Governmental fund statements are prepared using the current financial resources measurement focus and modified accrual basis of accounting.

Question

Quizplus · Accepted Answer

Governmental fund statements are prepared using the current financial resources measurement focus, which means that they report on current assets and liabilities and focus on the flow of financial resources rather than the accumulation of assets. They also use the modified accrual basis of accounting, which recognizes revenues when they become "available" (i.e. when they are collectible within the current period or soon enough after the end of the period to be used to pay current liabilities) and expenses when they are incurred. This is different from the full accrual basis used in the financial statements of for-profit entities, which recognizes revenues when they are earned and expenses when they are incurred, regardless of when they are paid or collected.

Governmental Fund Statements Are Prepared Using the Current Financial Resources