Which factor primarily determines whether a cost can be charged to a grant?

• A. The color of the receipt
• B. Whether the expense is a budgeted line item
• C. The timing of the expense
• D. Whether the cost is allowable under the grant terms

Answer: (D)

The central idea is that what you can charge to a grant is determined by allowability under the grant’s terms and the applicable cost principles. An expense must be necessary for the project, reasonable in amount, allocable to the grant, and consistent with what the grant authorizes and its budget. If the grant terms or cost principles say a cost is unallowable (for example, certain entertainment, fines, or other restricted items), it cannot be charged to the grant—even if it was budgeted or incurred during the project.

Timing or the mere existence of a budget line item don’t by themselves make a cost chargeable; a cost must meet the grant’s allowability criteria and be properly allocated to the project within the period of performance.