Financial Assets and Liabilities
n explaining the process of debits and credits, “In chapter 9-a it gave in depth information on recording process of debits and credits. The words debit and credit are commonly used in the process of recording financial information. which also represents an increase in an asset or expense. A credit represents an increase in a liability or revenue. To understand the accounting use of debits and credits, we need to make a minor arithmetical transformation in the fundamental accounting equation. The way we have presented the equation represents a stock: ASSETS (A) = LIABILITIES (L) + NET ASSETS (NA). The two most prominent things that change net assets are revenues, or support, and expenses. When the organization provides goods or services, it earns revenues, or if it receives donations, it has support. Revenue and support increase net assets. We show revenue or support as R.
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§ 1-When the organization uses resources to generate revenues, it incurs an expense. Expenses reduce net assets.” How is the process affected if there are more liabilities than assets?
§ you understand some aspects of financial management in a nonprofit agency, “I found this video to be a great learning tool, the narrator simplified the process of business accounting the importance of keeping the numbers straight. If I were tasked to maintain a companies books I would be able to handle it given the examples in the instructional video. I must say, nonprofits have a much harder time because assets are everything, even office furniture and anticipated monetary gifts.” Within the understanding of balance sheet and income statements,
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§ 2-what is in-kind to a non-profit agency? Can the agency use in-kind as a revenue or asse
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Liabilities are debts that an organization has. When the liabilities are more than the assets the organization is at a risk of collapsing having more liabilities than the assets will hurt the cash flow of the organization. The organization will not be able to make revenue by using…
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