The Statement of Owners’ Equity/Changes in Net Assets
The Statement of Changes in Net Assets (called the Statement of Equity in a for-profit organization) shows the reasons why net assets changed from the beginning of the statement period to the end of the statement period.[1] This statement is important in showing how the changes in the excess of revenues over expenses affect the net asset or equity position of the organization.
| Term | Definition | Section Info |
|---|---|---|
| Contributions for Charity Care | Represents money donated to the hospital for providing charity care | Included in temporarily restricted net assets |
| Contributions for Endowment Funds | Includes money received from donors with permanent restrictions on the principal and interest | Included in permanently restricted net assets |
| Increase (or Decrease) in Temporarily Restricted Net Assets | Presents the total changes in temporarily restricted net assets during the statement period | Included in temporarily restricted net assets |
| Net Assets Released from Restrictions | Includes money previously restricted by donors that has become available for use | Included in temporarily restricted net assets |
| Net Realized and Unrealized Gains on Investments | Reflects an increase on the value of investment (unrealized until sold) and an increase in cash (realized through dividends or interest) | Included in temporarily restricted net assets |
| Net Realized and Unrealized Gains on Investments | Represents and increase in the values of investments and an increase in cash | Included in permanently restricted net assets |
| Permanently Restricted Net Assets | Presents changes in permanently restricted net assets during the accounting period | Includes contributions for endowment funds and net realized and unrealized gains on investments |
| Temporarily Restricted Net Assets | Presents the changes in temporarily restricted net assets during the statement period | Includes contributions for charity care, net realized and unrealized gains on investments, net assets released from restrictions, and increase/decrease in temporarily restricted net assets |
| Total Changes in Net Assets | Difference between total net assets at the beginning of the year and the total net assets at the end of the year | |
| Unrestricted Net Assets | Includes net assets that have not been restricted by donors or granters, such as the excess of revenues to expenses from operations |
- Nowicki, M. (2017). Introduction to the financial management of healthcare organizations (7th ed.). Health Administration Press. ↵
