Rank the financial statements (Statement of Activities, Statement of Financial Position, Statement of Cash Flows, and Statement of Functional Expenses) in order of benefit to an administrator. Explain your reason for the order.
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- Nonprofit Accounting (Links to an external site.) – Review parts 2, 3, and 4 of the Accounting Coach Nonprofit Accounting Explanation.
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Lastly, administrators are least concerned about the statement of functional expenses, although it still holds benefit to the management. It is because it reports the incurred costs in the non-profit organization in terms of their functions. It also indicates the balance that the company maintains between its funding programs and sustaining workers. It is the least significant financial statement to administrators because it focuses on costs and expenses, which are of concern but not the primary focus of non-profit entities (Ittelson, 2017). Therefore, management utilizes this report to ensure that administrative funding is balanced to attract competent and qualified staff to meet the societal needs and goals of the non-profit firm.
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