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

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GAAP requires not-for-profit organizations to report their net assets in three categories: Unrestricted, Temporarily Restricted, and Permanently Restricted. This is done to provide stakeholders with a clear understanding of how the organization's assets are being utilized and whether any restrictions are in place. Unrestricted net assets can be used for any purpose, while temporarily restricted net assets are subject to donor-imposed restrictions that will expire over time. Permanently restricted net assets are subject to donor-imposed restrictions that will never expire.

What Are the Three Categories of Net Assets Required by GAAP