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An essay on financial statements and its objectives
The analysis and use of financial statements, 3rd edition
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SFAS 117 Ruling According to the Financial Accounting Standards Board (FASB), the purpose of SFAS 117 was to enhancing the relevance, understandability, and comparability of financial statements issued by nonprofit organizations (McLaughlin, 2009). The intention of the SFAS 117 was to make nonprofit organization financial statements readable as well as usable by stock holders of the nonprofit organization. With this being implemented there are now three types of funds which include; unrestricted, temporarily restricted, and finally permanently restricted (McLaughlin, 2009). These comprise the portion of net assets that result from contributions or other types of inflow of assets whose use is limited by restrictions placed by the original …show more content…
SFAS 117 was intended to make nonprofit financial statements readable and also usable by stake holders of the nonprofit organizations themselves. There are three types of funds which include; unrestricted, temporarily restricted, and permanently restricted. Unrestricted is where the donor has not placed or imposed any conditions on the asset. Temporarily restricted net assets are those where the donor has placed a condition on the donation that must be met in order to be used and in certain cases this must be met in a certain time frame. A permanently restricted net asset is one in which the condition placed by the donor can never be met by the nonprofit organization. St. Jude Children’s Hospital is a very well-known nonprofit organization that has been around for years. This organization fully complies with the SFAS 117 ruling. A full set of financial statements includes the following; a statement of financial position, a statement of activities, a statement of cash flows, accompanying notes, and a statement of functional expense.
Being identified as a nonprofit, doesn’t necessarily mean it will be a charitable organization. Though the term has been applied to most nonprofit organizations, the fact is most nonprofits is structured using the economic model. The economic model is based on the traditional model of management designed to deal with the complexity of managing an organization (Bradshaw & Hayday, 2007, p. 4). This model acquires funding from multiple sources such as; individuals, government grants, corporations, and foundations. Though an nonprofit organizations may be identified by the Internal Revenue Service (IRS) as tax-exempt, it may use the same economic model and framework as a for-profit organization. According to Brainard & Siplon, (2004), the nonprofit economic model often mimics that of the private sector by using organized professionals to help determine the goals and vision of the organization (p. 439). It is widely believed that most nonprofits use the economic model along with an aggressive...
... as an attempt to be transparent about who is funding the organization and how the money is being spent.
William & Torres provided a table to reflect hospitals ownership, and noted that some hospitals, while owned by one type of entity, may be operating under a contract by another entity, such as a hospital management company (Williams & Torrens, page 185). Some of the largest groups of hospitals in the nation are nonprofit community hospitals (Williams & Torrens, page 185). Nonprofit entities, including hospitals, function under special provisions of corporation law in each state, and under federal and state tax provisions that recognize their community service function (Williams & Torrens, page 185). The nation has approximately 1 million nonprofit entities of various sorts and hospitals have long been a traditional service provider in the nonprofit sector (Williams & Torrens, page 185). Nonprofit entities are generally exempt from most taxes at the federal, state, and local levels including income and property taxes (Williams & Torrens, page 185). These facilities are governed by a community based board that has ultimate authority for running these entities. Sponsorship for a nonprofit can come from various organizations, unlike other hospitals with traditional religious sponsorship (Williams & Torrens, page 185). A small percentage of the nation’s hospitals are operated by for-profit businesses (Williams & Torrens, page 186). For-profit hospitals have owners and issue stock to those owners to reflect their equity position (Williams & Torrens, page 185). For-profit hospitals are not just accountable to the community but must also provide a return on investment to the shareholders; they expect to generate a profit to pay a return to the equity inves...
As a non-profit organization, CHN relies on corporate, and TV/media partnerships to continue to provide the services they offer to the 170 children’s hospitals. These fundraisers are done in several ways the very first means of donation came from a telethon conducting in 1983 by founders Marie Osmond, John Schneider, Mick Shannon, and Joe Lake. After the success of the telethon with nearly 4.8 million dollars raised, many large corporations joined in the efforts to provide resources for sick and injured children. Many high-name corporations such as Marriott International, Walmart, Sam’s Club, Cosco, Dairy Queen and Ace Hardware are leading participants in donations. These donations are done in the form of tournaments, relays, telethons, and various other marathons. One of the most well-known forms of donations is done though the CMN paper balloon sales. Many of the named above stores, as well as many others s...
For example, in a profit making organization, the assets will be classified as either noncurrent assets, intangible assets or as current assets. However, this is not the case in nonprofit healthcare organizations. For nonprofit healthcare organizations, assets are classified as permanently restricted assets, which refers to assets that cannot be used up. These assets can be current or noncurrent assets, but the donor restricts their use. On the other hand, they also have unrestricted assets (Baker, 2013). These are assets that do not have any restriction, and the organization can use them (Baker,
For example, since they are not organized to pursue profits, nonprofits are more worthy of trust and therefore more reliable. Moreover, nonprofit comprise vast and growing sector of the national economy, and they are a vital partner with government to provide a wide range of social and human services. The American public will continue to value and support the nonprofit sector as long as it satisfies recognized needs not addressed by government or the for-profit sector. During the years, nonprofits sector provided historically valued services that public and private sectors failed to provide, and promoted new ideas, theories and policies to society. And finally, effective and appropriate use of technology is critical to maintaining a nonprofit organization 's accountability and relevance. A nonprofit should manage information with regard for confidentiality, safety, accuracy, integrity, reliability, cost-effectiveness, and legal compliance. A nonprofit should take the opportunity in incorporating the appropriate technology into its work to improve its efficiency, efficacy, and accuracy in the achievement of its
The goal of the Codification is to simplify the organization of thousands of authoritative U.S. accounting pronouncements issued by multiple standard-setters. To achieve this goal, the FASB initiated a project to integrate and topically organize all relevant accounting pronouncements issued by the U.S. standard-setters including those of the FASB, the American Institute of Certified Public Accountants (AICPA), and the Emerging Issues Task Force (EITF)
Since companies are often unable to sell their fixed assets within any reasonable amount of time they are carried on the balance sheet at cost regardless of their actual value. As a result, it is possible for companies to grossly inflate this number, leaving investors with questionable and hard-to-compare asset figures (Investopedia.com, 2003).
As a mother, the first thing that came to my mind were children, when we were informed to choose a nonprofit organization as a topic for the persuasive speech. I don’t have any prior experience helping an organization, so I went on a detailed research. In doing so, I have learned that of all 6 charity checker websites that our good professor has listed on blackboard, 4 of them have only good reports about my chosen nonprofit organization, Save the Children. First, Guidestar rated it gold. Second, Great Nonprofits rated it four and a half stars. Third, Charity Navigator rated it 4 stars. Lastly, Charity Watch rated it A, which means excellent. As for Better Business Bureau Wise Giving Alliance, it says that Save the Children is
Financial Accounting Standards Board. (1985). Statement of Financial Accounting Standards No. 86. Norwalk. Retrieved April 7, 2014, from http://www.fasb.org/cs/BlobServer?blobkey=id&blobnocache=true&blobwhere=1175820922177&blobheader=application%2Fpdf&blobheadername2=Content-Length&blobheadername1=Content-Disposition&blobheadervalue2=189998&blobheadervalue1=filename%3Dfas86.pdf&blobcol=url
Worth, Michael J. Nonprofit Management: Principles and Practice. 3rd Ed. Copyright 2014 by SAGE Publications, Inc.
In 1996 the Financial Accounting Standards Board (FASB) issued FAS 125: Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities to address off-balance sheet (OBS) accounting. FAS 125 required the recognition of assets an entity controls and the liabilities it incurred after the transfer of financial assets. And subsequently, the entity must de-recognize assets and liabilities when it no longer controls them. FAS 125 also defined the
The financial statements from Johns Hopkins Hospital (JHH) were used to calculate and analyze the meaning of the financial health of the organization from the years 2010-2012 (Appendix A). The following five major types of ratios were used: common size, liquidity, solvency, efficiency, and profitability
They are expected to be not-for-profit organizations established with strong social network and capacity to support the intervention objective of the donor. They should have program experience and track record, with formal organizational structure, management processes and actively managed by their Trustees or Directors.
...ith IFRS, these statements only examine these assets if they are able to be associated with the future interest.