Which of the Following Is True Regarding the Reporting of Expenses

question 61

Multiple Choice

Which of the following is true regarding the reporting of expenses by private sector,not-for-profit hospitals?

• A) All expenses are considered reductions in unrestricted net assets.
• B) Expenses must be reported by natural (i.e. salaries, supplies, etc.) classification in the statements.
• C) Both of the above.
• D) Neither of the above.

---

Definitions:

Residual Value

The forecasted sale price of an asset at the conclusion of its operational lifespan.

Economic Life

The period during which an asset is expected to be usable for the purpose it was acquired.

Lease Receivable

An asset account that records the amount due to be received by a lessor from a lessee under the terms of a lease agreement.

Sales-type Lease

A type of lease where the lessor recognizes immediate profit on the lease, similar to a sale, often used in equipment and vehicle financing.