Statement of Activities
The Statement of Activities is the non-profit equivalent to an Income Statement and was developed so organizations could track their revenues and expenses by fund. It is a required financial statement for any size non-profit organization just like the Statement of Financial Position – see how a church’s balance sheet is like a pizza pie! To help clarify how a Statement of Activities works, we will compare it to “The Big Game”. Just like football, teams are penalized when they don’t follow the rules, non-profits can have expenditures paid from the wrong ministry, revenue mismanagement, and other problems which can invoke penalties.
To help clarify fund accounting, let’s pretend the teams represent the revenue/expenses:
Every team has its own sources of revenue and its own expenses. Let’s use the teams from New York (NY Fund) and New England (NE Fund) to represent the funds in the church. The following revenue and expense transactions happened between the date Feb 1st and Feb 29th of 2012.
In preparation for The Big Game, each team has their revenues and expenses:
| New York Team | |
| Revenue | |
| T-Shirt | $1,000.00 |
| Ticket Sales | $1,200.00 |
| Expenses | |
| Bus Travel | $1,500.00 |
| Airplane Travel | $0 |
| New England Team | |
| Revenue | |
| T-shirt | $2,500.00 |
| Ticket Sales | $1,000.00 |
| Expenses | |
| Bus Travel | $0 |
| Airplane Travel | $3,000.00 |
The Statement of Financial Activities is created based on a date range and not an end date like the Statement of Financial Position (church balance sheet). The above revenues and expenses happened during the month of Feb 2012 (leap year).
Both teams can incur expenses for airplane travel, bus travel, or both; however, in the month of February, one team traveled by bus while the other traveled by airplane. Both teams made revenue in T-shirt and ticket sales.
How would the Statement of Activities look for each team?
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New York Team |
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Statement of Activities |
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Month Ended February 29, 2012 |
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| Revenue | |||
| T-shirt | $1,000.00 | ||
| Ticket Sales | $1,200.00 | ||
| Revenue Total | $2,200.00 | ||
| Expenditures | |||
| Bus Travel | $1,500.00 | ||
| Airplane Travel | $0.00 | ||
| Expenditure Total | $1500.00 | ||
| Total Net Revenue | $700.00 | ||
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New England Team |
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Statement of Activities |
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Month Ended February 29, 2012 |
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| Revenue | |||
| T-shirt | $2,500.00 | ||
| Ticket Sales | $1,000.00 | ||
| Revenue Total | $3,500.00 | ||
| Expenditures | |||
| Bus Travel | $0.00 | ||
| Airplane Travel | $3,000.00 | ||
| Expenditure Total | $3000.00 | ||
| Total Net Revenue | $500.00 | ||
Looking at the above examples would answer questions like which team may need some financial support from the league. The commissioner, Roger Goodell, can review these individual statements and see which teams are hurting financially or which teams are able to cover their expenses. In this case, the New England team would need some help financially to keep pace with the New York team.
What would a consolidated Statement of Activities look like? By answering this question, Roger Goodell can review how the football organization is doing overall and report to the various stakeholders.
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Football Organization |
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Consolidated Statement of Activities |
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Month Ended February 29, 2012 |
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| Revenue | |||
| T-shirt | $3,500.00 | ||
| Ticket Sales | $2,200.00 | ||
| Revenue Total | $5,700.00 | ||
| Expenditures | |||
| Bus Travel | $1,500.00 | ||
| Airplane Travel | $3000.00 | ||
| Expenditure Total | $4,500.00 | ||
| Total Net Revenue | $1,200.00 | ||
On the consolidated statement, every expense and revenue would be listed on one line combining the individual items from the prior two statements. So for example, T-shirt sales were $1,000.00 (for the New York team) and $2,500.00 (for the New England team). The consolidated statement would show $1,000.00 + $2,500.00 = $3,500.00. The same method is used for each line item on the Statement of Activities.
Imagine if you had this type of reporting for your various ministries and your organization overall? The ministry leaders would know instantly what is coming in for revenues and what is going out for expenses in each ministry. The church board would have a consolidated statement showing how the organization is doing over all.
Advanced Setup:
Generic accounts minimize the Chart of Accounts and simplify reporting (i.e. having one Travel Expense instead of a NY Travel Expense and a NE Travel Expense). The following example will show a travel expense that is split between the NE team and the NY team funds. Notice the same generic accounts – T-shirt sales, ticket sales, bus travel and airplane expenses – are used for both funds.
Income Transactions for the T-shirt Revenue account:
| Debit | Credit | Fund | |
| Checking | $1,000.00 | $1,000.00 NY Team | |
| T-shirt Revenue | $1,000.00 | $1,000.00 NY Team | |
| Checking | $2,500.00 | $2,500.00 NE Team | |
| T-shirt Revenue | $2,500.00 | $2,500.00 NE Team |
The checking account would increase a total of $3,500.00 ($1,000.00 + $2,500.00), however within the checkbook, the NY Fund would own $1,000.00 and the NE Fund would own $2,500.00.
| Debit | Credit | Fund | |
| Checking | $1,200.00 | $1,200.00 NY Team | |
| Ticket Revenue | $1,200.00 | $1,200.00 NY Team | |
| Checking | $1,000.00 | $1,000.00 NE Team | |
| Ticket Revenue | $1,000.00 | $1,000.00 NE Team |
The checking account would increase a total of $2,200.00 ($1,200.00 + $1,000.00), however within the checkbook, the NY Fund would own $1,200.00 and the NE Fund would own $1,000.00.
The grand total in the checkbook would increase $5,700.00, the same as the grand revenue from the consolidated statement.
Expenditure Transactions for the Travel Expenses:
| Debit | Credit | Fund | |
| Checking | $1,500.00 | $1,500.00 NY Team | |
| Bus Travel Expense | $1,500.00 | $1,500.00 NY Team |
Because the New England Team did not travel by bus there is no entry for them:
| Debit | Credit | Fund | |
| Checking | $3,000.00 | $3,000.00 NE Team | |
| Airplane Expense | $3,000.00 | $3,000.00 NE Team |
Because the New York Team did not travel by airplane, there is no entry for them.
If a user ran the Statement of Activities by team (fund), the New York Team would show Bus Travel at $1,500.00 and New England Team at $3,000.00. The consolidated amount is $4,500.00, $1,500.00 from the NY Fund and $3,000.00 from the NE Fund.
Just like in football, where all of the players are assigned a jersey number to identify them and they belong to a particular team, fund accounting uses the chart of accounts and specific funds to identify transactions.
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