Landon College, a private college, received a $1 million donation.The donor specified that the principal of her gift could never be used for program activities, but the earnings on the principal must be used to provide scholarships to academically qualified students in the business school.The $1 million gift would increase which of the following categories of net assets?

Question

Quizplus · Accepted Answer

The donor has specified that the principal of her gift can never be used for program activities, so it is permanently restricted. The earnings on the principal can only be used for scholarships in the business school, so it is also permanently restricted. Therefore, the gift increases the permanently restricted net assets of the college.

Landon College, a Private College, Received a $1 Million Donation