C is corrent. Nongovernmental, not-for-profit entities should prepare the following financial statements:
| 1. | Statement of financial position. |
| 2. | Statement of activities. |
| 3. | Statement of cash flows |
A is incorrect because only voluntary health and welfare organizations are required to report a statement of functional expenses.
B is incorrect because a statement of activities is required but a statement of functional expenses is not.
D is incorrect because only voluntary health and welfare organizations are required to report a statement of functional expenses.
