Understanding accounting and financial statements

¶ … Accounting and Financial Statements

Non-profit making organizations are those organizations, which are not allowed to make any profit on their day-to-day activities. They are required to offer their activities to the clients without any intention of making a profit. The kinds of financial statements prepared by the accountant include; budget, balance sheet, and income statement (Feldman & Libman, 2011, p. 26). Budget is a written plan that predicts income and expenditure in a given time, which is usually one year. The budget is based on the realistic planning of the programs and goals of the organization. Members of the organization use the budget to coordinate and control programs and finances. Balance sheet is the summary showing the financial status of a business in a given time. It also shows the assets, liabilities, and capital of the organization. Income statement is also known as a statement of operations. It shows how much money was received by the organization as revenue and how much money was spent as expenses in a given time. The revenue and expenses budgeted are compared with the actual revenue and expenses at the end of the year. The difference of the two indicates variance between the amount budgeted and the actual amount spent or received (Epstein, 2012, p. 24).

Better quality financial statements help to reassure donors because they should be presented to prove the financial position of the organization. For example, the budget should show a small difference between the actual and budgeted figures or even being the same. The balance sheet shows what assets the business owns and what is being owed, and what it owes other organizations. In addition, the balance sheet shows if the organization can pay its debts. The income statement shows how frequent the organization's transactions are performed. This will help the donors to estimate how the organization will utilize the funds.

BDO enjoys a long-term relationship with its clients when it belongs to a large international group. This is because the clients will learn to endure the challenges of the economy due to the long-term relationship. In addition, the clients will gain competence from the organization's team as they bring important matters like tax and other consultations on the table to be dealt with by the senior team members. BDO received industry honors like Alfred P. Sloan Award, which was worn by 39 of its U.S. offices for business excellence in the workplace (Epstein, 2012, p. 71). Some of the implications include the fact that the organization will be known attracting new clients whilst receiving funds from various donors without much interrogation on security. As a customer, I will expect quality services from BDO.

Mutual funds portfolio turnover is one of the easily explained investment qualities for investors. While expressed as percentages, it shows the portion of securities in the fund's portfolio of those sold and bought in a year. All these information is found in the reports and financial statements we present. When the lower percentage figure is reported, it will equate to a long portfolio-holding period. For example, if the turnover is 10% it means that the portfolio would be reconstituted after five years. On the other hand, when the turnover is 100% the portfolio will be reconstituted in one year. I will select one with 100% turnover because it can be reconstituted in a period of only one year (Feldman & Libman, 2011, p. 43). This will be economical and profitable instead of waiting for a long period to be reconstituted.