Question

A NFP organization classifies bal. in its statement of financial position as

A. Income, expenses, and equity
B. Revenue, expenses, and equity
C. Assets, liabilities, and net assets
D. Assets, expenses, and net assets

Answer 1

A NFP organization classifies bal. in its statement of financial position as C. assets, liabilities, and net assets.

Step-by-step explanation:

The correct classification of balances in a NFP (not-for-profit) organization's statement of financial position is option C. Assets, liabilities, and net assets.

An NFP organization's balance sheet consists of three main components:

1. Assets: These are the resources owned by the organization, such as cash, buildings, equipment, and investments. They represent the economic value of the organization.
2. Liabilities: These are the debts or obligations of the organization, such as loans, accounts payable, and accrued expenses.
3. Net assets: This is the difference between the organization's assets and liabilities. It represents the organization's residual interest in its assets after deducting its liabilities. Net assets can be classified into three categories: unrestricted, temporarily restricted, and permanently restricted.

By classifying balances in its statement of financial position as assets, liabilities, and net assets, the NFP organization provides a clear and accurate representation of its financial position.