Lesson 2 – Statement of Activities

Statement of Activities – Income Statement

This statement details the revenue your organization has earned and subtracts the amount you have spent (your expenses).

  • Revenue minus Expenses = Excess or Deficiency

The resulting amount is recognized as either an excess (revenue exceeds expenses) or a deficit (expenses exceed revenue). The resulting change either increases (excess) or decreases (deficit) your net asset balance. The Statement of Activities gives you a sense for how well the nonprofit is operating.

  • Must be broken down by Fund

According to proper nonprofit reporting standards, the Statement of Activities must separate your revenue and expenses by Net Asset Class:

  • Net Assets with Donor Restrictions
  • Net Assets without Donor Restrictions
  • Must be broken down by functional area within each Fund: Management & General, Programs, Fundraising

Technically, there is no such thing as a Restricted Expense; therefore there is a line item called: Revenue Released from Restrictions.

  • Excess or deficiency increases or decreases the Net Asset balance

Usually restrictions on revenue are based on timing — you must spend the money for the designated purpose before you can recognize the revenue that is designated.