What is the primary purpose of a statement of activities in a nonprofit organization?

The primary purpose of a statement of activities in a nonprofit organization is to summarize revenue and expenses. This financial statement provides an overview of how the organization is performing financially over a specific period, detailing the income generated from various activities and the expenses incurred.

By summarizing these elements, the statement of activities helps stakeholders, including management, donors, and board members, to assess the organization's financial health and operational effectiveness. It illustrates how resources are being allocated and whether the organization is fulfilling its mission effectively through its financial activities. This summary is critical for planning, accountability, and demonstrating transparency to stakeholders.

The focus on summarizing revenue and expenses distinguishes this statement, providing insights into the financial dynamics that drive the organization.