THE ABC NONPROFIT, INC.

SAMPLE Financial Statements

and Report Thereon

INDEPENDENT AUDITOR'S REPORT To the Board of Directors of The ABC Nonprofit, Inc. We have audited the accompanying statement of financial position of The ABC Nonprofit, Inc. (ABC) as of June 30, 2002, and the related statements of activities, functional expenses and cash flows for the year then ended. These financial statements are the responsibility of ABCs management. Our responsibility is to express an opinion on these financial statements based on our audit. The prior year summarized comparative information has been derived from ABCs 2001 financial statements and, in our report dated October 11, 2001, we expressed an unqualified opinion on those financial statements. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ABC as of June 30, 2002 and the changes in its net assets and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

SAMPLE
Raffa & Associates, P.C. Washington, DC September 28, 2002

THE ABC NONPROFIT, INC. NOTES TO FINANCIAL STATEMENTS STATEMENT OF FINANCIAL POSITION June 30, 2002 (With Summarized Financial Information as of June 30, 2001) _______________
2002 ASSETS Current Assets Cash and cash equivalents Accounts receivable Grants receivable Pledges receivable Charitable trust receivable Inventory Total Current Assets Other Assets Net property and equipment Investments Deposits TOTAL ASSETS LIABILITIES AND NET ASSETS Current Liabilities Accounts payable and accrued expenses Prepaid camp registration fees Current portion of notes payable Total Current Liabilities Long-term Liabilities Notes payable TOTAL LIABILITIES Net Assets Unrestricted Undesignated Internally designated Total Unrestricted Temporarily restricted Permanently restricted TOTAL NET ASSETS $ 2001

863,100 50,900 132,000 208,100 360,700 100,600 1,715,400 10,753,600 1,568,300 20,800 14,058,100

181,400 62,100 468,500 536,800 360,700 53,600 1,663,100 11,154,100 1,642,700 15,200

14,475,100

307,200 141,600 428,200 877,000 984,600 1,861,600

665,000 175,100 299,000 1,139,100 600,000 1,739,100

9,407,100 1,000,000 10,407,100 86,000 1,703,400 12,196,500

9,047,800 1,000,000 10,047,800 1,014,800 1,673,400 12,736,000

TOTAL LIABILITIES AND NET ASSETS

$ 14,058,100

$ 14,475,100

SAMPLE FINANCIAL STATEMENT

THE ABC NONPROFIT, INC. NOTES TO FINANCIAL STATEMENTS STATEMENT OF ACTIVITIES For the Year Ended June 30, 2002 (With Summarized Financial Information as of June 30, 2001) _______________ Unrestricted REVENUE AND SUPPORT Contributions Programs Membership dues Grants Rent Other Gift shop sales United Way Advertising Investment loss Net assets released from restrictions TOTAL REVENUE AND SUPPORT EXPENSES Program Services Supporting Services Management and general Fundraising TOTAL EXPENSES Change in Net Assets NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR $ 1,466,500 1,163,000 1,017,500 133,600 153,500 58,300 57,900 10,300 8,900 (88,200) 1,227,300 5,208,600 3,888,900 638,700 321,700 4,849,300 359,300 10,047,800 $10,407,100 $ $ Temporarily Restricted 242,000 56,500 (1,227,300) (928,800) (928,800) 1,014,800 86,000 Permanently Restricted $ 30,000 30,000 30,000 1,673,400 $1,703,400 2002 Total $ 1,738,500 1,163,000 1,017,500 190,100 153,500 58,300 57,900 10,300 8,900 (88,200) 4,309,800 3,888,900 638,700 321,700 4,849,300 (539,500) 12,736,000 $12,196,500 2001 Total $ 1,826,400 1,341,200 1,086,900 296,000 115,700 61,700 39,100 12,600 7,300 (16,400) 4,770,500 4,135,700 797,500 239,600 5,172,800 (402,300) 13,138,300 $12,736,000

SAMPLE FINANCIAL STATEMENT

THE ABC NONPROFIT, INC. STATEMENT OF FUNCTIONAL EXPENSES For the Year Ended June 30, 2002 (With Summarized Financial Information as of June 30, 2001) _______________
Program Services Cultural Arts Salaries Fringe benefits Total Salaries and Fringe Benefits Contracted services Depreciation Utilities Program and office supplies Bad debt expense Food and beverage Printing and copying Other Maintenance Advertising Postage and delivery Travel Subscriptions and dues Insurance Cost of goods sold Interest Equipment rental Telephone Occupancy TOTALS $ $ 57,613 7,757 65,370 600,000 20,000 9,604 1,622 2,801 9,794 3,995 2,925 7,622 9,311 10,334 300 1,667 2,077 6,913 754,335 $ Day Camp 10,292 1,154 11,446 600,000 18,000 1,716 7,606 1,801 3,676 523 4,937 93 15,155 298 371 $ 665,622 $ Community Service $ 163,705 25,943 189,648 404,242 36,103 27,291 17,392 2,056 13 1,508 8,312 908 368 11,736 5,902 2,543 112 708,134 $ $ Gift Shop 20,962 1,816 22,778 600,000 14,000 3,494 309 100 13 1,616 1,064 71 7 606 28,531 771 673,360 $ Membership Services $ 88,495 12,254 100,749 299,000 20,000 14,753 8,415 61,324 60 3,539 33,452 10,745 23,214 1,054 643 2,560 3,209 83 582,800 Newsletter $ 39,094 5,802 44,896 400,000 8,622 6,487 2,264 26,815 1,985 10,424 577 1,131 1,448 $ 504,649 Total Program Services $ 380,161 54,726 434,887 2,903,242 116,725 63,345 37,608 61,424 6,731 43,837 40,571 25,554 35,773 21,861 26,507 877 17,998 28,531 13,778 6,913 2,626 112 $ 3,888,900 $ Supporting Services Management and General $ 246,542 83,631 330,173 77,144 49,724 27,768 30,000 2,859 7,815 4,459 11,778 12,518 5,602 3,280 7,231 29,332 7,132 8,889 18,813 4,183 638,700 $ Fundraising $ 152,586 18,034 170,620 7,918 30,775 25,437 5,839 41,871 4,780 575 7,746 1,625 14,368 35 195 4,414 5,502 321,700 $ 2002 Totals 779,289 156,391 935,680 2,988,304 197,224 116,550 73,447 64,283 56,417 53,076 52,924 45,818 43,000 39,509 33,773 30,404 29,544 28,531 28,169 25,726 6,809 112 $ 4,849,300 2001 Totals $ 2,141,639 304,624 2,446,263 568,859 449,828 249,529 167,635 116,350 145,188 205,928 175,030 111,040 82,981 73,171 31,215 87,831 53,682 90,132 36,376 32,490 49,272 $ 5,172,800

SAMPLE FINANCIAL STATEMENT

THE ABC NONPROFIT, INC. STATEMENT OF CASH FLOWS For the Year Ended June 30, 2002 (With Summarized Financial Information for the Year Ended June 30, 2001) Increase (Decrease) in Cash and Cash Equivalents ______________
2002 2001 $ (402,300) 449,828 16,400 (854,900) (12,800) 58,600 355,000 413,900 30,400 2,500 338,100 11,600 406,328 (807,728) (807,728) (433,300) 854,900 125,000 546,600 145,200 36,200 $ 181,400 $ 90,100

CASH FLOWS FROM OPERATING ACTIVITIES Change in net assets Adjustments to reconcile change in net assets to net cash provided by operating activities: Depreciation Investment loss Contributions restricted for long-term purposes Increase in value of charitable trust receivable Changes in assets and liabilities: Accounts receivable Grants receivable Pledges receivable Inventory Deposits Accounts payable and accrued expenses Prepaid camp registration fees
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of property and equipment Purchases of investments Proceeds from sale of investments NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Principal payments under notes payable Proceeds from contributions restricted for investment in permanent endowment Proceeds from notes payable NET CASH PROVIDED BY FINANCING ACTIVITIES NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR CASH AND CASH EQUIVALENTS, END OF YEAR SUPPLEMENTAL CASH FLOW INFORMATION Actual cash payments for interest

$ (539,500) 197,224 88,200 (29,900) 11,200 336,500 328,700 (47,000) (5,600) (357,800) (33,500) (51,476) (13,700) (481,000) 684,176 189,476 (916,200) 29,900 1,430,000 543,700 681,700 181,400 $ 863,100 $ 76,900

SAMPLE FINANCIAL STATEMENT

THE ABC NONPROFIT, INC. NOTES TO FINANCIAL STATEMENTS _______________ 1. Organization and Summary of Significant Accounting Policies Organization The ABC Nonprofit, Inc. (ABC) is a non-profit organization established to provide health, welfare, and cultural benefits to members of the community and other interested individuals. ABC was created on July 1, 1985, when it separated from the XYZ Nonprofit Center, Inc. The primary sources of ABCs revenues are contributions, program fees, and membership dues. Cash and Cash Equivalents For purposes of the statement of cash flows, ABC considers all demand deposits and investments with a purchased maturity of three months or less to be cash and cash equivalents. Money market funds held as a part of ABCs long-term investment portfolio are not considered cash equivalents. Investments Investments consist of marketable debt and equity securities and are carried at fair value, as determined by quoted market prices. Property and Equipment and Related Depreciation Property and equipment are stated at cost. Expenditures for major additions, renewals and betterments are capitalized; conversely, expenditures for repairs and maintenance are charged to expense when incurred. Upon the retirement or disposal of assets, the cost and accumulated depreciation are eliminated from the accounts and the resulting gain or loss is included in revenue or expenses. Depreciation of property and equipment is computed using the straight-line method over the estimated useful service lives of the assets ranging from three to five years, except for land and artwork, which are not depreciated. In fiscal year 1997, ABC occupied and commenced operations in its newly renovated building. The building is being depreciated using the straight-line method over its estimated useful service life of 30 years.

SAMPLE FINANCIAL STATEMENT

THE ABC NONPROFIT, INC. NOTES TO FINANCIAL STATEMENTS _______________ 1. Organization and Summary of Significant Accounting Policies (continued) Classification of Net Assets The net assets of ABC are reported in three groups as follows: Unrestricted net assets represent the portion of expendable funds that are available for support of ABCs operations or that have been designated by the Board for a particular purpose. Temporarily restricted net assets represent amounts that are specifically restricted by donors or grantors for various programs, building renovation or future periods. At June 30, 2002, all temporarily restricted net assets are available for the periods subsequent to the year end. Permanently restricted net assets represent endowment gifts requiring that the principal be invested in perpetuity and that only the income be expended. Permanently restricted net assets at June 30, 2002 were $1,703,400, the income from which is available for operations.

Revenue Recognition Grants and contributions are considered unrestricted and available for general operations unless specifically restricted by the donor. ABC reports gifts and grants of cash and other assets as temporarily restricted if they are received with donor stipulations that limit the use of the donated assets as to a particular purpose or to future periods. When a stipulated time restriction ends or purpose restriction is accomplished, temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Donor temporarily restricted contributions whose restrictions are met in the same accounting period in which the contribution was originally pledged are reported as unrestricted revenue. Pledged contributions promised for future years are recorded as revenue at their net present value on the date the enforceable pledge document is received. Membership dues are deemed to be in exchange for the benefits of the program services and facilities provided by ABC and are recorded as revenue in the period the services are provided. Membership fees received in advance of the period the services are provided are recorded as deferred membership fees. At June 30, 2002, there was no material deferred revenue.

These are sample financial statements and therefore are not intended to include all the required footnote disclosures.
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