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BALANCE SHEET AND 1RS FORM 990

The balance sheet provides information that can help complete Part X of Form 990. Part X requests information on Assets, Liabilities, and Net Assets or Fund Balances, categorized as beginning of year and end of year (Box 9.6).

Box 9.6 Part X, Balance Sheet, Form 990

Part X, Balance Sheet, Form 990

INCOME STATEMENT AND BALANCE SHEET

As you may have noticed, the income statement and the balance sheet are different in purpose and format. The income statement or statement of activities shows the income generated and the expenses incurred by an organization over a period of time. The balance sheet or statement of financial position is a snapshot of the financial position of an organization at a specific point in time, generally at the close of an accounting period. The major items of the income statement are revenue or income, expenses or expenditures, and the balance or summary. On the other hand, the three major sections of the balance sheet are assets, liabilities, and fund balance. Box 9.7 illustrates the main differences between income statement and balance sheet.

STATEMENT OF CASH FLOW

The statement of cash flow describes the inflows (sources of cash) and outflows (use of cash or expenses) of a nonprofit entity for a given period. Usually, a statement of cash flow includes four main sections:

1. The operating activities: Cash received from various revenue sources (e.g., grants, contracts, contributions, special events, investment income) and expense sources (e.g., salaries; payments to suppliers; and payments for utilities, travel, and telephone).

2. The investing activities: Cash that is related to investing activities (e.g., equipment, investments, sale of investments).

3. Financing activities: Cash regarding financing activities related to repayment of debt.

4. Change in cash: Net increase or decrease in cash.

Overall, a statement of cash flow reflects either an increase or a decrease in cash. Box 9.8 is an illustration of a statement of cash flow.

Box 9.7 Income Statement and Balance Sheet

Balance Sheet

Income Statement

Definition

Snapshot of the financial position of an organization at a specific time.

Financial statement that shows the income generated and the expenses incurred by an organization over a period of time.

Purpose

Shows organization financial health or net worth at a given

• Shows the organization's financial health or net worth over time

time.

• Reveals sources of income

Major Items

• Assets

• Revenue or income

• Liabilities

• Expenditures or expenses

• Fund balance or owner's equity

• Excess (or deficit) of revenues

Box 9.8 Sample Statement of Cash Flow

Federal Year 2013 Statement of Cash Flow, Osh Operating activities

Community Foundation, Inc.

Federal year 2013

Cash received from grants

$200,000

Cash received from contracts

350,000

Cash received from contributions

100,000

Cash received from special events

150,000

Cash received from investment income

50,000

Cash paid to employees

-550,000

Cash paid to suppliers

-150,000

Cash paid to utilities, travel, phone

-60,000

Subtotal operating activities

90,000

Investing activities

Purchase of equipment

-1200

Purchase of investments

-20,000

Proceeds from sale of investments

1000

Subtotal investing activities

-20,100

Financing activities

Investing in endowment

-20,000

Payment on mortgage

-6,000

Subtotal financing activities

-26,000

Net increase or decrease in cash

43,900

Cash at the beginning of the year

6,100

Cash at the end of the year

$50,000

STATEMENT OF CASH FLOW AND 1RS FORM 990

The statement of cash flow provides information that can help provide financial information in Form 990, Part XI, Reconciliation of Net Assets (Box 9.9).

 
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