongovernmental not-for-profit college or university includes the categories of temporarily restricted, permanently restricted, and unrestricted.

These categories reflect the nature of donor-imposed restrictions on the use of the funds.

Temporarily restricted net assets have limitations that will expire with the passage of time or can be fulfilled by the actions of the organization, permanently restricted net assets are restricted by donors in perpetuity, and unrestricted net assets are not subject to donor-imposed stipulations and can be utilized at the discretion of the organization's management for any purpose.