What are the three categories of net assets required by the FASB in reporting a not-for-profit organization?

Question

Quizplus · Accepted Answer

The FASB requires not-for-profit organizations to report their net assets in three categories: unrestricted, temporarily restricted, and permanently restricted. Unrestricted net assets are those that are not subject to donor-imposed restrictions, while temporarily restricted net assets are subject to donor-imposed restrictions that will expire over time or when certain conditions are met. Permanently restricted net assets are subject to donor-imposed restrictions that will never expire. This three-category reporting system provides transparency and accountability for the organization's financial activities and helps stakeholders understand how the organization is using its resources.

What Are the Three Categories of Net Assets Required by the FASB