Written by Glenda Estioko, Presented by Lenora Williams, May 9, 2011
The Income Statements
A Financial Statement is a written report which quantitatively describes the financial health of a company usually compiled on a monthly, quarterly, and annual basis.
3 Main Financial Statements:
Ø Income Statement
Ø Balance Sheet
Ø Cash Flow Statement
What is an Income Statement?
The Income Statement (or Profit & Loss Statement) reports the income, expenses, and net income (surplus/deficit) for a specific period of time.
Nonprofit organizations use an accounting system called fund accounting. Fund accounting essentially groups financial data together into funds (Class/Job Codes) or accounts that share a similar purpose. This way, the organization has a better idea of what resources it has available to complete a specific task.
Differences between revenues (income) and expenditures (expenses) are called surpluses (a positive difference) or deficits (a negative difference).
Income Statements tell a story….
• Total Income: Informs you what types of funding the organization received;
• Total Expenses: Informs you what types of expenses the department/program incurred to fulfill deliverables;
Example: Labor, utilities, marketing, supplies, depreciation, etc.
• Net Income: Informs you of the difference (surplus or deficit) of Income and Expenses.
Total Income (Revenue) - Total Expenses (Expenditures) = Net Income (Surplus/Deficit)