FIN/380
 What is a financial statement?
 How can they help the financial manager?
 What are the types of financial statements?
 Statement of Financial Position
 What it reveals
 Why it is important
 Statement of Activities
 Content of the statement
 Importance of the statement
 Statement of Cash Flows
 What it shows
 Why it matters
 Revenues and Gains
Contributions
o Government Grants
o Donations-in-kind
o Other Income
o
 GAAP Guidelines
o
SAS 69
 Expenses
o Program Service
o Public Awareness
and Education
o Fund Raising
o Losses on
Contributions
Received
 IRS Form 990
o Revenue Statement
o Balance Sheet
o Statement of Functional Expenses
o Expenses set apart by individual program service
o Support schedule that features revenue sources
 Management team and board need sound financial data to
 Assess liquidity
 Set and monitor desired liquidity level
 Balance cash inflows and outflows over the near future and
longer-term future
• Internal financial statements
 Enable the measurement of financial position through ratio
analysis
 Utilize statements of financial positions and activities to
make liquidity, funding and operating ratio analyses
 Financial statements are instrumental to internal users
 Aid in the accurate representation of financial situation
 Support the fulfillment of the company’s mission and provide
proof of accountability
 Assist in the facilitation of necessary changes by management
 Two financial statements that are valuable to the management
 Statement of Financial Position/Balance Sheet
 Statement of Activity/Statement of Net Revenues
 The statement of cash flows seems to be of greatest importance
 It is crucial for management to know the amounts of cash
inflows/outflows to secure future operations
 Benefits internal decision making process
 Is useful in the development of internal reports
 Internal metrics
 Summary reports
 Conduct of financial ratio analysis
 Audit reports
 Target liquidity level
 Balancing of cash inflows and outflows
 Variance analysis
 Influences internal control process
 Statement of Cash Flows
 Used in cash flow projection
 Statement of Activities and Statement of Financial
Position
 Used in the computation of financial ratios
 Used for variance analysis
 Statement of Financial Position & Statement of Cash
Flows
 Used in the development of reports on target liquidity
levels
 Zietlow, Hankin, Seidner (2007) “Chapter 6: Understanding
Accounting Basics and Financial Statements. ______________from
https://ecampus.phoenix.edu/content/eBookLibrary2/content/eReade
r.aspx#ch06lev1sec3