Note: This is a Kaplan CPA Review Question
Clay University, a not-for-profit university, earned $300,000 from bookstore revenue and spent $100,000 for faculty research in 20X1. The $100,000 for faculty research came from a $150,000 research grant received in the previous year. What is the effect of these events on unrestricted net assets in 20X1?
A) Increase $450,000
B) Increase $400,000
C) Increase $300,000
D) Increase $200,000

Question

Quizplus · Accepted Answer

The bookstore revenue of $300,000 increases unrestricted net assets. The $100,000 spent on faculty research does not affect unrestricted net assets in 20X1 because it was funded by a restricted grant received in the previous year.

Note: This Is a Kaplan CPA Review Question