• Statement of Financial Position (Balance Sheets)
  
• Statement of Activities (Income Statement)
  
• Statement of Cash Flows

In addition, nonprofits must provide information about expenses as reported in their functional classifications (program services and supporting services.) Voluntary health and welfare organizations are also required to present a statement that reports expenses by their natural classification (e.g., salaries, rent, telephone, printing, etc.) Other nonprofits are encouraged to report in both formats as well.

The following briefly describes the information included in each statement.

Statement of Financial Position
Reports amounts of the organization's assets, liabilities and net assets (fund balances) at a specified date. This statement was previously known as the Balance Sheet.

Assets are properties and resources the agency owns and can use to achieve its goals.

Current assets include cash accounts, certificates of deposits and other investments, and items such as receivables which will be converted to cash within one year. Fixed assets include land, buildings and equipment.

Liabilities are debts of the organization, what is owed. Current liabilities typically include accounts payable to vendors, short-term loans due, withheld payroll taxes due, etc. Long term liabilities include long term debt, mortgages, etc.

Net Assets (previously called fund balances) represents the net of assets over liabilities. Three classes of net assets must be reported on unrestricted, temporarily restricted, and permanently restricted. Restrictions are determined by the conditions which donors place on their contributions.

Statement of Activities
Reports revenues, expenses, and the resulting change in net assets for the year. Charges are reported for each of the three classes of net assets (unrestricted, temporarily restricted, and permanently restricted.) This statement was previously known as the Income Statement or Statement of Revenue, Expenses and Changes in Fund Balances.

Statement of Cash Flows
Reports how the organization's cash position changed during the year. Cash flow information is divided among receipts and disbursements from investing, financing, and operating activities. Many nonprofits ask their auditors to prepare this statement.

Other Related Documents
In addition to the financial statements required for audit purposes, nonprofits are required by federal and state governments to file various information returns to maintain their tax-exempt status and document tax compliance. The primary federal reports are the annual Form 990 and Schedule A to the 990. State governments may require additional reports.

Sample Statements of Financial Position and Activities

ASSETS		19x8	19x7
	Cash and Cash Equivalents	$11,400	$6,300
	Grants Receivable	2,500	0
	Prepaid Expense	950	1,300
	Fixed Assets at Cost:
	Office Equipment	15,496
	Less:
	Accumulated Depreciation	<15,496>
	Net Fixed Assets	- 0 -	- 0 -
	Total Assets	$14,850	$7,600
LIABILITIES
	Accounts Payable	$1,500	$4,500
NET ASSETS (Fund Balance)		$13,350	$3,100

FORMAT A
Functional Expense Classification

REVENUES
Government Grants	$ 35,000
Other Grants	50,000
Individual Contributions	25,000
Fees for Service	45,000
Interest	2,000
Total Income	$157,000
EXPENSES
Counseling Program	$ 52,800
Training Program	62,100
Management and General	21,865
Fundraising	9,985
Total Expenses	$146,750
Increase/ in Net Assets	$ 10,250

FORMAT B
Natural Expense Classification

REVENUES
Government Grants	$ 35,000
Other Grants	50,000
Individual Contributions	25,000
Fees for Service	45,000
Interest	2,000
Total Income	$157,000
EXPENSES
Salaries and Fringe:
Executive Director	$ 38,000
Program Directors	50,000
Secretary	27,000
Rent	12,000
Supplies	11,000
Telephone	3,300
Postage	2,500
Copying	2,950
Total Expenses	$146,750
Increase/ in Net Assets	$ 10,250

Change in Net Assets	$10,250
Adjustments to reconcile change in net assets to net cash operating activities:
in grants receivable	2,500
Decrease in prepaid expenses	350
in accounts payable	3,000
Net cash operating activities	5,150
Net increase in cash and cash equivalents	5,100
Cash and Cash Equivalents — Beginning of year	6,300
Cash and Cash Equivalents — End of year	$11,400