In 2016 St. Martin's Hospital received a $50,000 cash gift to be used to buy supplies and other items for the pediatric department of the hospital. In 2017, St. Martin's purchased puppets and other items to be used in explaining medical procedures to young children. The acquisition of the items causes a NET decrease in which class(es) of net assets?

Question

Quizplus · Accepted Answer

The acquisition of items designated for a specific purpose (in this case, the pediatric department) funded by a restricted gift leads to a decrease in donor restricted net assets, as the funds are being used for their intended purpose.