The legal requirements are consistent with these national standards, but they are not identical. Specific legal reporting requirements are contained in reporting part https://accounting-services.net/income-smoothing-definition/ of this Manual. A common terminology and classification should be used consistently throughout the budget, the accounts, and the financial reports of each fund.

  • By analyzing your nonprofit’s statement of activities, your organization can determine if the expenditures currently allocated for each of your programs are sustainable for the long run.
  • Current operations are flexibly budgeted based on the estimated level of services to be provided and long-range sources and uses of assets are controlled by annual/biennial appropriations and continuing appropriations.
  • All general revenues, including taxes, should be reported net of estimated refunds and uncollectible amounts.
  • First, financial statements can be compared to prior periods to better understand changes over time.
  • The debt service transactions for a special assessment for which the government is not obligated in any matter should be reported in a custodial fund.
  • If all is selected, the export will include BARS accounts for all government types.
  • Budgetary comparison schedules should be presented as required supplementary information for the general fund and for each major special revenue fund that has a legally adopted annual/biennial budget.

The majority of this revenue will be recorded as gross in your statement of activities. As you can see, the report is divided into the revenue and expenses along the vertical axis. Horizontally, the revenue and expenses are further categorized by restrictions placed on the funds. At the Statement of Activities: Definition bottom of the report, there’s a section dedicated to the net assets of the organization. The statement of activities will also influence Report 990 generation when it comes time for tax season. The basis of Form 990 is the statement of activities and a statement of functional expense.

Why the Nonprofit Statement of Activities is Important

Below is a portion of ExxonMobil Corporation’s income statement for fiscal year 2021, reported as of Dec. 31, 2021. Primary expenses are incurred during the process of earning revenue from the primary activity of the business. Expenses include the cost of goods sold (COGS), selling, general and administrative expenses (SG&A), depreciation or amortization, and research and development (R&D).

Like all nonprofit financial statements, the central role of the Statement of Activities is to provide transparency and accountability to your donors and board. But it’s also an excellent tool for understanding just how healthy your business is. All expenses, except for investment expenses, are reported as expenses that decrease net assets without donor restrictions. Investment expenses can decrease net assets with donor restrictions if allowed by the terms of the donation.

What Are Functional Expenses? A Guide to Nonprofit Accounting

In fund financial statements, governments should report governmental, proprietary, and fiduciary funds to the extent that they have activities that meet the criteria for using these funds. Comprehensive budget – A government-wide budget that includes all resources the government expects and everything it intends to spend or encumber during a fiscal period. Revenue includes grants, contributions, program fees, membership dues and investment income. Revenue will be reported in the without donor restrictions column unless the donor has imposed specific conditions on the use of the contribution.

  • Your nonprofit works to accomplish its mission, and when it comes to communicating that to donors and external stakeholders, no document is as helpful as a statement of activities.
  • Cash flow from operating business activities, usually the first section of the cash flow statement, includes many items from the income statement and the current portion of the balance sheet.
  • Other resources (investment earnings and transfers from other funds, etc.) also may be reported in the fund if these resources are restricted, committed, or assigned to the specific purpose of the fund.
  • A nonprofit statement of activities example will have a heading, body, and bottom line.
  • The income statement provides an overview of revenues, expenses, net income, and earnings per share.

We recommend getting in touch with an accountant to help with these activities. Your organization can save time, energy, and money by using an outsourced accounting resource to help with your statement of activities. The expenses your organization incurs should all support your mission in some way, whether that’s by funding daily nonprofit operations or a specific project relevant to your mission’s purpose.