A private not-for-profit organization received a gift of $460,000 with purpose restrictions in 2013.In 2014 funds were expended for the purpose outlined in the gift,however,it was not possible to determine whether the restricted funds or unrestricted funds were used.The presumption should be:

Question

Quizplus · Accepted Answer

Generally, when funds are restricted for a specific purpose, they should be used for that purpose before utilizing any unrestricted funds. This is known as the "first-in, first-out" method, where the restricted funds are considered to be spent first. Therefore, the presumption should be that the organization used the restricted funds first for the specified purpose in 2014.

A Private Not-For-Profit Organization Received a Gift of $460,000 with Purpose