Which statement category best describes board-designated resources for a not-for-profit following FASB standards?

• A. Net assets without donor restrictions
• B. Net assets with donor restrictions
• C. Net assets with board-designated restrictions
• D. Endowment net assets

Answer: (A)

Board-designated resources are internal allocations from the board to use funds for a specific purpose, but they’re not imposed by donors. Because the designation is an internal, revocable decision, these resources are considered unrestricted. In nonprofit accounting under FASB, net assets are categorized as those without donor restrictions versus those with donor restrictions. Since the board can change or revoke its designation, board-designated resources flow into net assets without donor restrictions. Endowment net assets apply only to endowment funds and donor- or board-imposed endowment restrictions, which is not the same as a general board designation.