A measure of whether the government lived within its means in the measurement year,was required to use prior year resources to fund a portion of current year costs,or shifted the funding of some current year costs to future periods,is:
A) Business-type activities revenues/business-type activities expenses.
B) Unrestricted net position/total revenues.
C) Total revenues/total expenditures.
D) Total net position (governmental activities and business-type activities) less total net position at the beginning of the year.

Question

Quizplus · Accepted Answer

Total revenues/total expenditures is a measure of whether the government lived within its means in the measurement year. If total expenditures exceed total revenues, it indicates that the government has used prior year resources to fund a portion of current year costs or shifted the funding of some current year costs to future periods. If total revenues exceed total expenditures, it means that the government has generated enough revenue to cover its expenses in the current year without relying on prior year resources or future funding.

Option A is incorrect because it only considers the revenues and expenses of business-type activities and does not include governmental activities. Option B is incorrect because unrestricted net position/total revenues only indicates the percentage of revenues not constrained by external restrictions, and does not capture whether the government lived within its means. Option D is incorrect because it only considers changes in net position and does not provide information on whether the government is living within its means.

A Measure of Whether the Government Lived Within Its Means