The FASB Codification requires the following financial statements for all not-for-profit organizations:

• A. Statement of cash flows, statement of activities, and revenue and expense report.
• B. Balance sheet, income statement, and statement of cash flows.
• C. Statement of financial position, statement of activities, and statement of cash flows.
• D. Statement of changes in net assets, statement of functional expenses, and notes to financial statements.

Answer: (C)

The essential reporting framework for not-for-profit organizations centers on three main financial statements: the statement of financial position, the statement of activities, and the statement of cash flows. The statement of financial position shows what the organization owns and owes at a specific date, presenting assets, liabilities, and net assets. The statement of activities shows how net assets changed over the reporting period, detailing support, revenues, expenses, and gains or losses; this is often referred to as the change in net assets and is the not-for-profit counterpart to an income statement. The statement of cash flows reveals how cash moved during the period, categorized into operating, investing, and financing activities.

Notes to the financial statements accompany these three statements to provide additional context, accounting policies, and detail about significant items. The combination of these three statements plus notes is why the correct choice names the statement of financial position, the statement of activities, and the statement of cash flows.

Other options misalign with standard not-for-profit reporting: one uses terminology like a revenue and expense report (the not-for-profit equivalent is the statement of activities), another relies on for-profit naming such as balance sheet and income statement, and another suggests a separate, non-mandatory functional expenses statement instead of the core three statements. The three core statements listed above are the required set.