Financial Statements: List of Types and How to Read Them

With QuickBooks financial statement templates, the formulas are already built in. All you have to do is fill in your business and financial information and watch the numbers add up! You’re one step closer to understanding the financial health of your company when you use our financial report templates. As a business owner, you need to have a handle on the money coming in and going out of your business; to that end, an income statement shows your company’s revenue and expenses. When you create this report, you group and classify the expenses according to the type of cost.

Restricted Revenue includes any donations which have donor-placed restrictions on how or when the money can be spent, while Unrestricted Revenue includes any money which can be used for any purpose. You may choose to break down your revenue into additional categories, such as Sources of Unrestricted Donations and Federated Campaigns. If you have any more questions about nonprofit activities statements or any other financial matters, don’t hesitate to reach out to us.

What is the statement of activities?

If they matter to your nonprofit’s finances, record them at their real value. Grant income comes from funds given by government agencies, foundations, other nonprofits, or grant-making entities. A Statement of Activities shows whether an organization made a profit or a loss during a period of time. It is a financial snapshot that can be used to track the organization’s financial progress.

Since the company did not generate any non-operating income, its operating income was its net income balance. Improved management of resources can help your nonprofit organization to achieve its goals more efficiently and effectively. By understanding how to read and understand this key nonprofit financial report, you can better allocate your resources and improve your organization’s overall performance. In conclusion, understanding the intricacies of nonprofit Statements of Activities is essential for any nonprofit leader or stakeholder.

What does a Statement of Activities Include?

The SOA report shows a nonprofit organization’s income, expenses, and net income for a specific period of time, all or part of a fiscal year. The report reflects the changes to an organization’s net assets resulting from financial activities that occurred during the fiscal year. An analyst may first look at a number of ratios on a company’s income statement to determine how efficiently it generates profits and shareholder value.

For effective accounting period review, allocate revenues and expenses in separate columns to accurately assess the financial performance of each program or service. This allows you to track and assess the financial performance of each initiative separately. Yes, nonprofit organizations must follow the Generally Accepted Accounting Principles (GAAP). The Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 958 is another set of principles often used. These standards provide guidelines for proper financial reporting, including the preparation of the Statement of Activities.

Statement of Financial Activities Template for your Nonprofit Organization

Finally, ratio analysis can be used to isolate some performance metrics in each statement and bring together data points across statements collectively. First, financial statements can be compared to prior periods to understand changes over time better. Financial statements are also read by comparing the results to competitors or other industry participants. By statement of financial activities comparing financial statements to other companies, analysts can get a better sense of which companies are performing the best and which are lagging behind the rest of the industry. An often less utilized financial statement, the statement of comprehensive income summarizes standard net income while also incorporating changes in other comprehensive income (OCI).

Yes, the Statement of Activities can provide valuable insights for budgeting. You can identify trends, assess the effectiveness of revenue sources, and make informed projections for future periods. This helps you develop realistic budgets and allocate resources strategically to achieve your nonprofit’s goals. Nonprofits typically prepare their final Statement of Activities annually as part of their audit or review and make it publicly available. However, organizations should generate it internally more often, such as monthly or quarterly, to monitor financial performance more closely.