Kate is the Executive Director of a local food bank and is assessing the financial situation of her not-for-profit organization. Kate uses a (n) ______ to determine whether revenues from contributions and other sources will cover operating costs.
A) income statement
B) statement of cash flows
C) balance sheet
D) accrual accounting

Question

Quizplus · Accepted Answer

Kate would use an income statement to see if the revenue from contributions and other sources is enough to cover operating costs. The income statement details the organization's revenue and expenses over a specific period of time and provides a clear picture of the organization's net income or net loss. The statement of cash flows would be useful for evaluating the organization's cash inflows and outflows, while the balance sheet gives an overall snapshot of the organization's financial position. Accrual accounting is a method of recording financial transactions that contributes to the preparation of financial statements but is not a financial statement itself.

Kate Is the Executive Director of a Local Food Bank