CHAPTER VI

FINANCIAL STATEMENTS

For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth - to know the worst and provide for it.

Patrick Henry

GENERAL

For concluding the explanation of basic accounting, it is now appropriate to describe the financial statements.  These statements are prepared from the data and results of the activities described.  There are other statements prepared, but we will focus on the most common because of the nature of this presentation.

SOURCES AND USES OF FUNDS (Revenue and Expense Statement)

In the world of non-profits, the term – Net Assets (profit and loss) reflects the revenue (what was received) less the expenses (where the money went)  and the resultant amounts is posed the net asset/owners’ equity account.  This profit and loss statement is a sources and uses of funds statement listing all revenue and expenses.  Revenue is money coming into the parish from the Sunday offertory and other donations.  It would also include payments for various church activities by parishioners for retreats, days of prayer and for parishioner activities.  Expense examples would include payments for fuel and salaries for the staff.

Balance Sheet

The balance sheet lists all assets and all liabilities plus the net assets for a specific point in time.

SUMMARY

While this discussion of the financial statements is rather short and concise, keep in mind that we presented only two, which are the main statements.  The sources and uses of funds statement or a profit and loss statement is composed of the temporary accounts.  As discussed, revenue and expense accounts are temporary accounts and used to build the funds statement.  Revenue is money coming in and expenses are money going out.

The balance sheet is a listing of all assets on one side and all liabilities and net assets on the other side.  It is the financial condition of the entity at one point in time.  The balance sheet is a very meaningful document, which can provide significant information.