Understanding Financial Statements

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Understanding Financial Statements

  1. 1. Understanding Financial Statements MONEY MANAGEMENT Keeping Tabs on Where the Money Goes at Your Nonprofit
  2. 2. Launched in 1982 by Jim and Patty Rouse, The Enterprise Foundation is a national, nonprofit housing and community develop- ment organization dedicated to bringing lasting improvements to distressed communities. Copyright 1999, The Enterprise Foundation, Inc. All rights reserved. ISBN: 0-942901-54-1 No content from this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or any infor- mation storage and retrieval system, without permission from the Communications department of The Enterprise Foundation. However, you may photocopy any worksheets or sample pages that may be contained in this manual. This publication is designed to provide accurate and authori- tative information on the subject covered. It is sold with the understanding that The Enterprise Foundation is not render- ing legal, accounting or other project-specific advice. For expert assistance, contact a competent professional. COMMUNITY DEVELOPMENT LIBRARY™ This book is part of the Enterprise Community Development Library, an invaluable reference collection for nonprofit organizations dedicated to revitalizing and reconnecting neighborhoods to mainstream America. One of many resources available through Enterprise, it offers industry-proven information in simple, easy-to- read formats. From planning to governance, fund rais- ing to money management, and program operations to communications, the Community Development Library will help your organization succeed. ADDITIONAL ENTERPRISE RESOURCES The Enterprise Foundation provides nonprofit organizations with expert consultation and training as well as an extensive collection of print and online tools. For more information, please visit our Web site at www.enterprisefoundation.org.
  3. 3. About This Manual What are financial statements? Financial statements are numerical descriptions of fiscal activity and status required as part of an audit. Understanding the finan- cial statements of your organization will give you a different, and important, view of the nonprofit’s health and prospects. Understanding Financial Statements designed for the staffs and boards is of nonprofit organizations; city, county and state agencies; and techni- cal assistants and partners of nonprofit community development orga- nizations. This guide explains the elements of nonprofit organizational financial statements, providing information on: s Standard formats of various financial statements and reports s Cash vs. accrual accounting s Restricted funds Not intended as an in-depth text, Understanding Financial Statements provides examples and exercises written from the standpoint of a non- profit manager or board member who is not familiar with accounting or the details of financial management. This manual is one of the books within the Money Management series Table of Contents of The Enterprise Foundation’s Community Development Library™. The series provides detailed information on: Chart of Accounts 2 s Budgeting Balance Sheets 11 s Cash flow projections Exercise #1 14 s Sound financial management Exercise #2 16 s Assessing your organization’s finances Income Statements 18 s Accounting software Exercise #3 21 s Federal rules of nonprofit money management Exercise #4 24 Statements of Cash Flows 26 Exercise #5 28 Trial Balance: Connecting Balance Sheets With Income Statements 32 Exercise #6 37 Understanding Different Accounting Methods 43 Fund Accounting 46 Exercise #7 51 1
  4. 4. Chart of Accounts The chart of accounts is a listing of the different accounts used to record the activities or transac- tions of your organization. A chart of accounts reflects your nonprofit’s particular nature and function while using standard accounting terms. For instance, everyone will have a cash account. But you may not have an inventory account unless you are a retailer or wholesaler. For community development organizations, the chart of accounts may include accounts related to single-family development such as construc- tion in progress. Five major accounts are used in a chart of accounts: s Assets s Liabilities s Equity or Net Assets s Revenues s Expenses 2
  5. 5. COMMON CLASSIFICATIONS These five major accounts are larger categories that allow an organization to place its many different accounts and financial activities into an ordered, comprehensible structure. They help turn a confus- ing tangle of numbers into a clear narrative about your organization’s financial condition based on your organization’s particular activities. Commonly used classifications Assets Current Assets — cash, accounts receivable, prepaid expenses and other assets that can be readily converted to cash or consumed (within one year or accounting cycle). Investments — typically stocks, bonds and other securities. Fixed Assets — land and durable property and equipment held and used in normal operations and depreciated over future periods. Other Assets — accounts in this "catch-all" section vary between industries and orga- nizations but are typically any asset that does not fit into other categories, particu- larly noncurrent assets such as long-term notes receivable (loans to others). Also, nondepreciable fixed assets such as buildings purchased for renovation and resale (housing inventory for a housing development corporation). Liabilities Current Liabilities — obligations that are expected to be satisfied with current assets or within one year: accounts payable, wages and other payroll liabilities; short-term notes or current payments of longer-term obligations. Long-Term Liabilities — obligations that are not expected to be satisfied within the current period (one year) but rather will be paid in future periods: bonds, pensions, long-term notes (loans). Net Assets Equivalent to equity in a for-profit entity, the net assets account represents the cumulative effect of all transactions of the organization throughout its life. “What you own minus what you owe equals your net assets.” Assets - Liabilities = Net Assets Revenues Most nonprofit organizations classify revenues as either restricted or unrestricted. Restricted revenue refers to income that must be used for a specific purpose or pro- gram and comes from a special source. Unrestricted revenue refers to income that can be used at the nonprofit’s discretion for any activity (program or administrative). Other classifications can be defined based on their relevance to the organization’s activities. For example, some community development organizations may want a classification for revenue accounts related to federal contracts. Expenses Expense accounts may be classified based on the type of organization and the nature of its activities. The classifications may also be determined by how the man- agement of the organization wants to see the information — the format of the financial statements. The grouping of expenses may vary greatly between industries and companies. Many nonprofits classify their expenses as program and nonprogram — often called gen- eral and administrative, or G&A. Program expenses are those that are directly attrib- utable to a specific program. Nonprogram expenses refer to those costs that may not be directly attributed to a program but are incurred in the operation of the organiza- tion (fund raising, for example). Other classifications — such as direct and indirect expenses — may exist as well. 3
  6. 6. FOREVER HOMES CDC — CODES & ACCOUNTS Let’s look at an example of a fictitious 501(c)(3) s Developing Single-Family Homes for Sale nonprofit organization, Forever Homes, that has to First-Time Low-Income Home Buyers — three distinct business operations, all related to In 1998 Forever Homes developed six houses. housing. s Providing Supportive Housing for Households with Extensive Social Service s Managing Property Owned by Other Needs — In 1998 Forever Homes owned and Nonprofits — In 1998 Forever Homes managed managed 15 units of supportive housing. 400 units of affordable multifamily housing. Forever Homes’ activities are reflected in its chart of accounts. Here is a typical chart of accounts for this nonprofit. The code number stands for posting categories, and the account name describes the activity Codes & Accounts that takes place under each category. Code Account Code Account 1010 Cash — Checking 4160 Training Fees 1015 Cash — HOME Funds 4170 Consulting 1020 Cash — Savings 4200 Sale of Property 1030 Cash — Petty Cash 4900 Interest Income 1200 Accounts Receivable 5000 Cost of Property Sold 1300 Prepaid Expenses 6010 Salaries 1500 Land/Buildings 6020 Benefits 1510 Construction in Progress 6100 Program Supplies 1520 Salable Property 6150 Equipment Rental 1600 Long-Term Investments 6200 Staff Training 1800 Office Furniture & Equipment 6250 Marketing/Advertising 1801 Accumulated Depreciation — 6300 Printing & Reproduction Furniture & Equipment 6350 Publications & Memberships 1900 Notes Receivable 6400 Travel 2000 Accounts Payable 7050 Fund-Raising & Event Costs 2100 Payroll Liabilities 7100 Rent 2120 Accrued Expenses 7110 Utilities 2200 Purchaser’s Deposits 7120 Telephone 2300 Lease Payable 7130 Insurance 2400 Notes Payable 7140 Office Supplies 2500 HOME Funds Payable 7150 Postage & Delivery 3000 Net Assets 7160 Repairs & Maintenance 4010 Grants (unrestricted) 7200 Legal Fees 4011 Grants (restricted) 7210 Accounting & Auditing Fees 4050 Contributions 7800 Miscellaneous 4100 Fund-Raising Event 7900 Interest 4150 Program Fees 8000 Depreciation 4
  7. 7. How transactions affect Forever Homes’ chart of accounts Sample Transactions Classifications Affected Monthly payments of $18,750 $18,750 removed from Cash account for salaries $18,750 added to Salaries account Receipt of $5,000 from a $5,000 added to Cash account fund-raising event $5,000 added to Fund-Raising Event account Payment of $960 in interest $960 removed from Cash account on a loan $960 added to Interest account Receipt of $75 for interest $75 added to Cash account on bank deposits $75 added to Interest Income account Payment of $4,000 for $4,000 removed from Cash account an audit $4,000 added to Accounting & Auditing Fees account 5
  8. 8. More sample transactions and the accounts they affect Transaction Accounts Classification Received unrestricted operating grant and Cash Current Asset deposited money in bank Grants (unrestricted) Revenue Paid staff salaries Salaries Expenses Cash Current Asset Purchased supplies on account Supplies Expenses (due in 30 days) Accounts Payable Current Liability Borrowed money from bank for development Cash Current Asset (note due in five years) Notes Payable Long-Term Liability Paid invoices from last month Accounts Payable Current Liability Cash Current Asset Recorded renovation costs for single-family Construction in Progress Housing Inventory home (from contractor’s invoice) Accounts Payable Current Liability Sold single-family home — transferring Notes Payable Long-Term Liability development loan to buyer Sale of Property Revenue 6
  9. 9. Example of Chart of Accounts for Forever Homes CDC — Classifications of Balance Sheet Accounts This chart builds on what you already have seen in prior examples. In addition to codes and account names, the chart includes a classification of accounts by type as described earlier. Please note that all of the accounts on this page are balance sheet accounts. (More about balance sheets later.) Classifications of balance sheet accounts Code Account Classification 1010 Cash — Checking Current Asset 1015 Cash — HOME Funds Current Asset 1020 Cash — Savings Current Asset 1030 Cash — Petty Cash Current Asset 1200 Accounts Receivable Current Asset 1300 Prepaid Expenses Current Asset 1500 Land/Buildings Housing Inventory 1510 Construction in Progress Housing Inventory 1520 Salable Property Housing Inventory 1600 Long-Term Investments Investment 1800 Office Furniture & Equipment Fixed Asset 1801 Accum. Depr. — Furn. & Equip. Fixed Asset 1900 Notes Receivable Other Asset 2000 Accounts Payable Current Liability 2100 Payroll Liabilities Current Liability 2120 Accrued Expenses Current Liability 2200 Purchaser’s Deposits Current Liability 2300 Lease Payable Long-Term Liability 2400 Notes Payable Long-Term Liability 2500 HOME Funds Payable Long-Term Liability 3000 Net Assets Net Assets 7
  10. 10. Example of Chart of Accounts for Forever Homes CDC — Classifications of Income Statement Accounts This chart is another example showing all three headers: codes, account names and classification by type. The difference between this chart and the one shown just before is that all of the accounts on this page are income statement accounts instead of balance sheet accounts. (More about income statements later.) Classifications of income statement accounts Code Account Classification 4010 Grants (unrestricted) Revenue 4011 Grants (restricted) Revenue 4050 Contributions Revenue 4100 Fund-Raising Event Revenue 4150 Program Fees Revenue 4160 Training Fees Revenue 4170 Consulting Revenue 4200 Sale of Property Revenue 4900 Interest Income Revenue 5000 Cost of Property Sold Cost of Property Sold 6010 Salaries Direct Expenses 6020 Benefits Direct Expenses 6100 Program Supplies Direct Expenses 6150 Equipment Rental Direct Expenses 6200 Staff Training Direct Expenses 6250 Marketing/Advertising Direct Expenses 6300 Printing & Reproduction Direct Expenses 6350 Publications & Memberships Direct Expenses 6400 Travel Direct Expenses 7050 Fund-Raising & Event Costs Indirect Expenses 7100 Rent Indirect Expenses 7110 Utilities Indirect Expenses 7120 Telephone Indirect Expenses 7130 Insurance Indirect Expenses 7140 Office Supplies Indirect Expenses 7150 Postage & Delivery Indirect Expenses 7200 Legal Fees Indirect Expenses 7210 Accounting & Auditing Fees Indirect Expenses 7900 Interest Indirect Expenses 8000 Depreciation Indirect Expenses 8
  11. 11. Example of Chart of Accounts for Forever Homes CDC — Dollars Assigned On prior charts you have already seen three columns with codes, account names and classification by type headers. Now you can see the addition of a fourth column, which shows actual amounts specified for each account under a new header called Balance. Dollars assigned Code Account Classification Balance 1010 Cash — Checking Current Asset $4,015 1015 Cash — HOME Funds Current Asset $34,000 1020 Cash — Savings Current Asset $0 1030 Cash — Petty Cash Current Asset $250 1200 Accounts Receivable Current Asset $1,000 1300 Prepaid Expenses Current Asset $450 1500 Land/Buildings Housing Inventory $30,000 1510 Construction in Progress Housing Inventory $15,000 1520 Salable Property Housing Inventory $56,000 1600 Long-Term Investments Investment $0 1800 Office Furniture & Equipment Fixed Asset $30,000 1801 Accum. Depr. — Furn. & Equip. Fixed Asset $13,500 1900 Notes Receivable Other Asset $5,000 2000 Accounts Payable Current Liability $3,200 2100 Payroll Liabilities Current Liability $6,800 2120 Accrued Expenses Current Liability $0 2200 Purchaser’s Deposits Current Liability $0 2300 Lease Payable Long-Term Liability $3,000 2400 Notes Payable Long-Term Liability $0 2500 HOME Funds Payable Long-Term Liability $135,000 3000 Net Assets Net Assets $0 4010 Grants (unrestricted) Revenue $75,000 4011 Grants (restricted) Revenue $220,000 4050 Contributions Revenue $25,000 4100 Fund-Raising Event Revenue $5,000 4150 Program Fees Revenue $0 4160 Training Fees Revenue $21,000 4170 Consulting Revenue $20,000 4200 Sale of Property Revenue $0 4900 Interest Income Revenue $75 5000 Cost of Property Sold Cost of Property Sold $0 6010 Salaries Direct Expenses $225,000 6020 Benefits Direct Expenses $49,500 6100 Program Supplies Direct Expenses $0 6150 Equipment Rental Direct Expenses $2,000 6200 Staff Training Direct Expenses $2,000 6250 Marketing/Advertising Direct Expenses $2,000 chart continued on next page 9
  12. 12. Code Account Classification Balance 6300 Printing & Reproduction Direct Expenses $2,400 6350 Publications & Memberships Direct Expenses $1,500 6400 Travel Direct Expenses $4,500 7050 Fund-Raising & Event Costs Indirect Expenses $2,000 7100 Rent Indirect Expenses $18,500 7110 Utilities Indirect Expenses $2,100 7120 Telephone Indirect Expenses $3,900 7130 Insurance Indirect Expenses $5,000 7140 Office Supplies Indirect Expenses $5,500 7150 Postage & Delivery Indirect Expenses $3,500 7160 Repairs & Maintenance Indirect Expenses $0 7200 Legal Fees Indirect Expenses $4,000 7210 Accounting & Auditing Fees Indirect Expenses $4,000 7800 Miscellaneous Indirect Expenses $0 7900 Interest Indirect Expenses $960 8000 Depreciation Indirect Expenses $13,500 LOOK AT YOUR ORGANIZATION’S CHART OF ACCOUNTS Think about what you have just learned and compare it to the way your nonprofit keeps its chart of accounts. Notice the five account classifications: Assets Liabilities Net Assets Re ve n u e s Ex p e n s e s Also look at the level of detail in your accounts: Forever Homes has one account for salaries. Does your organization have one or more than one? Is the classification type listed next to each account? 10
  13. 13. Balance Sheets The balance sheet — known officially as a Assets comprise one section of the balance Statement of Financial Position — is a report sheet while liabilities and net assets comprise of the financial position of an organization the other section. The “totals” of these two at one moment in time, providing a snapshot sections should balance. of your company’s financial health. The infor- mation contained in the balance sheet shows The assets section shows what you own or what your organization’s ability to meet present and resources you have available. The liabilities and future obligations with current resources, how net assets section shows what you owe plus the much is owed and how much is owned by organization’s net account balance. the organization. THE BASIC ACCOUNTING EQUATION STANDARD FORMAT Assets – Liabilities = Net Assets The balance sheet contains the first three of the – or – five major account types: Assets = Liabilities + Net Assets s Assets s Liabilities Again, the balance sheet reflects the financial sta- tus of your organization for one day or moment. s Net Assets A subsequent balance sheet the very next day or moment could show a very different picture. The next examples illustrate this concept. Forever Homes CDC balance sheet — consolidated as of Dec. 31, 1998 Balance ASSETS Current Assets $ 39,715 Housing Inventory 101,000 Investments 0 Fixed Assets 16,500 Other Assets 5,000 Total Assets $ 162,215 LIABILITIES Current Liabilities $ 10,000 Long-Term Liabilities 138,000 Total Liabilities 148,000 NET ASSETS 14,215 TOTAL LIABILITIES & NET ASSETS $ 162,215 Assumptions s Line-item categories are the same as line items in the chart of accounts. s Each consolidated category is broken out into line items. s The basic accounting equation still holds: Assets = Liabilities + Net Assets 11
  14. 14. How Balance Sheets Are Affected by Purchases Forever Homes CDC balance sheet — detailed as of Dec. 31, 1998 Balance Dec. 31 ASSETS CURRENT ASSETS Cash — Checking $ 4,015 Cash — HOME Funds 34,000 Cash — Savings 0 Cash — Petty Cash 250 Accounts Receivable 1,000 Prepaid Expenses 450 Total Current Assets 39,715 INVESTMENTS Land/Buildings 30,000 Construction in Progress 15,000 Salable Property 56,000 Long-Term Investments 0 Total Investments 101,000 FIXED ASSETS Office Furniture & Equipment 30,000 Accum. Depr. — Furn. & Equip. (13,500) Total Fixed Assets 16,500 OTHER ASSETS Notes Receivable 5,000 Total Other Assets 5,000 TOTAL ASSETS $ 162,215 LIABILITIES CURRENT LIABILITIES Accounts Payable $ 3,200 Payroll Liabilities 6,800 Accrued Expenses 0 Purchaser’s Deposits 0 Total Current Liabilities 10,000 LONG-TERM LIABILITIES Lease Payable 3,000 Notes Payable 0 HOME Funds Payable 135,000 Total Long-Term Liabilities 138,000 TOTAL LIABILITIES 148,000 NET ASSETS 14,215 TOTAL LIABILITIES & NET ASSETS $ 162,215 12
  15. 15. On Jan. 3, 1999, Forever Homes purchased a computer that cost $2,500. The organization agreed to pay the computer store within 30 days. The balance sheet of January 3 reflects this transaction. Forever Homes CDC balance sheet — as of Jan. 3, 1999 Balance Jan. 3 ASSETS CURRENT ASSETS Cash — Checking $ 4,015 Cash — HOME Funds 34,000 Cash — Savings 0 Cash — Petty Cash 250 Notice: Accounts Receivable 1,000 s The increase in the Prepaid Expenses 450 Office Furniture & Total Current Assets 39,715 Equipment line item INVESTMENTS — from $30,000 in Land/Buildings 30,000 the December 31 bal- Construction in Progress 15,000 ance sheet to $32,500 Salable Property 56,000 in the January 3 bal- Long-Term Investments 0 ance sheet Total Investments 101,000 s Corresponding FIXED ASSETS increases in the Office Furniture & Equipment 32,500 summary line items Accum. Depr. — Furn. & Equip. (13,500) Total Fixed Assets Total Fixed Assets 19,000 and Total Assets OTHER ASSETS s The increase in the Notes Receivable 5,000 liability line item Total Other Assets 5,000 Accounts Payable TOTAL ASSETS $ 164,715 s Corresponding increases in the sum- LIABILITIES CURRENT LIABILITIES mary line items Total Accounts Payable $ 5,700 Current Liabilities, Payroll Liabilities 6,800 Total Liabilities, and Accrued Expenses 0 Total Liabilities and Purchaser’s Deposits 0 Net Assets Total Current Liabilities 12,500 LONG-TERM LIABILITIES Lease Payable 3,000 Notes Payable 0 HOME Funds Payable 135,000 Total Long-Term Liabilities 138,000 TOTAL LIABILITIES 150,500 NET ASSETS 14,215 TOTAL LIABILITIES & NET ASSETS $ 164,715 13
  16. 16. Balance Sheets: Exercise #1 Balance Sheet Transaction Changes On Jan. 15, 1999 Forever Homes purchased a single-family house for $30,000. Closing costs charged to the purchaser were $2,200. HOME funds were already lent by the city to pay all costs of this purchase. Use this page to show how this transaction changes the balance sheet of Jan. 3, 1999. Forever Homes CDC balance sheet as of Jan. 3 as of Jan. 15 ASSETS CURRENT ASSETS Cash — Checking $ 4,015 Cash — HOME Funds 34,000 Cash — Savings 0 Cash — Petty Cash 250 Accounts Receivable 1,000 Prepaid Expenses 450 Total Current Assets 39,715 INVESTMENTS Land/Buildings 30,000 Construction in Progress 15,000 Salable Property 56,000 Long-Term Investments 0 Total Investments 101,000 FIXED ASSETS Office Furniture & Equipment 32,500 Accum. Depr. — Furn. & Equip. (13,500) Total Fixed Assets 19,000 OTHER ASSETS Notes Receivable 5,000 Total Other Assets 5,000 TOTAL ASSETS $ 164,715 LIABILITIES CURRENT LIABILITIES Accounts Payable $ 5,700 Payroll Liabilities 6,800 Accrued Expenses 0 Purchaser’s Deposits 0 Total Current Liabilities 12,500 LONG-TERM LIABILITIES Lease Payable 3,000 Notes Payable 0 HOME Funds Payable 135,000 Total Long-Term Liabilities 138,000 TOTAL LIABILITIES 150,500 NET ASSETS 14,215 TOTAL LIABILITIES & NET ASSETS $ 164,715 © 1999, The Enterprise Foundation, Inc. 14
  17. 17. Answers to Exercise #1 Forever Homes CDC balance sheet — as of Jan. 15, 1999 Balance ASSETS CURRENT ASSETS Cash — Checking $ 4,015 Cash — HOME Funds 1,800 Cash — Savings 0 Cash — Petty Cash 250 Notice: Accounts Receivable 1,000 s The decrease in the Prepaid Expenses 450 Cash—HOME Funds Total Current Assets 7,515 line item — from INVESTMENTS $34,000 on Jan. 3 to Land/Buildings 62,200 $1,800 on Jan. 15 Construction in Progress 15,000 s The corresponding Salable Property 56,000 decrease in the sum- Long-Term Investments 0 mary line item Total Total Investments 133,200 Current Assets FIXED ASSETS s The increase in the Office Furniture & Equipment 32,500 Land/Buildings line Accum. Depr. — Furn. & Equip. (13,500) item — from $30,000 Total Fixed Assets 19,000 on Jan. 3 to $62,200 OTHER ASSETS on Jan. 15 Notes Receivable 5,000 s The corresponding Total Other Assets 5,000 increase in the sum- TOTAL ASSETS $ 164,715 mary line item Total Investments LIABILITIES CURRENT LIABILITIES s No changes in Total Accounts Payable $ 5,700 Assets, Total Payroll Liabilities 6,800 Liabilities, Net Assets, Accrued Expenses 0 or Total Liabilities and Purchaser’s Deposits 0 Net Assets Total Current Liabilities 12,500 LONG-TERM LIABILITIES Lease Payable 3,000 Notes Payable 0 HOME Funds Payable 135,000 Total Long-Term Liabilities 138,000 TOTAL LIABILITIES 150,500 NET ASSETS 14,215 TOTAL LIABILITIES & NET ASSETS $ 164,715 15
  18. 18. Balance Sheets of Your Organization: Exercise #2 Look at your nonprofit’s most recent and next most recent balance sheets. If those are not available, take any two that were created at different times. Use this exercise to list the components of each balance sheet. Then answer the questions on the next page. ASSETS CURRENT ASSETS Cash — Checking Cash — Savings Total Current Assets HOUSING INVENTORY Land/Buildings Construction in Progress Salable Property Total Housing Inventory INVESTMENTS Long-Term Investments Total Investments FIXED ASSETS Office Furniture & Equipment Accum. Depr. — Furn. & Equip. Total Fixed Assets OTHER ASSETS Notes Receivable Total Other Assets TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Accounts Payable Payroll Liabilities Accrued Expenses Total Current Liabilities LONG-TERM LIABILITIES Lease Payable Notes Payable Total Long-Term Liabilities TOTAL LIABILITIES NET ASSETS TOTAL LIABILITIES & NET ASSETS © 1999, The Enterprise Foundation, Inc. 16
  19. 19. Balance Sheet Questions: Have total assets increased or decreased? Which categories of the assets caused the change? Have total liabilities increased or decreased? Which categories of the liabilities caused the change? What has been the effect on net assets? © 1999, The Enterprise Foundation, Inc. 17
  20. 20. Income Statements The income statement — known officially as be more appropriate to refer to net income as a Statement of Activity — is a report that mea- surplus or deficit. You may also see it called the sures the results of an organization’s activities change in net assets. over a period of time. Very simply, the income statement reports the organization’s revenues and The standard format of an income statement is expenses for the given period — month, quarter, simple but can be as detailed as you want, with year, etc. — and the resulting difference: profit revenues and expenses grouped and subtotaled (surplus) or loss (deficit). The income statement into subtypes or classifications. Whereas the may also be called a statement of revenue and balance sheet shows the financial position of expenses or a profit and loss statement. the organization for the report date, the income statement shows the financial performance of STANDARD FORMAT OF the organization for the reporting period. INCOME STATEMENTS REVENUES LESS EXPENSES EQUALS Income statements contain the last two of the NET INCOME five major types of accounts: An income statement may not necessarily report s Revenues on all incoming resources and outgoing uses. s Expenses For example, a bank loan coming into the orga- nization and the payments of principal going Revenues represent resources flowing into the out will not be reflected (although interest owed organization for the period; expenses represent and paid on that loan will be reflected in the uses of those resources flowing out of the organi- income statement). (See the Statement of Cash zation. The resulting difference is the net income Flow section for more information.) — profit or loss. In the nonprofit world, it may Forever Homes CDC income statement — Consolidated as of Dec. 29, 1998 Current period REVENUES Restricted $ 220,000 Unrestricted 131,075 Total Revenues 351,075 EXPENSES Personnel Expenses 248,500 Direct Program Costs 14,400 Indirect and Nonprogram Costs 62,460 Total Expenses 325,360 NET INCOME $ 25,715 Assumptions s Revenues are listed at the top of the page s Expenses are listed below revenues s Net income is listed at the bottom s Net income = total revenues – total expenses 18
  21. 21. Forever Homes CDC income statement — Detailed (not consolidated) as of Dec. 29, 1998 Current Period REVENUES Grants (unrestricted) $ 60,000 Grants (restricted) 220,000 Contributions 25,000 Fund-Raising Event 5,000 Program Fees 0 Training Fees 21,000 Consulting 20,000 Sale of Property 0 Interest Income 75 Total Revenues 351,075 EXPENSES PERSONNEL EXPENSES Salaries 203,000 Benefits 45,500 Total Personnel Expenses 248,500 DIRECT PROGRAM COSTS Program Supplies 0 Equipment Rental 2,000 Staff Training 2,000 Marketing/Advertising 2,000 Printing & Reproduction 2,400 Publications & Memberships 1,500 Travel 4,500 Total Direct Program Costs 14,400 INDIRECT AND NONPROGRAM COSTS Fund-Raising & Event Costs 2,000 Rent 18,500 Utilities 2,100 Telephone 3,900 Insurance 5,000 Office Supplies 5,000 Postage & Delivery 3,500 Repairs & Maintenance 0 Legal Fees 4,000 Accounting & Auditing Fees 4,000 Miscellaneous 0 Interest 960 Depreciation 13,500 Total Indirect and Nonprogram Costs 62,460 Total Expenses 325,360 NET INCOME $ 25,715 Assumptions s Line-item categories are the same as the line items in the Chart of Accounts s Each consolidated category is broken out into line items s Net income = total revenues – total expenses 19
  22. 22. On Dec. 30, 1998, Forever Homes purchased office supplies that cost $500. This income statement up to December 30 reflects this transaction. Forever Homes CDC income statement — For the year-to-date ended Dec. 30, 1998 Current Period REVENUES Grants (unrestricted) $ 60,000 Grants (restricted) 220,000 Contributions 25,000 Fund-Raising Event 5,000 Program Fees 0 Training Fees 21,000 Consulting 20,000 Sale of Property 0 Interest Income 75 Notice: Total Revenues 351,075 s The increase in the office supplies line EXPENSES PERSONNEL EXPENSES item — from $5,000 Salaries 203,000 in the December 29 Benefits 45,500 statement to $5,500 Total Personnel Expenses 248,500 in the December 30 DIRECT PROGRAM COSTS statement Program Supplies 0 s The corresponding Equipment Rental 2,000 $500 increase in the Staff Training 2,000 summary line items, Marketing/Advertising 2,000 Total Indirect and Printing & Reproduction 2,400 Nonprogram Costs Publications & Memberships 1,500 and Total Expenses Travel 4,500 Total Direct Program Costs 14,400 s The corresponding $500 decrease in the INDIRECT AND NONPROGRAM COSTS summary line item Fund-Raising & Event Costs 2,000 Net Income Rent 18,500 Utilities 2,100 Telephone 3,900 Insurance 5,000 Office Supplies 5,500 Postage & Delivery 3,500 Repairs & Maintenance 0 Legal Fees 4,000 Accounting & Auditing Fees 4,000 Miscellaneous 0 Interest 960 Depreciation 13,500 Total Indirect and Nonprogram Costs 62,960 Total Expenses 325,860 NET INCOME $ 25,215 20
  23. 23. Income Statements: Exercise #3 On Dec. 31, 1998, Forever Homes received an unrestricted grant payment of $15,000 and paid monthly payroll expenses of $22,000 in salaries and $4,000 in benefits. Use the following page to show how these transactions change the income statement of Dec. 31, 1998. Forever Homes CDC income statement — For the year-to-date ended Dec. 30, 1998 as of Dec. 30 as of Dec. 31 REVENUES Grants (unrestricted) $ 60,000 Grants (restricted) 220,000 Contributions 25,000 Fund-Raising Event 5,000 Program Fees 0 Training Fees 21,000 Consulting 20,000 Sale of Property 0 Interest Income 75 Total Revenues 351,075 EXPENSES PERSONNEL EXPENSES Salaries 203,000 Benefits 45,500 Total Personnel Expenses 248,500 DIRECT PROGRAM COSTS Program Supplies 0 Equipment Rental 2,000 Staff Training 2,000 Marketing/Advertising 2,000 Printing & Reproduction 2,400 Publications & Memberships 1,500 Travel 4,500 Total Direct Program Costs 14,400 INDIRECT AND NONPROGRAM COSTS Fund-Raising & Event Costs 2,000 Rent 18,500 Utilities 2,100 Telephone 3,900 Insurance 5,000 Office Supplies 5,500 Postage & Delivery 3,500 Repairs & Maintenance 0 Legal Fees 4,000 Accounting & Auditing Fees 4,000 Miscellaneous 0 Interest 960 Depreciation 13,500 Total Indirect and Nonprogram Costs 62,960 Total Expenses 325,860 NET INCOME $ 25,215 21 © 1999, The Enterprise Foundation, Inc.
  24. 24. Answers to Exercise #3 Forever Homes CDC income statement — For the year-to-date ended Dec. 31, 1998 Current Period REVENUES Grants (unrestricted) $ 75,000 Grants (restricted) 220,000 Contributions 25,000 Fund-Raising Event 5,000 Notice: s The increase in Grants Program Fees 0 Training Fees 21,000 (unrestricted) — from Consulting 20,000 $60,000 on Dec. 30 to Sale of Property 0 $75,000 on Dec. 31 Interest Income 75 s A corresponding Total Revenues 366,075 increase in the summary line item EXPENSES PERSONNEL EXPENSES Total Revenues Salaries 225,000 Benefits 49,500 s The increase in two Total Personnel Expenses 274,500 Personnel Expenses line items — Salaries DIRECT PROGRAM COSTS from $203,000 to Program Supplies 0 $225,000, and Equipment Rental 2,000 Benefits from Staff Training 2,000 $45,500 to $49,500 Marketing/Advertising 2,000 Printing & Reproduction 2,400 s Corresponding Publications & Memberships 1,500 increases in the sum- Travel 4,500 mary line items Total Total Direct Program Costs 14,400 Personnel Expenses and Total Expenses INDIRECT AND NONPROGRAM COSTS Fund-Raising & Event Costs 2,000 s A corresponding Rent 18,500 decrease in Net Utilities 2,100 Income — from Telephone 3,900 $25,215 on Dec. 30 Insurance 5,000 to $14,215 on Dec. 31 Office Supplies 5,500 Postage & Delivery 3,500 Repairs & Maintenance 0 Legal Fees 4,000 Accounting & Auditing Fees 4,000 Miscellaneous 0 Interest 960 Depreciation 13,500 Total Indirect and Nonprogram Costs 62,960 Total Expenses 351,860 NET INCOME $ 14,215 22
  25. 25. Notes 23
  26. 26. Income Statements of Your Organization: Exercise #4 Look at your nonprofit’s most recent and next most recent income statement. If those are not avail- able, take any two that were created at different times. Use the following page to list the amounts in each category of each income statement. Then answer the questions that follow. Your Organization Statement of Income Earlier Period Later Period REVENUES Grants (unrestricted) $60,000 Grants (restricted) 220,000 Contributions 25,000 Fund-Raising Event 5,000 Program Fees 0 Training Fees 21,000 Consulting 20,000 Sale of Property 0 Interest Income 75 Total Revenues $351,075 Cost of Property Sold 0 EXPENSES PERSONNEL EXPENSES Salaries $203,000 Benefits 45,500 Total Personnel Expenses $248,500 DIRECT PROGRAM COSTS Program Supplies $0 Equipment Rental 2,000 Staff Training 2,000 Marketing/Advertising 2,000 Printing & Reproduction 2,400 Publications & Memberships 1,500 Travel 4,500 Total Direct Program Costs $14,400 INDIRECT AND NONPROGRAM COSTS Fund-Raising & Event Costs $2,000 Rent 18,500 Utilities 2,100 Telephone 3,900 Insurance 5,000 Office Supplies 5,500 Postage & Delivery 3,500 Repairs & Maintenance 0 Legal Fees 4,000 Accounting & Auditing Fees 4,000 Miscellaneous 0 Interest 960 Depreciation $13,500 Total Indirect and Nonprogram Costs $62,960 Total Expenses $325,860 24 NET INCOME $25,215 © 1999, The Enterprise Foundation, Inc.
  27. 27. Income Statement Questions Have total revenues increased or decreased? Which components of revenues caused the change? Have total expenses increased or decreased? Which components of expenses caused the change? What has been the effect on net income? © 1999, The Enterprise Foundation, Inc. 25
  28. 28. Statements of Cash Flows A statement of cash flows is a report of cash THE ROLE OF CASH FLOW AT A NONPROFIT activity. Its purpose is to illustrate how your cash position has changed. The cash flow state- Although a required part of nonprofit audits, ment reports, by certain classifications, where the cash flow statement is used less often than cash is derived and spent. It typically shows balance sheets and income sheets as a routine what areas of the organization received cash and financial management tool by many community what areas spent cash. development organizations. It is most often pre- pared by the auditor or accountant for the STANDARD FORMAT OF reporting period. CASH FLOW STATEMENTS STATEMENT OF CASH FLOWS VS. CASH Cash flow statements are usually divided FLOW PROJECTIONS into three sections: operations, investing and financing. While the cash flow statement reports on activi- ties in the past, the cash flow projection details Cash flows from operations: the prediction of the timing of all funds in and out of the system for a period in the future. The Inflows two may have similar names, but they look and s From grants, contributions and fund raising function differently. s From program, management and EFFECTS OF COMPARING CASH FLOW training fees STATEMENTS TO INCOME STATEMENTS Outflows When compared to the income statement, the s To employees, suppliers and other vendors cash flow statement will point out differences between net income and cash flow. While your s To the Internal Revenue Service, lenders financial statements may report a positive net and donors income, they may also report a negative cash flow. For instance, a balloon payment on a loan Cash flows from investing: at the end of the year may drain your available Inflows cash but will not be reflected in your income statement (because the principal portion of the s From sale of property or equipment loan is not an expense). The cash flow statement s From collection of principal on loans serves as a reconciliation of accrual accounting to cash accounting. (See the section on Outflows Understanding Different Accounting Methods for a definition of accrual and cash accounting.) s To purchase property or equipment s To make loans to other entities Cash flows from financing: Inflows s From loans or other financing Outflows s To make a payment on a loan 26
  29. 29. Notice how the operating cash flow reflects the Recording depreciation drives down the net positive net income. However, because of the income. However, because depreciation does loan to an affiliate and the payment on a com- not involve cash, the net cash flow in this pleted project loan — activities that do not run example is positive. through the income statement — a negative cash flow is reported. Income Statement Income Statement REVENUES Grants $ 100 REVENUES Grants $ 100 Program Fees 70 Program Fees 70 170 170 EXPENSES Program Expenses 120 EXPENSES Program Expenses 120 Other Expenses 40 Other Expenses 40 160 Depreciation 20 180 NET INCOME $ 10 NET INCOME $ (10) Statement of Cash Flows Statement of Cash Flows OPERATING Inflow $ 170 OPERATING Inflow $ 170 Outflow 160 Outflow 150 Net cash provided from 10 Net cash provided from 20 operating activities operating activities INVESTING Inflow 45 INVESTING Inflow 45 (payment on loan) (payment on loan) Outflow 50 Outflow 50 (loan to affiliate) (loan to affiliate) Net cash used in (5) Net cash used in (5) investing activities investing activities FINANCING Inflow 100 FINANCING Inflow 100 (new project loan) (new project loan) Outflow 110 Outflow 110 (old loan payment) (old loan payment) Net cash used in (10) Net cash used in (10) financing activities financing activities NET DECREASE IN CASH $ (5) NET CASH FLOW $ 5 Beginning cash, 1/1 50 Beginning cash, 1/1 50 Ending cash, 12/31 $ 45 Ending cash, 12/31 $ 55 Assumption Assumptions s All revenues and expenses involve cash s $10 of the program expenses have not yet (no outstanding payables or depreciation) been paid (accounts payable) s Depreciation expenses of $20 have been recorded 27
  30. 30. Statements of Cash Flows: Exercise #5 How Transactions Affect Income Statements and Statements of Cash Flows Part 1 For each transaction, circle the y(yes) or n(no) whether the income and/or cash flow statements are affected in the current period. Assume each transaction is independent of other transactions. Transaction Income Cash Flow Statement Statement 1. Received grant for housing services program y n y n 2. Purchased supplies on account for program workshop y n y n 3. Secured financing for housing development (installments will be received when construction begins next year) y n y n 4. Paid employees and consultants for services y n y n 5. Purchased four-unit rental property with existing grant y n y n 6. Made payment on construction loan: a. Principal portion y n y n b. Interest portion y n y n 7. Sold rehabilitated single-family home — proceeds recognized y n y n 8. Made payment on program materials purchased last year y n y n 9. Disbursed loan to affiliated nonprofit y n y n 10. Purchased computer equipment for finance staff y n y n © 1999, The Enterprise Foundation, Inc. 28
  31. 31. Part 2 How is cash flow affected, if at all? Look back at the 10 transactions listed in Part 1. For each transaction that would affect the cash flow statement, write what section of the cash flow statement would be affected. TRANSACTION SECTION AFFECTED 1 2 3 4 5 6a 6b 7 8 9 10 © 1999, The Enterprise Foundation, Inc. 29
  32. 32. Answers to Exercise #5 How Transactions Affect Income Statements and Statements of Cash Flows Part 1 The correct answers are circled below. Transaction Income Cash Flow Statement Statement 1. Received grant for housing services program y n y n 2. Purchased supplies on account for program workshop y n y n 3. Secured financing for housing development (installments will be received when construction begins next year) y n y n 4. Paid employees and consultants for services y n y n 5. Purchased four-unit rental property with existing grant y n y n 6. Made payment on construction loan: a. Principal portion y n y n b. Interest portion y n y n 7. Sold rehabilitated single-family home — proceeds recognized y n y n 8. Made payment on program materials purchased last year y n y n 9. Disbursed loan to affiliated nonprofit y n y n 10. Purchased computer equipment for finance staff y n y n © 1999, The Enterprise Foundation, Inc. 30
  33. 33. Part 2 The correct answers are shown below. TRANSACTION SECTION AFFECTED 1 Operating 2 n/a 3 n/a 4 Operating 5 Investing 6a Financing 6b Financing 7 Operating 8 Operating 9 Investing or Operating 10 Investing © 1999, The Enterprise Foundation, Inc. Please note: With respect to transaction #9, some activities such as disbursing loans to affiliates may be considered by the management of the organization as ordinary operations. Such transactions may be classified in the appropriate section of the cash flow statement. 31
  34. 34. Trial Balance: Connecting Balance Sheets With Income Statements A trial balance is a report of all the accounts on LINKING BALANCE SHEETS AND INCOME the books and their respective balances as of the STATEMENTS date of the report. The trial balance is produced to verify that your books are in balance, and it is Balance sheet accounts (assets, liabilities and net from the trial balance that the other financial assets) contain the cumulative effect of activities statements are constructed. from the beginning of time (day one of the orga- nization’s life). Income statement accounts (rev- STANDARD FORMAT enues and expenses) contain transactions only from the current accounting cycle (fiscal year). Each account has either a debit or credit bal- ance. Without getting into the details of the At the end of the year, the net difference of rev- theory behind debit/credit and double entry enues and expenses (net income) is rolled into accounting, suffice it to say that with respect the net assets account, and the new fiscal year to the five major types of accounts, assets and begins with zero balances for revenues and expenses typically have a debit balance, and lia- expenses. This is why in the nonprofit world, bilities, net assets and revenues typically have net income is often referred to as change in net a credit balance. assets. Let’s look at the financial statements and trial balance of Forever Homes on the next few If your trial balance is correct, the total debits and pages to see how this works. total credits will equal: They will be in balance. Accounts Debit Credit Assets xx.xx Liabilities xx.xx Net Assets xx.xx Revenues xx.xx Expenses xx.xx Totals xx.xx xx.xx © 1999, The Enterprise Foundation, Inc. 32
  35. 35. Exercise 3 showed how Forever Homes’ income statement would be affected by the receipt of an unre- stricted grant payment of $15,000 and payment of monthly payroll expenses of $22,000 in salaries and $4,000 in benefits. This chart shows a trial balance for the receipt of a grant and payment of payroll. Forever Homes CDC trial balance — For Jan. 1 through Dec. 31, 1998 Code Account Debit Credit 1010 Cash — Checking $ 4,015 1015 Cash — HOME Funds 34,000 1020 Cash — Savings 0 1030 Cash — Petty Cash 250 1200 Accounts Receivable 1,000 1300 Prepaid Expenses 450 1500 Land/Buildings 30,000 1510 Construction in Progress 15,000 1520 Salable Property 56,000 1600 Long-Term Investments 0 1800 Office Furniture & Equipment 30,000 1801 Accum. Depr. — Furn. & Equip. $ 13,500 1900 Notes Receivable 5,000 2000 Accounts Payable 3,200 2100 Payroll Liabilities 6,800 2120 Accrued Expenses 0 2200 Purchaser’s Deposits 0 2300 Lease Payable 3,000 2400 Notes Payable 0 2500 HOME Funds Payable 135,000 3000 Net Assets 4010 Grants (unrestricted) 75,000 4011 Grants (restricted) 220,000 4050 Contributions 25,000 4100 Fund-Raising Event 5,000 4150 Program Fees 0 4160 Training Fees 21,000 4170 Consulting 20,000 4200 Sale of Property 0 4900 Interest Income 75 5000 Cost of Property Sold 0 6010 Salaries 225,000 6020 Benefits 49,500 6100 Program Supplies 0 6150 Equipment Rental 2,000 6200 Staff Training 2,000 6250 Marketing/Advertising 2,000 chart continued on next page 33
  36. 36. Forever Homes CDC trial balance — For Jan. 1 through Dec. 31, 1998 Code Account Debit Credit 6300 Printing & Reproduction 2,400 6350 Publications & Memberships 1,500 6400 Travel 4,500 7050 Fund-Raising & Event Costs 2,000 7100 Rent 18,500 7110 Utilities 2,100 7120 Telephone 3,900 7130 Insurance 5,000 7140 Office Supplies 5,500 7150 Postage & Delivery 3,500 7160 Repairs & Maintenance 0 7200 Legal Fees 4,000 7210 Accounting & Auditing Fees 4,000 7800 Miscellaneous 0 7900 Interest 960 8000 Depreciation 13,500 Total $ 527,575 $ 527,575 Assumptions s Each line item in the trial balance comes from the chart of accounts. s Each line item in the trial balance is represented once, and only once, in the balance sheet or the income statement. 34
  37. 37. Forever Homes CDC corresponding balance sheet — For the year ended Dec. 31, 1998 Balance Dec. 31 ASSETS CURRENT ASSETS Cash — Checking $ 4,015 Cash — HOME Funds 34,000 Cash — Savings 0 Cash — Petty Cash 250 Accounts Receivable 1,000 Prepaid Expenses 450 Total Current Assets 39,715 INVESTMENTS Land/Buildings 30,000 Construction in Progress 15,000 Salable Property 56,000 Long-Term Investments 0 Total Investments 101,000 FIXED ASSETS Office Furniture & Equipment 30,000 Accum. Depr. — Furn. & Equip. (13,500) Total Fixed Assets 16,500 OTHER ASSETS Notes Receivable 5,000 Total Other Assets 5,000 TOTAL ASSETS $ 162,215 LIABILITIES CURRENT LIABILITIES Accounts Payable $ 3,200 Payroll Liabilities 6,800 Accrued Expenses 0 Purchaser’s Deposits 0 Total Current Liabilities 10,000 LONG-TERM LIABILITIES Lease Payable 3,000 Notes Payable 0 HOME Funds Payable 135,000 Total Long-Term Liabilities 138,000 TOTAL LIABILITIES 148,000 NET ASSETS 14,215 TOTAL LIABILITIES & NET ASSETS $ 162,215 35
  38. 38. Forever Homes CDC corresponding income statement — For the year ended Dec. 31, 1998 Current Period REVENUES Grants (unrestricted) $ 75,000 Grants (restricted) 220,000 Contributions 25,000 Fund-Raising Event 5,000 Program Fees 0 Training Fees 21,000 Consulting 20,000 Sale of Property 0 Interest Income 75 Total Revenues 366,075 EXPENSES PERSONNEL EXPENSES Salaries 225,000 Benefits 49,500 Total Personnel Expenses 274,500 DIRECT PROGRAM COSTS Program Supplies 0 Equipment Rental 2,000 Staff Training 2,000 Marketing/Advertising 2,000 Printing & Reproduction 2,400 Publications & Memberships 1,500 Travel 4,500 Total Direct Program Costs 14,400 INDIRECT AND NONPROGRAM COSTS Fund-Raising & Event Costs 2,000 Rent 18,500 Utilities 2,100 Telephone 3,900 Insurance 5,000 Office Supplies 5,500 Postage & Delivery 3,500 Repairs & Maintenance 0 Legal Fees 4,000 Accounting & Auditing Fees 4,000 Miscellaneous 0 Interest 960 Depreciation 13,500 Total Indirect and Nonprogram Costs 62,960 Total Expenses 351,860 NET INCOME $ 14,215 36
  39. 39. Trial Balance: Exercise #6 Connecting Balance Sheets With Income Statements Using the trial balance, construct a balance sheet and an income statement on the format pages that follow for Forever Homes for the period Jan. 1, 1999 through Jan. 31, 1999. Forever Homes CDC trial balance — For Jan. 1 through Jan. 31, 1999 Code Account Debit Credit 1010 Cash — Checking $ 7,451 1015 Cash — HOME Funds 17,800 1020 Cash — Savings 0 1030 Cash — Petty Cash 250 1200 Accounts Receivable 650 1300 Prepaid Expenses 0 1500 Land/Buildings 62,200 1510 Construction in Progress 37,000 1520 Salable Property 56,000 1600 Long-Term Investments 0 1800 Office Furniture & Equipment 32,500 1801 Accum. Depr. — Furn. & Equip. $ 13,500 1900 Notes Receivable 5,000 2000 Accounts Payable 26,320 2100 Payroll Liabilities 6,800 2120 Accrued Expenses 0 2200 Purchaser’s Deposits 0 2300 Lease Payable 3,000 2400 Notes Payable 10,000 2500 HOME Funds Payable 151,000 3000 Net Assets 14,215 4010 Grants (unrestricted) 12,000 4011 Grants (restricted) 31,406 4050 Contributions 800 4100 Fund-Raising Event 4150 Program Fees 4160 Training Fees 650 4170 Consulting 4200 Sale of Property 4900 Interest Income 5000 Cost of Property Sold 6010 Salaries 31,000 6020 Benefits 7,750 6100 Program Supplies 725 6150 Equipment Rental 6200 Staff Training 6250 Marketing/Advertising 6300 Printing & Reproduction chart continued on next page 37
  40. 40. Forever Homes CDC trial balance — For Jan. 1 through Jan. 31, 1999 Code Account Debit Credit 6350 Publications & Memberships 150 6400 Travel 925 7050 Fund-Raising & Event Costs 7100 Rent 4,100 7110 Utilities 250 7120 Telephone 445 7130 Insurance 4,400 7140 Office Supplies 350 7150 Postage & Delivery 245 7160 Repairs & Maintenance 7200 Legal Fees 500 7210 Accounting & Auditing Fees 7800 Miscellaneous 7900 Interest 8000 Depreciation $ 269,691 $ 269,691 © 1999, The Enterprise Foundation, Inc. 38

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