Question

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Select from the option list provided the most likely classification(s) of net assets, if any, that are affected by each transaction of a not-for-profit entity. The entity reports the minimum required classes of net assets. Each choice may be used once, more than once, or not at all.

Transaction	Answer
1. Legally restricted gains.
2. Expenses reported by functional classification.
3. Contributions of services that do not create or enhance nonfinancial assets or require special skills.
4. Costs of collection items not capitalized by the NFP.
5. Board-designated endowment.
6. Expenses reported by natural classification.
7. Conditional promise to give if the barrier has not been overcome.
8. Unconditional promises to give cash with amounts due in future periods.
9. Receipt of a gift restricted to acquisition of a long-lived asset that has been placed in service. The entity chooses to imply a time restriction over the life of the asset.
10. Investment return on a donor-restricted perpetual endowment fund with no donor restriction on the investment return, which has not been appropriated by the governing board.
11. Losses on an underwater endowment fund.

Answer 1