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 Returns

The additional output gained by adding one more unit of a particular input while keeping other inputs constant.

Transferability Of Ownership

The ability to legally transfer the title or ownership of assets or property from one entity to another.

Principal-Agent Problem

A challenge in situations where one party (the agent) is supposed to act in the best interest of another party (the principal) but may have self-interests that conflict.

Corporate Form

A legal entity structure for a business, recognized by the law as separate from its owners, and offering limited liability.