Question

1. Which of the following is characteristic of governmental fund accounting and financial reporting? a. The inclusion of only financial assets and related liabilities. b. The inclusion of all financial and capital assets, as well as all related debt. c. The inclusion of all financial assets, as well as any capital assets and related debt that are related to General Fund functions. d. Depreciation is reported in all governmental funds that use capital assets.

Answer 1

Answer:

a) the inclusion of only financial assets and related liabilities.

Explanation:

The basic foundation of governmental financial accounting and reporting in the United States was established by the Governmental Accounting Standards Boards (GASB) in its "Objectives of Financial Reporting," which stated that the purpose of financial reporting is to provide information to facilitate decision making by various groups.

The groups were defined as;

(1) citizens of the governmental entity,

(2) direct representatives of the citizens, such as legislatures and oversight bodies, and

(3) investors, creditors, and others who are involved in the lending process.