All assets and liabilities of Non-profit organisation are reported on its statement ofa)Cash Flow statementb)Financial positionc)Income positiond)Fund flow statementCorrect answer is option 'B'. Can you explain this answer?

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Answer

The status of the assets, liabilities, and owners' equity (and their interrelationships) of an organization, as reflected in its financial statements. Also called financial condition.

Answer

A nonprofit's statement of financial position (similar to a business's balance sheet) reports the organization's assets and liabilities in some order of when the assets will turn to cash and when the liabilities need to be paid. ... (We will present a sample statement of financial position in a later section.)

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All assets and liabilities come under Balance sheet which also represents financial position.

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Financial position because it represents the position of business in which records all type of assets and liabilities

Answer

Statement of Financial Position

The statement of financial position, also known as the balance sheet, is a financial statement that reports the assets, liabilities, and owner's equity of an organization at a specific point in time. Non-profit organizations are required to prepare this statement to provide information about their financial position.

Assets
Assets represent the economic resources owned or controlled by an organization. They are classified into two categories: current assets and non-current assets.

1. Current Assets: Current assets are those that are expected to be converted into cash or used up within one year or the normal operating cycle of the organization. Examples of current assets include cash, accounts receivable, prepaid expenses, and inventory.

2. Non-current Assets: Non-current assets are long-term assets that are not expected to be converted into cash or used up within one year. Examples of non-current assets include property, plant, and equipment, investments, and intangible assets.

Liabilities
Liabilities represent the obligations or debts of an organization. They are also classified into two categories: current liabilities and non-current liabilities.

1. Current Liabilities: Current liabilities are obligations that are expected to be settled within one year or the normal operating cycle of the organization. Examples of current liabilities include accounts payable, accrued expenses, and short-term loans.

2. Non-current Liabilities: Non-current liabilities are long-term obligations that are not expected to be settled within one year. Examples of non-current liabilities include long-term loans, deferred revenue, and pension obligations.

Equity
Equity represents the residual interest in the assets of an organization after deducting liabilities. In the case of non-profit organizations, equity is often referred to as net assets. Net assets are further categorized into three types: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets.

- Unrestricted Net Assets: These net assets have no donor-imposed restrictions and can be used for any purpose deemed appropriate by the organization.
- Temporarily Restricted Net Assets: These net assets have donor-imposed restrictions that will be met either by the passage of time or by the occurrence of a specific event.
- Permanently Restricted Net Assets: These net assets have donor-imposed restrictions that are permanent in nature and can only be used for specific purposes as defined by the donors.

The Importance of the Statement of Financial Position for Non-profit Organizations
The statement of financial position is crucial for non-profit organizations as it provides a snapshot of their financial health at a specific point in time. It helps stakeholders, such as donors, board members, and regulators, to assess the organization's ability to meet its financial obligations, manage its assets, and fulfill its mission. By analyzing the assets, liabilities, and net assets, stakeholders can make informed decisions regarding their involvement and support for the organization. Additionally, the statement of financial position allows for comparison with previous periods to track the organization's financial performance and identify any trends or areas of concern. Overall, the statement of financial position is a key financial statement that provides transparency and accountability for non-profit organizations.

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