Accounting Term: What Is a Statement of Activities?

For example, if total revenues for the fiscal year are $2,200,000 and total expenses are $1,850,000, you subtract the expenses from the revenue to determine the net assets. The purpose of the change in net assets is to articulate the net assets or equity of the statement of financial position. The SOA outlines a company’s profits and expenditures over a period, while the Statement of Financial Position presents its financial position at a specific point in time. The image below is the SOA of a nonprofit organization in Washington, DC, called Freedom House (2015).

The Three Main Types of Statements of Work You Should Know

There’s no escaping the task of keeping your financial documentation up to date and trustworthy, but it doesn’t have to be a chore. Form 990 does not have to adhere to GAAP standards and contains additional information which, while relevant to the IRS, may be confusing for many of your stakeholders. This allows you to mitigate risks and seize opportunities, redirecting funds to the initiatives that most effectively advance your mission. For instance, an environmental conservation mission could include forestry, wildlife preservation, or educational initiatives. Find out what it takes for nonprofit finance teams to not only survive but thrive with our Ebook survival guide. Take our 2-minute survey to find out if outsourced accounting and bookkeeping is a good fit for your organization.

Starting a Nonprofit Organization With No Money

This integration improves visibility, enables better reporting, and allows for automation that enhances compliance with internal policies and external regulations. Ensure all parties are aligned, responsibilities are clearly defined, and information is accurate and specific. Include details like the number of expected revisions, communication protocols, and escalation procedures. Specify whether payments are tied to deliverable completion, made on a recurring schedule, or structured in some other way. Include details about invoicing procedures, payment methods, and timeframes to ensure Bookkeeping for Painters smooth financial transactions.

How are SOAs Different from an Income Statement?

A clear breakdown of expenses also helps demonstrate your organization’s efficiency and commitment to mission-driven activities. For example, nonprofits record incoming funds only after meeting donor conditions, while for-profit companies can recognize revenue as soon as a statement of activities example sale is complete. One of the key documents to help you make that call is the statement of activities. Once you have the change in net assets, you can compare revenue and expenses by significant program activity (or function) to see exactly where you are making or losing money. If you use cash-based accounting, you’ll only record cash deposited into your bank during the reporting period.

• It’s also important to note that some assets may have more liquidity than others, which is good to keep track of in case of an emergency.
• A Statement of Activities will help nonprofits file Form 990 with the IRS and provide needed transparency to donors, foundations, and corporations.
• If you cannot find a nonprofit’s Statement of Activities, you can also ask the organization for a copy.
• We’ll help you determine if outsourcing your accounting and bookkeeping is the right decision for your organization.
• Since the statement of activities distinguishes unrestricted funds and restricted funds, you can get an idea of just how flexible your funding streams are.
• Revenues represent the total income a nonprofit organization receives from various sources, such as donations, grants, program fees, and investment returns, during a specific period.

Expenses represent the costs incurred by your nonprofit in carrying out its activities and operations. Aplos partners with Stripe Payments Company for money transmission services and account services with funds held at Fifth Third Bank N.A., Member FDIC. The IRS Form 990 might sound scary, but it’s actually your nonprofit’s chance to shine! This annual filing details your mission, programs, and finances for the world to see. For tracking budgets and financials across grants, programs, or multiple locations. Stewart Hemingson is an MBA marketing graduate on a What is bookkeeping mission to make content that converts while being informative and engaging.