NPO Financial Statements

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ACCOUNTING FOR NOT-FOR-PROFITORGANIZATIONS (NPOs)

JUNE 21, 2014



What is a non-profit organization?

an entity that is operated for thebenefit of society as a whole ratherthan for the benefit of an individualproprietor or a group of partners or

shareholders.• A not-for-profit organization strives

only to obtain revenue sufficient to

cover its expenses.• Thus, the concept of income is

not meaningful.

What is a not-for-profit organization



Some examples are:

• 1. Voluntary health and welfare organizations:

• 2. Schools, colleges and universities

• 3. Hospitals

• 4. Cooperatives

•

5. Labor unions• 6. Performing arts organizations

• 7. Foundations

• 8. Religious organizations

• 9. Country clubs

• 10. Professional associations



FINANCIAL REPORTS FOR NOT –FOR-

PROFIT ORGANIZATIONS

• The primary purpose of financial statements

is to provide relevant information to meet the

common interests of donors, members, creditors and

others who provide resources to not-for-profit

organizations. Those external users of financial

statements have common interests in assessing:

A.The services an organization provides and its ability to

continue to provide those services and

B. How managers discharge their stewardshipresponsibilities and other aspects of their performance.



More specifically, the purpose of financial statements, including

accompanying notes, is to provide information about:

•

The amount and nature of an organization’s assets,liabilities and net assets

• The effects of transactions and other events and

circumstances that change the amount and nature

of net assets• The amount and kinds of inflows and outflows of

economic resources during a period and the relation

between inflow and outflow

•

How an organization obtains and spends cash, itsborrowing and repayment of borrowing and other

factors that may affects its liquidity

• The service efforts of an organization



STATEMENT OF FINANCIAL POSITION

• This statement provides relevant

information about the liquidity, financial

flexibility and interrelationship of an

organization’s asset and liabilities in order

to let the external users of such be able to

assess the organization’s ability to continue

providing the services, the organization’s

liquidity, financial flexibility, ability to meet

obligations, and needs for externalfinancing.



ACCOUNTING FOR NOT-FOR-PROFITORGANIZATIONS (NPOs)

SELECTED FINANCIALSTATEMENTS

JUNE 22, 2014



What is a non-profit organization?

• Some examples are:

• 1. Voluntary health and welfare organizations:

• 2. Schools, colleges and universities

• 3. Hospitals• 4. Cooperatives

• 5. Labor unions

• 6. Performing arts organizations

• 7. Foundations

• 8. Religious organizations

• 9. Country Clubs

•

10. Professional associations



Statement of Financial Position

SCHOOLS/ UNIVERSITIES



Statement of Activities




S

t a t e m e n t o f F i n a n c i a l P o s i t i o n


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Statement of Financial Position


NPO Financial Statements

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