non profit

Statement of Cash Flows

Reports cash flows from operating, investing, and financing activities.

Unrestricted Cash Contributions

Cash inflows from operating activities.

Restricted Contribution for Long-term Asset

Treated as a financing activity inflow; the subsequent purchase of the asset is an investing activity outflow.

Contribution Revenue

Cash or gifts in kind provided to an NPO without receiving anything of commensurate value in exchange.

Gifts in Kind

Noncash contributions (e.g., investments, inventory, services) recorded as revenues at fair value if determinable.

Pledge

A promise to provide resources to an NPO in the future; may be conditional or unconditional.

Unconditional Pledge

Accounted like accounts receivable; recognized as revenue in the period pledged.

Statement of Activities

Demonstrates how resources are used to provide programs and services; reports inflows and outflows of resources.

Operating Activities (Cash Flow)

Cash effects of items in the statement of activities; inflows include revenues collected, outflows include expenses paid.

Investing Activities (Cash Flow)

Cash effects of long-term asset transactions; inflows from asset sales, outflows from asset purchases.

Financing Activities (Cash Flow)

Cash effects of long-term liabilities and donor-restricted contributions for long-term purposes.

Statement of Functional Expenses

Breaks down functional categories (program services and supporting services) into natural expense categories (rent, salaries, etc.).

Unrestricted Support

Contributions received without donor restrictions.

Restricted Support

Contributions received with donor-imposed restrictions.

Internally Designated Assets

Reported in net assets without donor restrictions.

Donor-Designated Assets

Reported in net assets with donor restrictions.

Conditional Contribution

Recognized as a liability until donor-imposed conditions are substantially met.

Net Assets Without Donor Restrictions

Resources the organization may spend at its discretion.

Net Assets With Donor Restrictions

Resources restricted for a specific purpose, use, or period of time.

Exchange vs Contribution Revenue

Determined based on whether the donor received commensurate value.

Fair Value Adjustments for Gifts in Kind

Unrealized gains/losses are reported in the statement of activities.

Refundable Advance

Liability recorded for conditional contributions until conditions are met.

Net Patient Service Revenue

Gross patient revenue adjusted for discounts, contractual adjustments, and implicit price concessions.

Residual Interest

Net assets of an NPO; equivalent to equity in a for-profit, but with no ownership interest.

Functional Expenses

Categorizes expenses by purpose—program services or supporting services.

Natural Expenses

Categorizes expenses by type (salaries, rent, utilities, depreciation).

Program Services

Expenses directly related to the mission of the NPO.

Supporting Services

Expenses that support the organization but are not part of the core mission.

Revenue Recognition for NPOs

Contributions are recognized when received or pledged (if unconditional); restricted contributions affect net assets with donor restrictions.

Donor-Imposed Restriction

Requirement that contributions be used for a specific purpose, time, or program.

Unrealized Gains/Losses

Changes in fair value of assets reported in the statement of activities.

Time-Restricted Donations

Contributions that cannot be used until a future period.

Variance Power

The ability of an NPO to redirect donated assets to other purposes without donor approval.

Fiduciary Duty (NPO)

Responsibility to manage assets according to donor directives.

Other Operating and Nonoperating Revenues

Income received from sources other than primary operations.

Net Assets Released from Restrictions

Restricted funds used for their intended purpose and reclassified as without donor restrictions.

Fundraising Expenses

Costs incurred to solicit contributions from donors.

Management and General Expenses

Overhead costs of running the organization.

Patient Revenue Adjustments

Discounts, contractual adjustments, and implicit price concessions applied to gross patient service revenue.

Contributed Services (Specialized Skills)

Recognized as revenue when services require skills provided by someone with those skills.

Nonrecognizable Services

Volunteer services not requiring specialized skills are not recorded as revenue.

Four Non Profit Statements

Statement of Activities, Statement of Financial Position, Statement of Cash Flows, and Statement of Functional Expenses.

Statement of Functional Expenses

A detailed report that breaks down the functional expenses of a nonprofit organization according to their purpose, such as program services, management and general expenses, and fundraising expenses.

How are the 3 financial statements connected?

the Income Statement summarizes revenues and expenses to show net income, which is reported on the Balance Sheet as part of equity(its added to re). In addition, the Statement of Cash Flows illustrates how changes in net income from the Income Statement affect cash movements during the period.