National Association of Boards of Long Term Care Administrator (NAB) CORE Practice Exam

The operating performance for a specific span of time is measured by which financial document?

1. Operating budget

2. Balance sheet

3. Statement of financial condition

4. Income statement

The correct answer is: Income statement

The income statement is the financial document that measures operating performance over a specific period of time. It provides a detailed account of a facility's revenues, expenses, and profitability within that timeframe. By summarizing these financial activities, the income statement offers insights into how well the organization is performing economically, allowing leadership to assess operational efficiency and make informed decisions based on trends in income and expenditures. In contrast, the operating budget focuses primarily on projected revenues and expenses for future periods rather than reflecting actual performance. The balance sheet presents a snapshot of the organization's financial position at a specific point in time, detailing assets, liabilities, and equity but does not cover performance over a period. Similarly, the statement of financial condition serves to summarize a facility’s financial health but is not oriented toward measuring performance over a continuous operating period like the income statement does.