A Not-For-Profit University Uses Fund Accounting

question 30

Multiple Choice

A not-for-profit university uses fund accounting.It maintains a Loan Fund to account for its extensive program of financial assistance to students.The Loan Funds are derived from many sources,including both donations and amounts set aside by the university's governing board.When it prepares its statement of financial position,how should the university classify the net assets of the Loan Fund?

• A)All net assets should be classified as temporarily restricted.
• B)All net assets should be classified as permanently restricted.
• C)Net assets should be classified as either temporarily or permanently restricted,depending on the restrictions imposed by the governing board and the donors.
• D)Net assets set aside by the governing board should be classified as unrestricted,and net assets from donations should be classified as temporarily or permanently restricted,depending on the nature of the donor-imposed restrictions.