Image Up Advertising & Design

| THE COLONY NEWS | JUNE 2023 | 7 By Chuck Gordon A balance sheet is a financial statement that shows the financial picture of The Colony (Community) at a specified point in time. Financial transactions that impact our Community assets, liabilities and home owners' equity are recorded and rolled up into the balance sheet. • The balance sheet comprises three major components: 1. Assets: Funds, land, buildings and anything owned by the community. (Current and Non-Current) 2. Liabilities: What our community owes to vendors, agents, and contractors. 3. Homeowners' Equity: The remaining accumulated funds that are not owed out as liabilities. Homeowner's equity is generally available for improvements, emergencies, redistributions to the reserves, or to the homeowners. • Balance Sheet Equation: Homeowner's Equity = Total Assets – Total Liabilities. As an example for the month of March: Total Community Assets = $1,404,067 Total Community Liabilities = $304,044 Home Owners' Equity = $1,100,023 NOTE: The Colony is a non-profit mutual benefit interest corporation. By Chuck Gordon The income statement shows the detail where the operating revenue was generated and the detail where our operating expenses were incurred. It indicates whether the budgeted revenue is meeting the budgeted expenses during a specified period of time. • The Income Statement has three major components: 1. Income: Shows the amount of income obtained from HOA assessments, fee income, investment income, salon rental, etc. 2. Expenses: Shows in detail the total accrued expenses to operate the Community during the specified period. 3. Performance: The budgeted versus actual revenue is compared to the budgeted versus actual expenses in the period. This comparison results in whether the community benefited by a net gain in income or suffered a net loss during the period. • Basic differences between the Balance Sheet and Income Statement. 1. The balance sheet is used to analyze our financial position, and indicate the owners' equity. In contrast, the income statement is used to analyze how well we are performing against the budget. 2. The balance sheet shows a snap shot of the company's financial position at a point in time, while the income statement reflects the financial performance over a period of time. 3. The balance sheet reports assets, liabilities and owners' equity, while the income statement reports revenue, expenses, and net income or losses. What is a Balance Sheet? What is an Income Statement? FROM THE TREASURER

• Cover