Governmental activities fund statements must be changed to the accrual basis from the modified accrual basis when preparing government-wide financial statements.

Question

Quizplus · Accepted Answer

Government-wide financial statements follow the accrual basis of accounting, while governmental activities funds use the modified accrual basis. Therefore, when preparing government-wide financial statements, the governmental activities funds statements must be converted to the accrual basis to ensure consistency in accounting principles.

Governmental Activities Fund Statements Must Be Changed to the Accrual