Make-A-Wish Foundation accepts $40,000 in donations that are donor designated to specific wish granting activities. When the resources are spent for this purpose, the statement of activities will report:

Question

Quizplus · Accepted Answer

When a nonprofit organization receives donations that are restricted by donors for specific purposes, these funds are initially recorded as an increase in net assets with donor restrictions. Once the organization spends these funds for their designated purpose, it must report the expenses and also recognize the release of net assets from restrictions. This is done by decreasing net assets with donor restrictions and increasing net assets without donor restrictions for the amount spent, reflecting that the funds have been used as intended and are no longer restricted. Therefore, the correct answer involves recognizing both the release of net assets (as a decrease in net assets with donor restrictions and an increase in net assets without donor restrictions) and the expenses incurred (as a decrease in net assets without donor restrictions).

Make-A-Wish Foundation Accepts $40,000 in Donations That Are Donor Designated