Nonprofit Bookkeeping & Accounting For Dummies, 2nd Edition

Chapter 17

Analyzing the Statement of Activities

IN THIS CHAPTER

Knowing what’s reported on the statement of activities

Comparing current revenues and expenses to prior periods and other nonprofits

Rarely do financial disasters happen overnight. Often, when a nonprofit has to close its doors due to lack of funding, the situation probably could have been avoided with proper financial oversight. Usually, the statement of activities contains signs that, if properly evaluated, reveal the likelihood of trouble and ways to avoid disaster. Good financial managers use their statement of activities as planning tools and indicators of future events.

The Financial Accounting Standards Board (FASB) requires nonprofits to report information about all expenses in one location. This can be on the statement of activities, as a note to the financial statements, or on a separate financial statement. See Chapter 13 for more information about the FASB.

Information found on a statement of activities provides

• A summary of transactions, events, and circumstances that change an organization’s net assets: This ties in both revenue and expenses.
• Information about the relationship between transactions and events: This assists in an important nonprofit control relating to program cost identification and ...