Non profit assosication - Basic understanding of a Statement of Activities

Non Profit - Non profit assosication - Basic understanding of a Statement of Activities

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Showing revenues and expenses, the statement of position may look like an revenue statement, but with some differences.

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Non Profit

One of the differences is the fact that a non-profit doesn't have profits or losses. Non-profit organizations are not in enterprise with a goal of development a profit, but to fulfill a program, a mission. Reflecting that, the Statement of Position presents a "Change in Net Assets" that could be positive when revenues are larger than expenses and negative, when the opposite is true. Interestingly at the end of this statement typically shows the beginning net assets and then the ending balance.

It is base for this statement to be presented as a matrix with revenues and expenses as line items and three columns labeled: Unrestricted, temporarily restricted, and constantly restricted- all typical of the non-profit sector. A revenue is not just a revenue, it needs to be classified as unrestricted, temporarily restricted or constantly restricted in the statement of activities.

Generally, all expenses are shown as unrestricted- first column in report. That is a peculiar rule for non-profits per Fa Sb 117- Financial Statements of Not-for-Profit Organizations.

Another distinction between the statement of position and an revenue statement is about expenses normally summarized by area- supervision & general, program and fund-raising. Line items for rent, utilities, and salaries, are not shown separately. If you want to see each private expense, you should look for another financial statement, the statement of functional expenses.

We still have one distinction when comparing this statement with the revenue statement: "Net assets released." It is presented in the revenue section and is normally an growth in unrestricted column and a decrease in temporarily restricted column. Seeing across, this line item should all the time add up to zero. For example, if you see ,000 in that line item increasing unrestricted column, then you will most likely see a - minus a thousand -in the same line under temporarily restricted column. Then end consequent is zero. You can think of this line item as an internal adjusting mechanism.

An example format of this statement follows:

- Abc Organization
- Statement of Activities As of 6/30/20Xx

[Columns ] Unrestricted / Temporarily Restricted / constantly Restricted / Total

Revenue

- Contributions
- Net Assets Released

Total Revenue

Expenses

Programs:

- program A
- program B
- supervision and general Fundraising

Total Expenses

- convert in net assets
- Net Assets at the beginning of the year
- Net Assets at the end of the year

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