Financial Statements For Non-Profit Organizations

Non Profit - Financial Statements For Non-Profit Organizations

Good morning. Today, I learned about Non Profit - Financial Statements For Non-Profit Organizations. Which could be very helpful if you ask me so you. Financial Statements For Non-Profit Organizations

Like any other business, non-profit organizations have their own set of financial statements, presenting information relevant to managers, donors, bankers, and other concerned parties. The main unlikeness in the middle of a non-profit assosication and a for-profit is that a non-profit has no owners, no investors. That is major - you will not see owner's equity or profit or losses in financial statements.

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Non Profit

Statement of Financial Position

This financial statement is the equilibrium sheet of a non-profit organization. The main unlikeness in the middle of a regular equilibrium sheet and a statement of financial position is the presence of "net assets" instead of owner's equity in the statement of financial position. Since non-profits have no owners and no investors, the lack of owner's equity in this financial statement is understandable.

The recipe for the statement of financial position is: Assets = Liabilities + Net Assets

Statement of Activities

The statement of activities is comparable to the earnings statement. Revenues are presented along with expenses, normally summarized by functional area, such as programs, administration, and fundraising. Unlike a for-profit earnings statement, the statement of activities does not show profit or loss; instead it presents "changes in net assets".The statement of activities typically shows two lines: one line with starting net assets and a last line item with ending net assets. This presentation is unique to the non-profit sector.

The recipe for the statement of activities is: Revenues - Expenses= turn in net assets + starting net assets = Ending net assets

*The ending net assets in this statement should agree with the same items in the Statement of Financial Position

Statement of Functional Expenses

This statement is unique to the non-profit assosication with nothing like it in the for-profit business. This statement details the expenses and it is presented in a matrix format with cost descriptions as lines and three functional areas as columns. Many times program area is shown in more than one column, identifying each program separately. The expectation is that most money is spent in the program area, reflecting the assosication mission and objectives.

The basic recipe for the statement of functional expenses is: Total Expenses= program Expenses + administrative Expenses + Fundraising Expenses

*The ending equilibrium of the statement of functional expenses should agree with the expenses per Statement of Activities.

Statement of Cash Flows

This statement is the same as per for-profit businesses. It shows cash received and how it was used. As the case with for-profit, the statement can be ready using the direct recipe or indirect. The idea is the same, but obviously containing non-profit specific information, such as grants receivable or cash from donations.

The recipe for Statement of cash flows is: turn in Cash=Cash from Operations+ Cash from Investing+ Cash from Financing

*The statement of cash flows contains cash equilibrium that should agree with the same cash equilibrium in the financial position.

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