Which organizations should report the results of their operations in a statement of operations?

Not-for-profit organizations are required to report the results of their operations in a statement of operations because this financial statement provides critical information about how the organization is performing financially over a given period. This report outlines the revenues and expenses, helping stakeholders understand the organization’s ability to sustain its operations, fulfill its mission, and manage resources effectively.

Non-profits rely heavily on donations, grants, and other forms of income, so it is essential to show transparency regarding how funds are utilized in achieving their objectives. The statement of operations helps convey this information, focusing on the surplus or deficit generated during the reporting period, which is a key indicator of the organization's financial health.

While governmental and healthcare organizations also report their financial activities, the terminology and structure of their reports may differ. Governmental organizations often use a statement of activities as part of their financial reports, and healthcare organizations may operate under unique regulations that dictate their reporting practices. However, not-for-profit organizations specifically use the term "statement of operations" to detail their revenue and expenses comprehensively.