Not-for-profits are required to report expense amounts by natural classification and functional classification.

Question

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Not-for-profits are required to report expenses based on both natural classification (such as salaries, supplies, rent, utilities) and functional classification (such as program services, fundraising, management and general). This is in accordance with the Financial Accounting Standards Board (FASB) regulations for not-for-profit organizations.

Not-For-Profits Are Required to Report Expense Amounts by Natural Classification