Which financial statement shows changes in net assets for the year in a not-for-profit organization?

• A. Statement of Financial Position
• B. Statement of Cash Flows
• C. Statement of Activities
• D. Notes to Financial Statements

Answer: (C)

Net assets change over the year is shown on the statement of activities. In nonprofit accounting, net assets replace equity and track how the organization’s resources grow or shrink from beginning to end of the period. The statement of activities presents revenues and support (such as contributions, grants, and gains) as additions to net assets and presents expenses and losses as reductions. It often separates changes with donor restrictions from those without restrictions, showing how much of the year’s activity affects each category of net assets. This is the primary place to see the organization’s performance over the year.

In contrast, the statement of financial position shows assets, liabilities, and net assets at a single point in time, not how net assets changed during the year. The statement of cash flows details cash receipts and payments, and the notes to the financial statements provide additional disclosures and context.