Question

A certain city reports the following year-end total assets: General Fund $18,400,000 Library Fund (a special revenue fund) 2,900,000 Debt Service Fund 2,600,000 Total governmental funds 26,300,000 Total governmental and enterprise funds combined 51,250,000 Based on this information, which funds should be reported as major funds?
A. General Fund only
B. General Fund and Library Fund
C. General Fund and Debt Service Fund
D. All three funds should be reported as major funds

Answer 1

Answer

The correct answer is option A) General Funds

Explanation:

Based on the information provided which is

• General Fund $18,400,000
• Library Fund (a special revenue fund) 2,900,000
• Debt Service Fund 2,600,000
• Total governmental funds 26,300,000
• Total governmental and enterprise funds combined 51,250,000

only option A) General funds meets the requirement for a major fund.

the criteria for a major fund is at least 10% of total governmental and enterprise funds.

Answer 2

Answer:

B) General Fund and Library Fund

Explanation:

Major funds are those that include revenues, assets, expenditures and liabilities that account for at least 10% of all the government funds.

In this case the total government funds = $26,300,000

so 10% of total funds = $26,300,000 x 10% = $2,630,000

only the general fund ($18,400,000 ≥ $2,630,000) and the library fund (2,900,000 ≥ $2,630,000) are higher than the 10% threshold.