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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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19 CURRENT ASSETS AND CURRENT LIABILITIES

PERSPECTIVE AND ISSUES

Chapter 3 describes the requirement for not-for-profit organizations to present liquidity information in the statement of financial position. The requirement can be satisfied by reporting a classified statement of financial position which classifies assets and liabilities as current and noncurrent. If an organization does so, classified statements of financial position should present current assets and current liabilities separately from noncurrent assets and liabilities.

With some exceptions relating to donor-imposed restrictions or restrictions on the use of cash (explained later in this chapter), not-for-profit organizations would classify assets and liabilities similarly to commercial organizations. Current assets are defined for commercial enterprises as those assets which are, or will become, cash, or will be consumed in normal business operations within a year or within one operating cycle if more than one year. Current liabilities are those obligations which will require the use of current assets or the incurrence of another current liability to liquidate them. Current liabilities also include the following:

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