What is the statement of activities?

statement of activities example

Operating revenue is the revenue earned by selling a company’s products or services. The operating revenue for an auto manufacturer would be realized through the production and sale of autos. Operating revenue is generated from the https://www.digitalconnectmag.com/a-deep-dive-into-law-firm-bookkeeping/ core business activities of a company. Changes in cash from financing are cash-in when capital is raised and cash-out when dividends are paid. Thus, if a company issues a bond to the public, the company receives cash financing.

Improved financial management can help your nonprofit organization better allocate its resources and improve its overall performance. Improved financial management can help your nonprofit organization better plan for the future, and track its progress over time. Overall, the statement of activities is an essential tool for nonprofit leaders. By understanding its contents, you’ll be better positioned to sustain your organization in the long term. The revenue section contains a breakdown of the major sources of revenue, such as contributions, program fees, membership dues, grants, investment income, and amounts released from donor restrictions.

Nonprofit Accounting Terms

Using this information, an investor might decide that a company with uneven cash flow is too risky to invest in; or they might decide that a company with positive cash flow is primed for growth. Cash flow might also impact internal decisions, such as budgeting, or the decision to hire (or fire) employees. Ideally, a company’s cash from operating income should routinely exceed its net income, because a positive cash flow speaks to a company’s ability to remain solvent and grow its operations.

statement of activities example

It is not uncommon for the details surrounding the organization’s financial health to get overlooked. The expense section reports all cash that flows out of your organization, including pending expenses—those you know you’ve incurred but haven’t spent the money yet, such as payroll for hours worked the previous month. It includes donations, grants, fundraising, earned revenue, government funding, and special events. But a nonprofit calls the difference between revenue and expenses change in net assets.

What’s on the Statement of Activities?

Before classifying a transaction or an event, as extraordinary or special, government should assess its materiality and significance in the context of financial statements in which it would be presented. Something that is significant or material in the fund financial statements may not be significant or material in the government-wide statements. All general revenues, including taxes, should be reported net of estimated refunds and uncollectible amounts. Charges for services are program revenues of a function/program that assess the charge even if the money is required to be spent on a different function/program. To fulfill Cornell’s primary missions, operating expenses consist primarily of salary and benefits and maintenance costs for facilities and services. Contributions or gifts include outright cash gifts and pledges (promises to give) to the university.

Others support more than one program and must be allocated to the appropriate functions. If a building is shared by several programs, for example, the rent must be allocated using an objective method. Note, that there is special law firm bookkeeping guidance on allocating costs related to an activity that combines fundraising with elements of another function. The nonprofit statement of activities is one of the core accounting documents that your organization creates.