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i <br /> I Hibiscus Children ' s Center, Inc . <br /> NOTES TO FINANCIAL STATEMENTS <br /> June 30 , 2002 <br /> I <br /> NOTE B - SUMMARY OF SIGNIFICANT ACCOUNT/NG POLICIES (continued <br /> I2 . Basis of Accounting <br /> I Basis of accounting is used to describe when revenues and expenses are recognized <br /> in the accounts and reported in the financial statements . <br /> I The Center prepares its financial statements on the accrual basis in accordance with <br /> generally accepted accounting principles . Assets and related revenue are recorded <br /> when earned and related liabilities and expenses are recognized as incurred . <br /> IIn applying the accrual basis to grant revenue, the legal and contractual <br /> requirements of the individual programs are used as guidance . <br /> I3 . Property , Plant and Equipment <br /> I Uses of funds for acquisitions of physical properties are generally accounted for as <br /> unrestricted net assets . These properties are recorded at cost, or fair market value <br /> if donated , plus additional capitalized expenditures which are required on certain <br /> I constructed assets . If donors of property stipulate how long the assets must be <br /> used , the contributions are recorded as restricted support . In the absence of such <br /> stipulations , contributions of property and equipment are recorded as unrestricted <br /> Isupport . <br /> The Organization has elected to capitalize those assets costing or having a fair <br /> market value at time of donation of $ 500 or more . <br /> I4 . Cash Equivalents <br /> I For purposes of the Statement of Cash Flows, cash equivalents include cash on <br /> hand , time deposits , certificates of deposit and all highly liquid debt instruments <br /> with original maturities of three months or less . Cash and cash equivalents at <br /> I June 30 , 2002 includes $ 776 , 730 in interest bearing accounts . <br /> 5 . Income Taxes <br /> I Hibiscus Children ' s Center, Inc . is exempt from federal and state income tax as an <br /> organization described in Section 501 (c ) ( 3 ) of the Internal Revenue Code . In <br /> accordance with the Internal Revenue Code , Hibiscus Children ' s Center, Inc . is not <br /> Iconsidered a private foundation . <br /> 6 . ' In-kind Contributions <br /> IHibiscus Children ' s Center, Inc . records in- kind contributions at fair market values <br /> consistent with those amounts which would be paid for similar products and <br /> Iservices . <br /> I Page 8 <br />