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Wiley Not-for-Profit GAAP 2014: Interpretation and Application of Generally Accepted Accounting Principles by Marie DiTommaso, Richard F. Larkin

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7 FUND ACCOUNTING

Perspective and Issues

Concepts, Rules, and Examples

Categories of Funds

Current unrestricted fund

Current restricted fund

Restricted endowment fund

Fixed asset fund

Other types of funds

Alternative Fund Groupings

Expendable and nonexpendable

Managed fund groups

A Typical Set of “Fund” Financial Statements

Interfund borrowing

Elimination of Funds for Reporting Purposes

Conclusion

PERSPECTIVE AND ISSUES

Many not-for-profit organizations have used fund accounting both for internal record-keeping and for external financial reporting purposes. Fund accounting segregates assets, liabilities, and fund balances into separate accounting entities associated with specific activities, donor-imposed restrictions, or objectives.

Generally accepted accounting principles do not require not-for-profit organizations to use fund accounting in the presentation of financial statements. Any “fund” amounts that are presented in the financial statements must still be classified in those financial statements in the appropriate net asset classification: unrestricted, temporarily restricted, or permanently restricted net assets based on the absence or existence and type of donor-imposed restrictions. Financial statements prepared using fund accounting and not presenting these net asset classifications would not be considered to be in accordance with generally accepted accounting principles.

The statement establishes a financial reporting model based on net assets, classified solely on ...

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