In the Two-Worksheet Approach, What Type of Adjustment Will Be

question 11

Multiple Choice

In the two-worksheet approach, what type of adjustment will be necessary for interest expenditure/expense on the operating statement conversion worksheet?

• A) No adjustment is necessary for interest expenditure/expense. The amount of interest expenditure on the governmental fund financial statements is the same amount that will be reported as interest expense in the government-wide statements.
• B) Interest on long-term debt that has been incurred but not paid will need to be added to the interest expenditure reported on the governmental funds balance sheet.
• C) Interest paid this year that is attributable to the previous year accrual for long-term debt will need to be deducted from interest expenditure reported on the governmental funds balance sheet.
• D) An adjustment to the interest expenditure reported on the governmental funds operating statement will be necessary for the net change in accrued interest payable on long-term debt from the beginning of the year to the end of the year.

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