Question

A nonprofit university uses fund accounting. The university's governing board decides to set aside $500,000 in a separate fund called the Student Performance Quasi-Endowment Fund, the income of which will be used to finance a long-term study on the career paths of the university's graduates. In which net asset classification of the university's statement of financial position would the net assets in this fund be reported?

Answer 1

Answer:

Unrestricted fund

Explanation:

Unrestricted funds represent contributions that the NPO can use for some reason. Unrestricted funds are typically allocated to the operational costs of the NPO or a particular operation selected by the NPO.

Under this situation, $500,000 is considered as an Unrestricted fund, because the university's governing separated it for Quasi-Endowment Fund.