Which report would you consult to review a department's gross costs and earned revenues?

Which report would you consult to review a department's gross costs and earned revenues?

• A. Balance Sheet
• B. Statement of Net Cost
• C. Statement of Operations and Changes in Net Position
• D. Budgetary Resources

Answer: (B)

The main idea is to identify the report that breaks out the full spending and the revenues earned, showing what the department actually cost to operate after accounting for earned revenues. The Statement of Net Cost is designed to present the gross costs of operations and the earned revenues, yielding the net cost for the period. This direct presentation of both the total costs and the offsetting revenues is exactly what you need to review a department’s financial performance in terms of how much it costs to operate and what revenues were earned to offset those costs. By contrast, a Balance Sheet shows assets, liabilities, and net position at a point in time, not the costs of operations. The Budgetary Resources report tracks budget authority and obligations, not the actual costs and revenues of operations. The Statement of Operations and Changes in Net Position focuses on revenues, expenses, and changes in net position, but it doesn’t provide the same explicit breakdown of gross costs and earned revenues in the way the Statement of Net Cost does.

The main idea is to identify the report that breaks out the full spending and the revenues earned, showing what the department actually cost to operate after accounting for earned revenues. The Statement of Net Cost is designed to present the gross costs of operations and the earned revenues, yielding the net cost for the period. This direct presentation of both the total costs and the offsetting revenues is exactly what you need to review a department’s financial performance in terms of how much it costs to operate and what revenues were earned to offset those costs.

By contrast, a Balance Sheet shows assets, liabilities, and net position at a point in time, not the costs of operations. The Budgetary Resources report tracks budget authority and obligations, not the actual costs and revenues of operations. The Statement of Operations and Changes in Net Position focuses on revenues, expenses, and changes in net position, but it doesn’t provide the same explicit breakdown of gross costs and earned revenues in the way the Statement of Net Cost does.