Financial Statements: A Primer

Montessori Life, Fall 2005 | Go to article overview

Financial Statements: A Primer


The usual structure of a nonprofit organization includes a chief executive officer (CEO), a chief financial officer (CFO), and a board of directors with a chair or president, a secretary, and a treasurer. The organization operates on a fiscal, or financial, year basis. The fiscal year is a 12-month period used for planning the use of funds and for calculating annual financial reports. Organizational structure determines the selection of the 12-month period. Most nonprofits use a July 1 to June 30 fiscal year. The information on page 45 covers fiscal years 2003 and 2004. If you have any questions, please contact Carol Monroe, CAE, Vice President of Finance & Operations, at carol@amshq.org.

The Statement of AMS Financial Activity,

which appears at right, shows a comparison between fiscal years 2003 and 2004, including revenues and expenses as well as net assets. Restricted funds are shown for both years in an itemized format.

Revenue

is any income earned from services or products sold.

Liabilities (Expenses)

are debts to others including accounts payable, principal payments on debts, and any other accrued expenses. Current liabilities are those that must be paid now or in the next 12 months.

Assets

include all property owned by the organization. Current assets include cash, investments, and other assets that can be used or converted to cash within 12 months. Net assets refer to the difference between total assets and total liabilities.

Restricted Funds

are contributions designated by the donor for a specific use.

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