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Hello, I am confused why the correct answer is B for this question. I picked A. I understand this is a support service, since it is not a program service. However, per the textbook, “all expenses, other than investment expenses, are reported as decreases in net assets without donor restrictions.” Choice A seems to be the best answer.
Thanks in advance for any feedback.
Question:
Environs, a community foundation, incurred $10,000 in management and general expenses during 1991. In Environs’ statement of activity for the year ended December 31, 1991, the $10,000 should be reported as:a. A direct reduction of net assets – without donor restrictions.
b. Part of supporting services.
c. Part of program services.
d. A contra account to offset revenue and support.
Explanation:
Choice “b” is correct. Part of supporting services. “Management and general” expenses incurred by a community foundation should be reported as part of supporting services in the statement of activity.
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