Financials Presentation - Kevin DeBolske
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Transcript of Financials Presentation - Kevin DeBolske
Introduction and Agenda
Methods of Accounting Financial Statements
Methods of Accounting
Cash Accrual
Modified Cash
Cash Accounting
• Revenue is booked when received • Expenses are recorded when paid • No accounts receivable or payable on balance
sheet
Accrual Accounting
• Revenue is booked when earned • Expenses are recorded when incurred • Accounts receivable and payable on balance sheet
Modified Cash
• Revenue is booked when earned • Expenses are recorded when paid • Accounts receivable on balance sheet; no
accounts payable
Important Considerations
Accrual Method • Required by GAAP • Delinquencies
• More accurate picture of receivables
• Shows obligations not yet paid • Community characteristics
• Size & complexity may dictate use of accrual method
Important Consideration
Cash Method • Report any significant expense incurred but not
yet paid • Carefully review monthly A/R report (30/60/90
day format) with the Board • Maintain lower management fees
Important Considerations
Modified Cash Method • Submit and pay invoices on routine basis to
materially portray expenses. • May have substantial delinquencies & want to
maintain AR and prepaids on balance sheet.
Financial Statements
• Balance Sheet – Assets – Liabilities – Equity & Fund Balances
• Income Statement – Revenue – Expenses – Net Income & Fund Balances
• Statement of Cash Flows • Financial Reports
Balance Sheet
• Assets • Liabilities • Fund balances (usually at the close of the last
day of a month or a year) ASSETS = LIABILITIES + FUND BALANCES
Balance Sheet
Balance Sheet
Assets Assets are the property controlled by the association: • Cash • Accounts Receivable • Prepaid Expenses • Fixed Asset • Receivable from Other Sources
Liabilities Liabilities are the obligations of the association:
• Insurance Payable • Accounts Payable • Accrued Expenses • Prepaid Assessments • Funds designated for long- range capital
projects
Members Equity (Fund Balance)
The cumulative earnings of the association from the date of inception.
ASSETS = LIABILITIES + MEMBERS’ EQUITY
Income Statement
Reports Revenues, Expenses and Net Income Also known as:
• Statement of Revenue and Expenses • Operating Statement • Profit and Loss Statement (P&L)
Information on a multi-column statement would include:
• Current month – actual, budget and variance • Year-to-Date – actual, budget and variance
Income Statement
Revenue Revenues: • Assessments (both billed and earned) • Late charges & interest • Laundry, parking and recreational services • Refunds from outside entities • Gain on sale of an asset; a litigation settlement
Expenses: Costs incurred, either paid or due and payable
Expenses
Net Income (or Loss)
• The result of operations determined by Total Revenue less Total Expenses
• This amount does not necessarily equate to cash
Income Statement Equation
REVENUE - EXPENSE = NET INCOME or (LOSS)
Questions?