Certified Fund Raising Executive (CFRE) Practice Test

Which financial statement best presents the results of operations for a specific period of time?

1. Balance sheet

2. Statement of cash flows

3. Statement of income and expenditure

4. Fund balance report

The correct answer is: Statement of income and expenditure

The statement of income and expenditure is specifically designed to provide a detailed overview of an organization's revenues and expenses over a particular period, illustrating how those figures contribute to the overall financial health and operational effectiveness of the organization during that timeframe. This statement captures not just the total income generated, but also highlights how much was spent, which enables stakeholders to assess the organization’s performance in achieving its goals. The balance sheet, by contrast, offers a snapshot of an organization’s financial position at a single point in time, detailing assets, liabilities, and equity, rather than showing the flow of income and expenditures over a period. The statement of cash flows provides insights into how cash is generated and used but does so focusing on cash rather than the broader picture of operational performance. The fund balance report typically reflects the net assets at a certain point and is more relevant for understanding overall organizational resources rather than the results of operations.