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Which of the following is a general rule established by the FASB regarding contributions received by a nonprofit?

a) Contributions must be recorded as income immediately
b) Contributions must be recorded as liabilities
c) Contributions must be recorded as expenses
d) Contributions must be recorded as net assets

User Sdu
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1 Answer

4 votes

Final answer:

According to the FASB, contributions received by a nonprofit should be recorded as net assets, and may be classified as restricted if specified by the donor for future use or specific purpose. Option D is correct.

Step-by-step explanation:

The Financial Accounting Standards Board (FASB) has established a general rule regarding contributions received by a nonprofit organization. According to the FASB, contributions must be recorded as net assets. This rule is reflected in the FASB Statement No. 116, which states that contributions received should be recognized as increases in net assets in the period received, unless the donor stipulates that they are to be used in a future period or for a specific purpose. In those cases, the contributions would be classified as restricted net assets until the restrictions are met.

User Anarcat
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