Non Profit Cash and cash equivalents

Understanding Cash and Cash Equivalents on the Statement of Financial Position for Nonprofit Executive Directors and Board Members

Main Financial Office

The Statement of Financial Position, often referred to as the balance sheet, is a fundamental financial document that provides a snapshot of a nonprofit organization's financial health at a specific point in time. Cash and cash equivalents are a critical component of this statement, representing the most liquid assets that the organization holds.

Key Components of Cash and Cash Equivalents

Cash on Hand

Purpose: Physical currency and coins that the organization keeps for immediate use.

Importance: Cash on hand is essential for day-to-day operations, allowing the organization to handle minor expenses and immediate financial needs.

Cash on Hand

Cash in Bank Accounts

Purpose: Funds held in checking and savings accounts.

Importance: Cash in bank accounts is vital for managing regular operational expenses, such as payroll, utilities, and program costs.

Bank Accounts

Short-Term Investments and Petty Cash

Purpose: Highly liquid investments and a small amount of cash kept on hand for minor expenses.

Importance: These assets provide opportunities to earn returns on excess cash and handle small, unplanned expenses efficiently.

Short-Term Investments

Contact Know Your Numbers today for expert guidance and support in mastering the intricacies of financial statements. Together, we can ensure your organization's financial health and stability.