The basis of accounting selected by or imposed on a governmental entity can influence which of the following?
A)A decision to contract-out a specific service rather than provide that service itself.
B)The amount of salary increases proposed by union negotiators.
C)The amount that is available to spend on a donor-specified project or service.
D)All of the above.

Question

Quizplus · Accepted Answer

The basis of accounting selected by or imposed on a governmental entity can influence decisions related to budgeting, financial reporting, and resource allocation. For example, if a government entity uses the accrual basis of accounting, it may prioritize the need for accurate financial reporting over providing certain services itself. Alternatively, if a government entity uses the cash basis of accounting, it may prioritize the availability of funds in the short-term, potentially leading to a decision to contract-out certain services. Similarly, the accounting basis used can also impact the amount of funds available for specific projects or services, potentially affecting the decisions made by union negotiators when proposing salary increases. Therefore, all of the given choices can be influenced by the accounting basis selected by or imposed on a governmental entity.

The Basis of Accounting Selected by or Imposed on a Governmental