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Wiley Not-for-Profit GAAP 2015: Interpretation and Application of Generally Accepted Accounting Principles by Richard F. Larkin, Marie DiTommaso, Warren Ruppel

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7 FUND ACCOUNTING

PERSPECTIVE AND ISSUES

Many not-for-profit organizations have used fund accounting both for internal recordkeeping 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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