How Do the Balance Sheet and Statement of Revenues, Expenditures

question 52

Multiple Choice

How do the balance sheet and statement of revenues, expenditures, and changes in fund balances of governmental funds differ from the financial statement presentation for the governmental activities in the government-wide statement of net assets and statement of activities?
(1) Internal service funds are not included in the fund-based financial statements of governmental funds but could be reported in the governmental activities of government-wide financial statements.
(2) The economic resources measurement basis is used for fund-based financial statements of governmental funds and the current financial resources measurement basis is used for governmental activities in the government-wide financial statements.
(3) Modified accrual accounting is used for fund-based financial statements of governmental funds to time revenues and expenditures and accrual accounting is used for governmental activities of government-wide financial statements.
(4) The financial statements of governmental funds for fund-based financial statements are the same as governmental activities in government-wide financial statements but with different titles of the financial statements.

• A) 1 and 2.
• B) 2, 3, and 4.
• C) 1, 2 and 3.
• D) 1 and 3.
• E) 1, 2, 3, and 4.

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Definitions:

Marginal Revenue

The increase in revenue that results from the sale of one additional unit of a product.

Output

The total amount of goods or services produced by a company, industry, or economy within a specific period.

Additional Unit

Referring to the next or extra unit of a product or service to be produced or consumed, often used in analyses of costs and benefits.

Perfectly Competitive

Describes a market situation where firms sell identical products, there are no barriers to entry or exit, and no single buyer or seller can influence the market price.