The Statement of Operations is a financial statement presenting a municipality's revenues, expenses, and annual surplus or deficit for the fiscal year—essentially a public sector income statement. Revenues include property taxes, user fees, grants, investment income, and other sources. Expenses are typically categorized by function (like transportation, protective services, recreation) or by type (salaries, materials, contracted services). The difference between revenues and expenses produces the annual surplus or deficit. Unlike private sector income statements focused on profit, municipal statements of operations show whether revenues covered costs of providing services. This statement is central to understanding annual financial performance and comparing actual results to budgets.