Financial Statements of the United States Government for the Fiscal Years Ended September 30, 2025, and 2024

Statements of Net Cost

These statements present the net cost of the government operations for FYs 2025 and 2024. Costs and earned revenues are categorized on the Statement of Net Cost by significant entity, providing greater accountability by showing the relationship of the entities’ net cost to the government-wide net cost. Costs and earned revenues are presented in this Financial Report on an accrual basis, while the Budget presents outlays and receipts, generally on a cash basis. The focus of the Budget is by entity.

The Statements of Net Cost contain the following four components:

• Gross cost—is the total cost of providing federal goods and services, excluding (gain)/loss from changes in assumptions and before considering related exchange revenue. The gross costs are the amounts reported by each entity, adjusted to reflect certain cost assignments made on a cause-and-effect or other reasonable basis (see discussion below).
• Earned revenue—is exchange revenue resulting from the government providing goods and services to the public at a price.
• (Gain)/loss from changes in assumptions—is the gain or loss from changes in long-term assumptions used to measure the liabilities reported for federal civilian and military employee pensions, other postemployment benefits (OPEB), and other retirement benefits (ORB), including veterans’ compensation.
• Net cost—is computed by subtracting earned revenue from gross cost, adjusted by the (gain)/loss from changes in assumptions.

Individual entity net cost amounts will differ from the entity’s financial statements primarily because of the elimination of intra-governmental activity and the subsequent reallocation of certain costs to individual entities at the government-wide level. While intra-governmental costs are eliminated from the face of the financial statements, the consolidated Statements of Net Cost is intended to show the total cost for each entity, therefore, reallocations are completed at the government-wide level to show costs more accurately at the entity level for employee benefit costs, intra-governmental buy/sell costs and related revenues, custodial collections, and imputed costs. These reallocated costs have a net effect of zero on the Statements of Net Cost in the Financial Report.

Because of its specific function, most of the employee benefit costs originally associated with the OPM have been reallocated to the user entities for government-wide reporting purposes. With regard to intra-governmental buy/sell transactions the selling entities’ costs are reallocated to the buying entities in order to allocate the costs to the entities that benefit from such costs.

In addition, the intra-governmental imputed costs recognized for the receipt of goods and services, financed in whole or part by the providing entities, have been reallocated to the net cost amounts of the individual entities receiving the benefit and subtracted from the applicable administering entities’ net cost amounts. The most significant types of imputed costs that are recorded relate to post-retirement and health benefits, Federal Employees’ Compensation Act (FECA), and Treasury’s Judgment Fund.

The interest on securities issued by Treasury and held by the public is reported on Treasury’s financial statements, but because of its importance and the dollar amounts involved, it is reported separately in these statements.

The accompanying notes are an integral part of these financial statements.

The accompanying notes are an integral part of these financial statements.