Discussion and Assessment

Discussion questions-The subcategories of net assets including unrestricted, temporarily restricted, and permanently restricted net assets serve as a guide the not-for-profit organizations on how their net assets have to be expended. Not-for-profit entities finance their operations from the donations of third parties and these donations usually arrive with restrictions, and these restrictions affect how these funds will eventually be spent.

For example, a donation specifying that only the interest income on it can be used to fund the organization's operations is classified as permanently restricted net assets while the interest income itself is classified as unrestricted.

What is the difference in the way that bonds are reported by for-profit and not-for-profit organizations.