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FIN/380
What is a financial statement?
How can they help the financial manager?
What are the types of financial statements?
Statement of Financial PositionWhat it revealsWhy it is important
Statement of ActivitiesContent of the statementImportance of the statement
Statement of Cash FlowsWhat it showsWhy it matters
ExpensesoProgram ServiceoPublic Awareness
and EducationoFund RaisingoLosses on
Contributions Received
Revenues and Gainso Contributionso Government Grantso Donations-in-kindo Other Income
GAAP Guidelineso SAS 69
IRS Form 990oRevenue StatementoBalance SheetoStatement of Functional ExpensesoExpenses set apart by individual program serviceoSupport schedule that features revenue sources
Management team and board need sound financial data to Assess liquidity Set and monitor desired liquidity levelBalance cash inflows and outflows over the near future and
longer-term future
• Internal financial statementsEnable 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 accountabilityAssist 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 processIs useful in the development of internal
reportsInternal metrics Summary reports Conduct of financial ratio analysis Audit reportsTarget liquidity levelBalancing of cash inflows and outflowsVariance analysis
Influences internal control process
Statement of Cash FlowsUsed in cash flow projection
Statement of Activities and Statement of Financial PositionUsed in the computation of financial ratiosUsed for variance analysis
Statement of Financial Position & Statement of Cash FlowsUsed 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/eReader.aspx#ch06lev1sec3