Final answer:
Funds received from an external donor for the specific purpose of purchasing library books for a nongovernmental not-for-profit university would result in an increase to temporarily restricted net assets. The restriction applies until the purpose for which the funds were given has been met.
Step-by-step explanation:
When funds are received from an external donor with the stipulation that they are to be used for a specific purpose, the nature of the net assets or net position depends on the type of institution receiving the funds. For a nongovernmental not-for-profit university, such funds are typically classified as temporarily restricted net assets, indicating that the funds must be used for the purpose designated by the donor, in this case, the purchase of library books. The use of the term 'temporarily' signals that the restriction applies until the specified purpose has been fulfilled. In contrast, unrestricted net position would apply to funds that have no donor-imposed restrictions and can be used for any purpose by the institution. Permanently restricted net assets refer to funds that the donor has stipulated must be maintained indefinitely; the principal cannot be spent, although the income generated from investing the principal may be used according to the donor's instructions.
In this scenario, the funds received are for a specific temporary purpose and thus would result in an increase to option B) Temporarily restricted net assets in a nongovernmental not-for-profit university. Governmental universities follow different accounting rules and would reflect such funds in accordance with state and federal financial regulations, often in categorizations that parallel 'restricted funds' in non-governmental contexts.