When financials are provided for general body review, do not let the accounting terms and information formatting scare you. Here are a few tips to make it simple to understand a profit and loss statement, also called an income statement, reported by the government or on tribally owned businesses.
Four ways money can enter a tribal government or business:
- Federal funding or cash sales;
- Proceeds from a loan (debt);
- New investor or current owner (equity);
- Accounts receivable collections.
Four ways money can leave a tribal government or business:
- Purchase assets such as land, equipment, or inventory;
- Payroll and expenses incurred from being in business;
- Make loan payments;
- Distribute earnings to the owners.
As you have the opportunity to review your tribe’s income statement, just know the purpose of financials are to explain how money travels into, is utilized within, and moves out of your tribal system. Reports will differ in small ways from one tribe to the next but practically all follow the same general guidelines.