list and describe the three categories of net assets Solution The net assets section of a nonprofit\'s statement of financial position reports totals for each of the following classifications: These classifications are based on the restrictions made by the donors at the time of their contributions. 1. Unrestricted net assets If a donor does not specify a restriction on his or her contribution, the amount received by the nonprofit is recorded as an assetand as unrestricted contribution revenues. Unrestricted contribution revenues (reported on the statement of activities) also cause the amount of unrestricted net assets to increase. 2. Temporarily restricted net assets If a nonprofit receives a contribution that has a donor-imposed restriction (other than to be held in perpetuity), the amount is usually recorded as an asset and as temporarily restricted contribution revenues. Temporarily restricted contribution revenues (reported on the statement of activities) also cause the amount of temporarily restricted net assets to increase. 3. Permanently restricted net assets If a donor stipulates that her contribution must be held by the nonprofit in perpetuity (forever, not be used up), the amount is recorded as an asset and as permanently restricted contribution revenues. Permanently restricted contribution revenues (reported on the statement of activities) also cause the amount of permanently restricted net assets to increase..

1. list and describe the three categories of net assets
Solution
The net assets section of a nonprofit's statement of financial position reports totals for each of
the following classifications:
These classifications are based on the restrictions made by the donors at the time of their
contributions.
1. Unrestricted net assets
If a donor does not specify a restriction on his or her contribution, the amount received by the
nonprofit is recorded as an assetand as unrestricted contribution revenues. Unrestricted
contribution revenues (reported on the statement of activities) also cause the amount of
unrestricted net assets to increase.
2. Temporarily restricted net assets
If a nonprofit receives a contribution that has a donor-imposed restriction (other than to be held
in perpetuity), the amount is usually recorded as an asset and as temporarily restricted
contribution revenues. Temporarily restricted contribution revenues (reported on the statement of
activities) also cause the amount of temporarily restricted net assets to increase.
3. Permanently restricted net assets
If a donor stipulates that her contribution must be held by the nonprofit in perpetuity (forever,
not be used up), the amount is recorded as an asset and as permanently restricted contribution
revenues. Permanently restricted contribution revenues (reported on the statement of activities)
also cause the amount of permanently restricted net assets to increase.