8/14/2019 Nicole Reese SBA2

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Major Accounting

CategoriesItems Definitions

Liabilities Accounts PayableThe unpaid bills of a not-for-profit organization. These are bills for goods or services

that have been received by the organization prior to the end of its fiscal year.

Liabilities Accrued Expenses IOU's for goods and services received by a not-for-profit organization for which eitheran invoice has not been received or the entire invoice does not apply to the fiscal year-

end reporting.

AssetsContributions

Receivables Contributions owed the organization. A pledge that hasn't yet been fulfilled.

The "outflows or other using up of assets or incurrence of liabilities (or the combination

of both) from delivering or producing goods, rendering services, or carrying out other

activities that constitute the entity's ongoing major or central operations."

Expenses Administrative Fees Fees dealing with the administration of the organization including audit fees, bankingfees, legal fees, etc.

Assets Cash Equivalents Financial Instruments that are readily convertible to cash within three months--Treasurynotes, money market funds, commercial paper.

Revenues Interest IncomeInterest payments received from the bank on the organization's savings accounts, etc.

Assets InventoriesItems that the organization expects to sell. In other words, supplies that are expected

to be used by the not-for-profit organization in its operations should not be reported as

inventories.

Liabilities Debt

Liabilities owed by the non-profit to others. "Debt is known by several different names,

usually based on how long the debt has before it becomes due , or matures. Short-

term loan (five years or less) Line of credit (like checking account overdraft privileges)

"It is important to note that a liability is not recorded at the time that the not-for profit

organization obtains the line of credit, but rather when it draws down on the credit line.

Probable future sacrifices of economic benefits arising from present obligations of aparticular entity to transfer assets or provide services to other entities in the future as a

result of past transactions or events.

Liabilities Line of Credit

An pre-agreed amount that the organization can borrow-- like checking account

overdraft privileges. "It is important to note that a liability is not recorded at the time that

the not-for profit organization obtains the line of credit, but rather when it draws down

on the credit line.

Liabilities Long-term debt A type of debt usually associated with the construction of a facility or other majorcapital improvement.

The difference between the assets and liabilities of a non-for-profit organization.

Assets Other Receivables

Not for profit organizations sometimes have other receivables reported on their

statement of financial position representing money owed to them for reasons other thanthe two main categories previously described. Examples: Amounts owed under grants

(for general support); Reimbursements of expenses; Reimbursement of expenses paid

on behalf of other not-for-profit organizations.

Assets Cash Money other than security deposits or restricted money--Money is the most liquid assetthat has no strings attached to it at all.

Revenues Product Revenue Payment made to the organization by others in exchange for the goods provided by theorganization, etc.

Revenues Service Revenue Payment made to the organization by others in exchange for the services provided bythe organization, etc.

Expenses Facility Payments the organization makes to others related to the space that the organizationoccupies

Expenses Transportation Payments the organization makes to others related transportation activities such asvehicle purchases, auto insurance, auto maintenance and repairs, etc.

Net Assests

Permanently

Restricted Net

Assets

Net assets that a donor has instructed the not-for-profit organization to maintain in

perpetuity, that is permanently. IE Endowment where only the interest can be used not

the principal.

Assets Prepaid Expenses

Assets that arise because an organization has paid for services that it will receive in the

future, with the future being defined as a time past the fiscal year-end. EXAMPLE--On-

line education software subscriptions bought in May with left over funds that will be

used starting the following September.

Expenses Program Expenses Purchases made by the organization related to program operation including supplies,furniture, textbooks, computers, etc.

Revenues Rental Income Rent payment received from others who areetc occupying orgnazation's space, etc.

The "inflows or other enhancements of assets of an entity or settlement of its liabilities

(or a combination of both) from delivering or producing goods, receiving, services, or

other activities that constitute the entity's ongoing major or central operation."

Expenses Personnel ExpensesSalaries and Benefits paid to employees

Liabilities Short-term debt Short-term loan (one year or less)

AssetsProperty Plant and

Equipment

Sometimes referred to as fixed assets, the property, plant (building) and equipment of a

not-for-profit organization represents its long-lived assets used in the conduct of the

organization's business. These would include land, buildings, equipment, office

furnishings, computers, vehicles and other similar assets. Normally there are minimums

amounts here. ( Lease-hold improvements, Capitalized leases. P. 18 )

Assets Investments Stocks, bonds, IOU's

Net Assests

Temporarily

Restricted Net

AssetsNet assets whose use is limited by either a donor-imposed time restriction or a donor-

imposed purpose restriction.

The probable future economic benefits obtained or controlled by a particular entity as a

result of past transactions or events

AssetsAccounts

Receivables

Funds that are owed to the not-for profit organization from individuals or other

organizations because of services provided or goods sold to these other entities. The

receivable should not be recorded until the organization actually "earns" the revenue.

Not all receivables are ultimately collected.

Net AssestsUnrestricted Net

AssetsNet assets of a not-for-profit organization that are not temporarily restricted or

permanently restricted.

Liabilities Deffered IncomeWhen cash is received by a not-for-profit organization prior to its either having earned

the income or the right to keep the income, it records the cash along with a liability-type

account called deferred income. (See Page 28. Subscription sales to the Opera before

the shows are produced.)

Revenues

Assets

ACCOUNTS: The Foundation Tools of Financial Recordkeeping

Expenses

Liabilities

Net Assests