What is a Statement of Activities?
A statement of activities is a not-for-profit organization’s equivalent of an income statement.
How it Works
A for-profit organization will prepare an income statement at the end of each accounting period.
All the information for this report comes from the income and expense accounts.
The difference between income and expenses shows net profit for the period.
Statement of Activities
By contrast, a not-for-profit organization prepares a statement of activities at the end of each accounting period.
Some of this report’s information comes from the income and expense accounts.
Expense accounts include things such as fund raising expenses, management, and administration.
Income accounts show revenue generated from such things as contributions, fees, grants, investments etc.
However, unlike an income statement, the statement of activities includes other accounts, as well.
It shows net assets at the beginning of the accounting period.
Net assets is the difference between assets and liabilities.
In other words, it is the difference between what the organization owns and what it owes to others at the beginning of the period.
Finally, the statement of activities will show any net assets released from restrictions.
With non-profit organizations, donors make donations.
These donations are held as an asset of some kind, such as money in the bank.
Often, donors will place restrictions on how their donation is to be used.
Most of the time, these restrictions are time based.
Some of these assets may fall due for release during the period.
Once released, the assets finally become revenue for the organization.
As such, the released assets need to be shown in the statement of activities.
All of this activity will change net assets over the period.
When complete,the change in net assets will be reflected in the statement of activities balance.
The balance will include net assets at the beginning of the period.
It will also include any increase in net assets due to releases from restriction.
And it will also include any increase in net assets from operating profit.