Question

The governing board of a private not-for-profit entity votes to set $400,000 in cash aside in an investment fund so that this money and future interest will be available in five years, when a new building is scheduled for construction. Which of the following is not true?

a. The investments are reported on the statement of financial position as net assets without donor restrictions,
b. The acquisition of the investments is not reported on the statement of activities.
c. Board-designated funds will appear in the net asset section of the week of not as net assets with donor restrictions
d. Income earned by these investments appears on the statement of activities under the out donor restrictions.

Answer 1

Answer: C. Board-designated funds will appear in the net asset section of the statement of financial position as net assets with donor restrictions

Step-by-step explanation:

Following the information given in the question, the investments will be reported on the statement of financial position as net assets without donor restrictions.

It should also be noted that the acquisition of the investments is not reported on the statement of activities. The income that is earned by these investments will also appear on the statement of activities under the out donor restrictions.

The statement that the board-designated funds will appear in the net asset section of the week of not as net assets with donor restrictions is not true.