Not-for-profit entities report which of the following as a net asset category?

• A. Net assets without donor restrictions
• B. Net assets with donor restrictions
• C. Net assets with endowments
• D. Net assets restricted by time only

Answer: (B)

Not-for-profit entities present resources in two net asset categories: those without donor restrictions and those with donor restrictions. This separation shows whether donors have placed restrictions on how funds can be used or when they can be spent. The correct choice identifies the category that reflects donor-imposed restrictions: net assets with donor restrictions. Endowment funds, and other restricted resources, fall under this category when donors restrict them, either in perpetuity or for a specific purpose or time. Time restrictions are simply a type of donor restriction, so they’re part of the same restricted category rather than a separate net asset category.