The basic equation of non-profit organization accounting differs from the basic equation of accounting in other companies. This is because the nonprofit organization does not recognize the owner’s capital. The resources of nonprofit organizations are derived from donations and the results of their development
For that reason, nonprofit organizations need to prepare the financial statements. For a small sized organization with limited resource, preparing the financial report may be left. Mostly, this kind of organization focuses more on the program implementation than the administration task. However, there is no reason to ignore it. Nonprofit organizations should not depend on the trust given by their donors only. The organization’s accountability is needed to provide the reliable information to donors, regulators, beneficiaries, and public.
Managing Bookkeeping , According to PSAK 45, there are 4 types of financial record should be prepared by non-profit organizations:1. Balance sheet by the end of the reporting period. 2. Activity report for a specific period. 3. Cash flow statement 4. Notes to the financial statements
- Managing Bookkeeping : Balance sheet
The purpose of balance sheet report is to provide the information regarding asset, liabilities, net asset, and other information in a specified period. This report supports the donors, organization member, creditors, and other parties to access:
- The organization capability in delivering continual services
- Liquidity, financial flexibility, the capability to meet its obligation, and external funding needs.
- Managing Bookkeeping : Activity report
The activity report provides the information related to the transactions and other events that may change the amount and the nature of the net asset, transaction relationship, and the resource usage during the program implementation. The changes in net asset cover 4 transactions: A. Earning. B. Expenses. C. Profit and loss. D. Net asset reclassification.
- Managing Bookkeeping : Cash flow report
It presents the information of historical changes on cash and entity, separately shows the changes within one period of operational activity, investment, and funding. The main goal of this report is to inform the cash revenue and expenses in one period.
- Reported record.
The notes to the financial statements present certain accounting policy information that applies relevant to understanding the financial statements.
