Generally accepted accounting principles applicable to state and local governments require that
A) Only governmental funds and proprietary funds should be established.
B) Only those funds required by law, GASB standards, and sound financial administration should be established.
C) Only those funds required by law and sound financial administration should be established.
D) All categories of funds must be established.

Question

Quizplus · Accepted Answer

Generally accepted accounting principles applicable to state and local governments require that only those funds required by law, GASB standards, and sound financial administration should be established. This means that there is flexibility in the types of funds that can be established, as long as they meet these criteria. It is not necessary to establish all categories of funds, as choice D suggests, and choice A is incorrect because it does not account for fiduciary funds. Therefore, choice B is the best option.

Generally Accepted Accounting Principles Applicable to State and Local Governments