Care Foundation is a voluntary health and welfare organization funded by contributions from the general public. In its Statement of Activities, the annual provision for depreciation should:

Question options:

A) Not be included.

B) Be included as an element of support.

C) Be included as an element of changes in fund balances.

D) Be included as an element of expense.

D) Be included as an element of expense

Explanation:

Care foundation is a voluntary health and welfare organization funded by contributions from the public and therefore is a non-profit organization. Non profit organizations use statement of activities and not income statements used by for profit organizations in reporting revenue and expenses for the year. In the case of non profit organizations, statement of activities are reported as statement of expenses for the year.

Under GASB, direct expenses are expenses that can be linked to a program, department or activity and therefore can be directly linked to that function. Depreciation is a direct expense for non profit accounts and should be charged as expense for the relevant year based on the function of the capital asset it can be traced to. For example a capital asset that can be linked to a particular function should charge it's depreciation expenses as direct expenses based on its functions