What is the underlying reason a governmental unit uses separate funds to account for its transactions?
A) Governmental units are so large that it would be unduly cumbersome to account for all transactions as a single unit.
B) Because of the diverse nature of the services offered and legal provisions regarding activities of a governmental unit, it is necessary to segregate activities by functional nature.
C) Generally accepted accounting principles require that nonbusiness entities report on a funds basis.
D) Many activities carried on by governmental units are short-lived and their inclusion in a general set of accounts could cause undue probability of error and omission.

Question

Quizplus · Accepted Answer

The diverse nature of services offered by governmental units and the legal provisions that govern their activities necessitate the segregation of activities by their functional nature. This allows for more precise and effective management, reporting, and compliance with legal restrictions.

What Is the Underlying Reason a Governmental Unit Uses Separate