Statement of Financial Position (5)

In reviewing this statement of financial position, there are several characteristics of the statement that should be kept in mind.

• The financial position statements (as with all of the basic financial statements) are presented as comparative statements, showing the current fiscal year amounts compared with the prior fiscal year. Presenting information in a comparative format is not required by SFAS 117, but is the preferred method of presenting financial statements. Most readers of financial statements, including those of not-for-profit organizations, expect the financial statements to be comparative because comparative statements are far more useful to a reader than financial statements that only present a single year’s information.

• The total of net assets must equal total assets less total liabilities. However, there is no similar relationship for each of the three components of net assets—unrestricted, temporarily restricted and permanently restricted. For example, the financial statement does not display the temporarily restricted assets and liabilities that would net to the temporarily restricted net asset amount. Some organizations choose to pre-sent this information by providing separate columns for each of the three classifications of net assets. However, it should be kept in mind that this presentation is not required and it adds to the complexity of the financial statements.

• Accounts receivable are displayed separately from contributions receivable. This is in compliance with the requirements of generally accepted accounting principles that significant categories of receivables be presented separately. Accordingly, receivables resulting from a not-for-profit organization’s sales of goods or services would be presented separately from its donor contributions receivable. In addition, receivables from grants may be of sufficient significance that separate presentation would be appropriate.

Taken From : Wiley Not-for-Profit Accounting Field Guide 2003

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