How Does the FASB Require Not-For-Profit Organizations to Report Expenses

question 1

Multiple Choice

How does the FASB require not-for-profit organizations to report expenses?

• A) Natural classification, such as salaries, rent, and supplies.
• B) Functional classification, such as program and support.
• C) Management has the option of reporting using natural classification or functional classification.
• D) Both natural classification and functional classification must be reported.

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Definitions:

Future Value

The predicted amount of money that an investment will grow to at a specified future date, based on an assumed rate of growth.

Interest Rate

A lender's price to a borrower for the asset's usage, quantified as a percentage of the main sum.

Cash Flows

The movement of funds in and out of a business, determining its operating, investing, and financing activities' liquidity.

Lottery Prize

A financial reward won in a lottery, typically involving a large cash sum or valuable goods.