Gabel School Financial Reporting - Assignment Example

Issues arose when it came to the income statement. Although Gabel Boarding School not for profit organization meaning its primary organizational objective is not profit maximization, the school is heading towards the dark end. The financial statements indicate that the company spends more than it earns in one trading period. When there are many expenses that the income, the school generates the chances of the operations of the school getting paralyzed are very high.

            The financial statements of Gabel Boarding School also indicate that the biggest source of funds for the school loans from banks and other financial statements. Ideally not for profit organizations do not get their revenues from their activities but donors and investors. Donors and investors are parties interested in the goodwill of the project. Loans tend to drain all the funds from the operations and the little income the school gets. Another issue with the financial statements of the school is that there are many miscellaneous expenses. The miscellaneous expenses generate not revenues for the school and thus act as a fiscal restraint.

            Not-for-profit organizations usually have their income statements include few details. They add up all items from their expenditures and record them as one item. Their statements have a particular audience who is the donor and investors. Because of the audience, they attract they only list important activities of the organization, unlike Gabel Boarding School where all items are on the list (McCarthy, Nancy, and John 132).

            The first recommendation that the school must work on immediately reduce their expense accounts. Reducing the expense account does not necessarily mean that the school stops carrying out its operations but instead either raises the revenues they have from other sources or gets rid of activities that are no a must-do. The best way to reduce expenses from the organization’s activities is to have a checklist (McCarthy, Nancy, and John 140). The checklist will assess the relevance of each activity and the income it generates for the school. It will also act as an analysis tool to guide the school into investing in the right projects that are more profitable.

            Another recommendation that the school should consider is selling off the old equipment. The old equipment is depreciating at a fast pace; the school can sell them when they are at least worth some value rather than wait and sell them as scrap. Selling them will help the school get new items or get funds from the old tools that are not in use.

            The school should also include the names of its debtors. The account receivable account has a full list of no names. Including the names of the borrowers will help the school keep track of them and follow up on their cash. The school also must not give additional services to parties that have not paid for the previous services to reduce the amount of money in the accounts receivables (McCarthy, Nancy, and John 200).