Question

At the end of the year, the account Academic Support Expense in a nongovernmental not-for-profit college or university is closed to:

A) Net Assets—Unrestricted.
B) Net Assets—Temporarily Restricted.
C) Revenues—Tuition and Fees.
D) Net Assets—Released from Restrictions—Unrestricted.

Answer 1

Year-end Academic Support Expenses at a nongovernmental not-for-profit college or university are closed to Net Assets—Unrestricted, decreasing the net unrestricted assets on the balance sheet.

Step-by-step explanation:

At the end of the fiscal year, a nongovernmental not-for-profit college or university would typically close the account Academic Support Expense to Net Assets—Unrestricted. Year-end Academic Support Expenses at a nongovernmental not-for-profit college or university are closed to Net Assets—Unrestricted, decreasing the net unrestricted assets on the balance sheet.

This is because any expenses for the year reduce the amount of net assets that are not subject to donor-imposed restrictions. When expenses are closed out, they are offset against the net assets in the equity section of the balance sheet, which for a nonprofit organization are categorized as unrestricted, temporarily restricted, or permanently restricted.

Since Academic Support Expenses are generally operational costs, they would be closed out to the unrestricted class of net assets, assuming there are no specific donor restrictions attached to these expenses.