State appropriations for higher education institutions are to be reported as nonoperating revenues in the Statement of Revenues,Expenses,and Changes in Net Position.

Question

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State appropriations are considered nonoperating revenues because they are not directly related to the institution's primary activities of instruction, research, and public service. Instead, they are a form of external financing intended to support the institution's mission and operations. As such, they should be reported separately in the financial statements to distinguish them from operating revenues and expenses.

State Appropriations for Higher Education Institutions Are to Be Reported