A private not-for-profit organization received a gift of $460,000 with purpose restrictions in 2011.In 2012 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

The general accounting principle is that restricted funds are utilized before unrestricted funds. Therefore, it is presumed that the organization used the restricted funds first, and the remaining balance was covered by unrestricted funds.

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