If State Law Requires That Local Governments Prepare General Fund

question 79

Multiple Choice

If state law requires that local governments prepare General Fund and special revenue fund budgets on a basis that differs from the basis of accounting required by GAAP, then the budgetary comparison schedule or statements should

• A) Not be included as part of the basic financial statements.
• B) Be included with the actual figures presented on the budget basis and then reconciled to the GAAP basis.
• C) Be included with budget figures and actual figures adjusted to the GAAP basis.
• D) Be included as part of management's discussion and analysis (MD&A).

---

Definitions:

S Corporation

A special designation for a corporation that allows income, losses, deductions, and credits to be passed through to shareholders for tax purposes.

Dual Purpose Corporation

A business entity designed to operate for both profit and to achieve a social or charitable goal.

General Partnership

A partnership in which the partners divide profits and management responsibility and share unlimited personal liability for the partnership’s debts.

Business Losses

Business losses are the negative financial impacts a business suffers, often reflected in its financial statements as expenses exceeding revenues.