Statement of Financial Activities

A description of currently known facts, decisions, or conditions expected to have an impact on financial position and results of operation. The term currently known is limited to events or decisions that have occurred, or have been enacted, adopted, agreed on, or contracted as of the date of the auditor’s report.

Statement of Financial Activities

If it can demonstrate that it’s making those investments, it need not depreciate, and the book value does not change. A government’s unrestricted net position is akin to a non-profit’s unrestricted net assets. These are net assets available for spending in the coming fiscal year. Net Investment in Capital Assetsis the value of OP’s infrastructure assets minus the money it owes on the bonds that financed those assets. All capital assets are reported in this component of net assets, even if there are legal or other restriction on how the government is to use them for service delivery.

Defining The Financial Statement

Personal financial statements may be required from persons applying for a personal loan or financial aid. Typically, a personal financial statement consists of a single form for reporting personally held assets and liabilities , or personal sources of income and expenses, or both. The form to be filled out is determined by the organization supplying the loan or aid. An income statement is meant to report profitability for a business. A nonprofit is not driven by profits, but rather a mission or a service.

Statement of Financial Activities

To identify the extent to which each function or program draws from the general revenues of the organization or is self-supporting through fees and intergovernmental aid. Activities reported in enterprise funds and internal service funds .


A fund is a stand-alone, self-balancing set of accounts with a specific purpose. A government’s general fund is where it accounts for its general services that are paid for through general revenue sources.

Investing activities generated negative cash flow or cash outflows of -$10.2 billion for the period. Additions to property, plant, and equipment made up the majority of cash outflows, which means the company invested in new fixed assets. Investing activities include any sources and uses of cash from a company’s investments into the long-term future of the company. A purchase or sale of an asset, loans made to vendors or received from customers, or any payments related to a merger or acquisition is included in this category.

Expenses: How Much Money Did You Spend?

As you’ve seen, those changes are the basis for the cash flow statement prepared with the indirect method. Growth in unrestricted net assets generally indicates that the organization’s core programs and services are profitable. States and localities dealt with precisely this issue when they implemented Governmental Accounting Standards Board Statement 34. This statement – euphemistically known as “GASB 34” – required governments, for the first time, report the book value of their capital assets. Prior to GASB 34, they reported what they spent each year on capital assets as an expense, but they did not include their full book value.

  • Cash can come from donations/contributions, grants, memberships, etc.
  • Business-type activities present many different challenging strategic and policy questions.
  • The purpose of the MD&A is to provide a narrative explanation, through the eyes of management, of how an entity has performed in the past, its financial condition, and its future prospects.
  • Contrast the basic financial statements for non-profits to those same statements for governments and for-profit organizations.
  • For private sector entities, this difference is known asowner’s equity.
  • These include white papers, government data, original reporting, and interviews with industry experts.
  • Excel Shortcuts PC Mac List of Excel Shortcuts Excel shortcuts – It may seem slower at first if you’re used to the mouse, but it’s worth the investment to take the time and…

Taxpayers’ main interest is that the government delivers the services they expect it to deliver. Donors and funders who give money to a non-profit organization care about its financial health, Statement of Financial Activities but they also don’t expect to get their money back if the organization fails. Mostly, they care that the organization will continue to serve its clients and the community at large.

What Is A Statement Of Activities Soa?

In the traditional fundamental equation, we use “net assets” to identify assets minus liabilities. When we add deferrals, the “net assets” label no longer captures everything on the right side of the equation, but “net position” does. Technically speaking, net assets are simply the difference between assets and liabilities. For private sector entities, this difference is known asowner’s equity. Determine how to prepare, in accordance with GAAP, a statement of activities.

For instance, imagine that a school district levies a special sales tax to pay for school buildings. Taxpayers want to see how much revenue that tax generated, how much money the school district borrowed to build those buildings, how much of that revenue has been used to repay that borrowed money, and so on. Liabilities, as with for-profit entities, are a nonprofit’s debts and financial obligations. A typical statement of financial position differentiates between “current” and “long term” liabilities, with the former category representing obligations owed within one year. Recognizing net assets with donor restrictions and representing them as such in financial statements is crucial so that organizational decision-makers are aware of obligations in the future.

Grants And Contracts And Similar Agreements For Capital Acquisitions

The balance sheet, lists the company’s assets, liabilities, and equity as of a specific moment in time. That specific moment is the close of business on the date of the balance sheet. Notice how the heading of the balance sheet differs from the headings on the income statement and statement of retained earnings. A balance sheet is like a photograph; it captures the financial position of a company at a particular point in time. As you study about the assets, liabilities, and stockholders’ equity contained in a balance sheet, you will understand why this financial statement provides information about the solvency of the business. Financial reporting is crucial for performing analysis to support business decisions. Using financial statements improves accountability and supports the analysis of critical financial data.

Statement of Financial Activities

In this chapter, we walk through the basic financial statements that most public organizations prepare, and the essential concepts from accounting you’ll need to understand the numbers that appear in those statements. To calculate your months of LUNA, you’ll need to take the total unrestricted net assets found on your nonprofit balance sheet and subtract the property and equipment assets . This is because those assets are tied up in physical belongings (property, software, etc.) and cannot be liquidated to cover additional liabilities.


Shows funds with donor-placed restrictions on how or when you can spend the money. You can include all restricted funds together or segment them by donation type. Financial income and expenses include the interest rate and exchange results on foreign currency, recognized in the accounting period to which they relate. Project donations are accounted for in the statement of income and expenses and recorded as an obligation on the balance sheet once a commitment is done in the framework of a project application.

In 2015 it contributed 6.4 million on behalf of its employee members, and KPERS required a $5.3 deduction to pay benefits to members who have retired and are now receiving benefits. Financing activities are cash the organization borrows to finance its operations.

It’s where local governments account for police, fire, public health, and other services paid for through property taxes and general sales taxes. It’s also where state governments account for their Medicaid programs, state parks, state patrol, and other general services paid for through state income taxes and statewide general sales taxes. For most governments the general fund is the largest and most carefully-watched. According to GAAP, a government’s general fund, special revenue funds, and capital projects funds are collectively called itsgovernmental funds.You can think of the governmental funds as a government’s core services and operations. Reported assets, liabilities, equity, income and expenses are directly related to an organization’s financial position.

OP has net position restricted for a typical array of needs such as debt service, capital spending, and compensation claims. The key here is we’re focused on assets and liabilities driven by cash flows. So to make sense of the Change in Operating Assets and Liabilities section, first think about how typical assets and liabilities interact with cash.

What Are Common Drivers For Each Income Statement Item?

In the aggregate, they must take in more revenue than they spend, or they will cease operating. GAAP tells us when an organization can say it “owns” an asset, or when it has “earned” revenue for delivering a service, among many other types of financial activity.

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