What detail must the annual financial report include about expenses?

• A. Expense category and category detail.
• B. Total expenses only.
• C. Employee salaries.
• D. Audit results.

Answer: (A)

The main idea is that financial reports must show how expenses are distributed, not just the total spent. Including the expense category and the detail underneath it provides a clear breakdown of where funds went, such as salaries, benefits, supplies, program costs, and other specific subcategories. This level of detail supports transparency, budgeting, and accountability, making it easier for reviewers to see exactly how resources were used and to compare year over year or against budgets.

The other options miss important requirements: listing only total expenses hides how money was actually spent; naming a single item like employee salaries is overly narrow and does not reflect other expense areas; and audit results belong in the auditor’s report, not in the expense disclosure itself.