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American Red Cross

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The American Red Cross predominately uses Enterprise Funds for its accounting for their revenues. Since the group does receive about 26% of their revenue through donations, based on the 2011 financial statements, these contributions are usually restricted. They are restricted in a couple different ways; unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. And because of these types of restrictions, Enterprise Funds do work best for the Red Cross in order to account for each fund. The two sets of restricted contributions that are used more often are the unrestricted or the temporarily restricted. Of the total contribution amounts for 2011, 84% of that falls into one of those two net asset accounts. The 2011 Consolidated Statement of Activities breaks down the revenues by contributions, products and services, and other revenue accounts, along with the 2010 numbers for comparison, by unrestricted, temporarily restricted, and permanently restricted. Each coordinating expense section is presented the same way. The investment revenues are reported at fair value on the financial statements. Any investment income is classified as operating revenue and is also kept separate on the financials.
Revenue recognition by the Red Cross is during the period received or when pledge. If a contribution comes with a donor imposed restriction and then at the end of the restriction, those funds are then reclassified as unrestricted and can be used for any type of expense. This then requires journal entries for this reclassification.
In the notes section of the 2011 financial statements, included were the changes in net assets for all the Enterprise Funds. These show the changes throughout the period for unrestricted, temporarily restricted, and the permanently restricted funds. Using these statements does help to evaluate fund balances for

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