Certified Nonprofit Professional Practice Exam

In terms of budgeting, what does a line item specifically refer to?

1. A general classification of expenses.

2. A detailed account of individual expenses.

3. A summary of revenues.

4. A framework for forecasting future needs.

The correct answer is: A detailed account of individual expenses.

A line item refers specifically to a detailed account of individual expenses within a budget. Each line item is typically assigned to a unique entry in the budget document that specifies a particular expense, allowing for precise tracking and management of financial resources. This level of detail helps organizations monitor spending and ensure accountability, as it breaks down the budget into specific categories, making it easier to identify where funds are being allocated and spent. In contrast, the other options offer broader or different perspectives on budgeting. A general classification of expenses does not specify individual items but rather groups them, which lacks the granularity that line items provide. Additionally, while a summary of revenues gives an overview of income, it does not delve into the specifics of expenses, which is the focus of line items. Lastly, a framework for forecasting future needs pertains to budgeting strategy and planning rather than actual recorded expenditures. Thus, the precise nature of line items as detailed accounts of individual expenses sets them apart in the budgeting process.