2018-05-16 10:33:34 Pro Accounting English Learn what the statement of activities is and why your clients must have one prepared. Discover what sorts of activities are included and... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/04/Female-accountant-reviews-statement-of-activities.jpg https://quickbooks.intuit.com/ca/resources/pro-accounting/small-business-statement-activities/ Accounting Term: What Is a Statement of Activities?

Accounting Term: What Is a Statement of Activities?

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One of the basic financial statements you’ll prepare for your clients looks at their revenue and expenses. If you work with nonprofit entities, the difference between these two accounts is the change in net assets. The financial statement may go by a few different names, but these accounts are always summarized on the statement of activities. A company’s statement of activities is a record of transactions that happened over a period of time. While your client’s balance sheet is a snapshot view of what its company is like at a certain date, a statement of activities summarizes what happened during a month, quarter, or full year.

There are two main sections to a statement of activities. The first covers revenue. All types of fund inflows are added up in this section, including individual donor contributions, grant revenue, membership dues, investment income, and funds released from restrictions. The other section covers expenses. These are reported on the statement of activity by function. The major function categories include programs, fundraising, and administrative costs. All of these accounts are typically reported based on the restrictions imposed on them; this is done by adding columns to the statement.

The statement of activities is a required financial statement for many purposes. If your nonprofit client is having its records reviewed or audited, it must have a statement of activities. In addition, it’s typically required as part of the supporting documents if your client goes to a bank to try and get a loan. The statement of activities may be requested by major donors, or your client may have to provide certain information from the statement when preparing a grant application. It’s important your client knows what the statement of activities is and how it is useful. Although it’s not the best information for internal decision-making, your client is still required to have a statement of activities prepared for many reasons.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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