Even though nonprofits will not be interested in creating profits, their accountants still prepare financial statements for external and internal users. The original group of fiscal statements are: Statement of Activities Statement of Position and the Statement of Money Flows.
Statement of Financial Position
This statement is not dissimilar to the for profit Balance Sheet. It lists cash, accounts receivable, payable, stocks and “net assets.” Since a nonprofit does not actually have owners, this statement does not reveal ” Equity” or “Retained Earnings”. Rather, net assets are presented, which collect monetary changes within the years.
This report presents an entire perspective of resources to allow for increase and amounts representing exactly what the nonprofit possesses, owes. Should you review this statement and see $100 in no receivables, cash and $10,000 in obligations, you may become worried about the nonprofit’s ability to live and pay its invoices.
The convention:Assets = Liabilities Net Assets is followed by the Statement of Financial Position
Statement of Actions
The Statement of Activities is not dissimilar to the for profit Income Statement. It presents expenses and sales, which may be summarized by the areas of fundraising, management and plans.
This statement frequently has multiple columns to present the amounts by the form of net asset, like “Unrestricted,” “Briefly Limited” and “Forever Limited.” When a us non profit organizations receives $100 to be employed for general operations, it is going to appear under the column that is unrestricted. On the other hand, in the event the $100 is given with limitations as to its use, it is going to appear under the other columns.