What Is the Nonprofit Balance Sheet?
Wondering what the nonprofit balance sheet is?
There’s only one way to find out—by breaking it down beat by beat.
What Is a Nonprofit Balance Sheet?
The nonprofit balance sheet basically serves as a cross section that provides the most comprehensive photos of an organization’s financial situation.
Why Does the Balance Sheet Matter?
The balance sheet indicates an organization’s liquidity by communication how much cash an organization has at present and what assets will soon be available in the form of cash.
What Is a Statement of Financial Position?
The statement of financial position used to be called the balance sheet. Even though the name has changed since the inception, the purpose of the statement of financial position (SOP) hasn’t. Basically, it exists as any business balance sheet or statement of personal net worth.
What the SOP accounts for:
- •Assets: Assets are basically what is owned by the tax exempt organization. They are what your organization has, what others owe you, and what you have invested in.
- •Liabilities: Liabilities are what your organization owes to others or holds on behalf of others.
- •Net Assets: Net Assets are also called equity, capital, retained earnings, or fund balance. The net assets of a nonprofit organization should be equivalent to the net worth of the organization.
What Is the Statement of Activities?
The statement of activities used to be called the income statement, and many nonprofit organizations produce a variety of versions of this report. These have been called budget reports, profit & loss reports, or income and expense reports.
No matter what the name is, the statement of financial activities (SOA) shows the nonprofit organization’s income and expenses for a specific period of time.
That’s pretty much the gist of it!
If you have any questions for the upcoming Form 990 deadline, our dedicated tax filing experts of ExpressTaxExempt will be here to help you! You can reach them by email at [email protected] or by phone at 704.839.2321.
