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PIEDMONT HEALTH SERVICES, INC. <br /> NOTES TO FINANCIAL STATEMENTS <br /> Note 1: Summary of Significant Accounting Policies <br /> Nature of Activities <br /> Piedmont Health Services, Inc. (the Organization) operates <br /> community medical and dental centers. Also, the Organization <br /> operates a comprehensive senior care program. The Organization <br /> provides comprehensive health care services at seven locations <br /> in Orange, Alamance, Caswell and Chatham Counties. <br /> Financial Statement Presentation <br /> The financial statement presentation follows the recommen- <br /> dations of the American Institute of Certified Public <br /> Accountants' Audit and Accounting Guide, Health Care Entities. <br /> Basis of Accounting-- <br /> The accompanying financial statements are prepared on the <br /> accrual basis of accounting. <br /> Financial statements are presented in accordance with U.' S. <br /> generally accepted accounting principles. Under U. S. <br /> generally accepted accounting principles, the Organization is <br /> required to report information regarding its financial position <br /> and activities according to three classes of assets: <br /> unrestricted net assets, temporarily restricted net assets, and <br /> permanently restricted net assets, as applicable. <br /> Cash and Cash Equivalents <br /> The Organization considers all highly liquid investments . <br /> available for current use with maturity of three months or less <br /> to be cash equivalents. <br /> Inventory <br /> The Organization capitalizes inventories of pharmaceutical <br /> supplies. Purchased inventory is stated at cost and donated <br /> inventory is stated at fair market value based on the donor' s <br /> wholesale prices. <br /> -14- <br />