Why Are Separate Operating Statements Prepared for Governmental Funds and Proprietary

question 3

Multiple Choice

Why are separate operating statements prepared for governmental funds and proprietary funds in the fund-level financial statements?

• A)because a single operating statement would require too many columns for the average reader to understand readily
• B)because governmental funds use the full accrual basis of accounting in the fund financial statements,whereas proprietary funds use the modified accrual basis of accounting
• C)because governmental funds have a different measurement focus and basis of accounting than proprietary funds in the fund-level financial statements
• D)because governmental fund operating statements need to be read together with the "budget and actual" schedules,whereas proprietary fund operating statements do not

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Definitions:

Overstated

A term used when the reported value of an asset, income, or expense is higher than the actual value, leading to inaccuracies in financial reporting.

Period's End

Refers to the conclusion of a specific accounting or reporting period, such as the end of a quarter or fiscal year.

Book Value

The net value of an asset as recorded on a company's balance sheet, calculated by subtracting accumulated depreciation from the original purchase cost.

Market Value

The present rate at which a service or asset is available for purchase or sale.