Question

Expenses are always reported as reductions of:

A) Unrestricted net assets.
B) Unrestricted, temporarily restricted, or permanently restricted net assets.
C) Either unrestricted or temporarily restricted net assets, but never permanently restricted net assets.
D) None of the above.

Answer 1

Expenses in non-profit accounting can be reported as reductions of all three classifications of net assets: unrestricted, temporarily restricted, or permanently restricted. Thus, the correct answer is unrestricted, temporarily restricted, or permanently restricted net assets.

Step-by-step explanation:

The question you asked relates to non-profit accounting, specifically the classification of expenses related to the types of net assets. When dealing with expenses, they are typically reported as reductions of net assets. According to non-profit accounting standards, expenses can reduce any of the three classifications of net assets: unrestricted, temporarily restricted, or permanently restricted net assets. Therefore, the correct answer to your question is:

• Expenses are always reported as reductions of unrestricted, temporarily restricted, or permanently restricted net assets.

This means that all types of net assets are subject to reduction from expenses incurred by the non-profit organization.