Nonprofit Accounting Basics

Form 990 (Core Form)

The Form 990, Return of Organization Exempt from Income Tax, contains a twelve page “core” form with the following twelve parts:

Part I provides basic information about the organization and contans a summary of selected items contained in the balance of the return.

Part II is the signature block.

Part III is the Statement of Program Service Accomplishments.  Narratives related to the mission and major programs of the organization are reflected in this part.  Financial information about the programs is also required for 501(c)(3) and 501(c)(4) organizations.

Part IV is the Checklist of Required Schedules. If the questions in Part IV are answered “yes,” a corresponding schedule must be completed. See Form 990 Schedules for more information about schedules.

Part V is the Statements Regarding Other IRS Filings and Tax Compliance. The questions are meant to ensure all filing organizations are aware of the multiple filing requirements that can apply to them.

Part VI relates to Governance, Management, and Disclosure. There are three sections to Part VI: Governing Body and Management, Policies, and Disclosure.

Part VII is titled Compensation of Officers, Directors, Trustees, Key Employees, Highest Compensated Employees, and Independent Contractors.

Part VIII is the Statement of Revenue.

Part IX is the Statement of Functional Expenses.

Part X is the Balance Sheet.

Part XI is the Reconciliation of Net Assets. Part XI is a reconciliation of the beginning net assets for the year to the ending balances. Any changes not included in Parts VIII and IX must be disclosed.

Part XII is titled Financial Statements and Reporting. The questions in this section generally require yes or no answers and relate to the method of accounting, whether an audit has taken place, and the extent of federal funding.