The FASB requires that a statement showing the relationship of functional expenses to natural classifications of expense be prepared by which of the following entities?
A) Colleges and universities.
B) Health care entities.
C) Voluntary health and welfare entities.
D) All not-for-profit entities.

Question

Quizplus · Accepted Answer

The FASB requires that all not-for-profit entities prepare a statement showing the relationship of functional expenses to natural classifications of expense. This statement is known as the statement of functional expenses and provides information on how the organization's expenses are disaggregated by function, such as program services or supporting activities, and by natural expense classifications, such as salaries or rent. The statement of functional expenses is an important part of the financial statements for not-for-profit entities and is used by stakeholders to evaluate the organization's performance and efficiency.

The FASB Requires That a Statement Showing the Relationship of Functional