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To illustrate these points, consider a company that has been profitable for several years and has built up substantial retained earnings. If this company decides to invest heavily in new equipment, the cash account decreases while fixed assets increase, leaving retained earnings unchanged. Conversely, if a company with negative retained earnings turns a profit, it …

Read more “Retained Earnings Formula: Definition, Formula, and Example”

This is the same method as how for-profit companies would categorize their expenses (e.g. meals and entertainment, supplies, travel). Importantly, to prepare the Statement of Functional Expenses you have to provide both the functional and natural categories for all of your expenses. However, the cost may vary depending on the amount spent by the company …

Read more “18 Top Nonprofit Management Software for 2024”