Money Matters for Nonprofits by Melisa F. Galasso CPA

Author:Melisa F. Galasso, CPA
Language: eng
Format: epub
ISBN: 9781632995926
Publisher: River Grove Books
Published: 2022-08-15T00:00:00+00:00

When the event is held and the ticket buyer attends, the university has satisfied its obligation to the ticket buyer. As a result, the liability is reversed and revenue is recognized. The increase in revenue will increase net assets, which keeps the equation balanced.

TYPES OF LIABILITIES

Accounts Payable

Accounts payable (AP) is a common liability for nonprofits. Many nonprofits will purchase goods and services on credit, typically with relatively short due dates (fifteen to thirty days). When the item is purchased, no cash is paid, and instead accounts payable is recognized. When the nonprofit performs its check run, it will reduce cash and reverse the accounts payable. Typically, AP does not accrue interest due to the short-term nature of the liability.

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