Which of the following is the best rationale/justification for reporting the business-type activities of a government in a separate fund?
A) Laws or regulations require that the activity's costs of providing services be recovered by fees and charges rather than by general purpose taxes or similar charges.
B) Separate funds facilitate budgeting, planning, and control.
C) Separate funds facilitate an assessment of the activity's performance.
D) Separate funds facilitate an assessment of the activity's fiscal status.

Question

Quizplus · Accepted Answer

The primary rationale for reporting business-type activities of a government in a separate fund is that laws or regulations often mandate that the costs of providing services for these activities must be covered through fees and charges, rather than through general taxation. This approach ensures that the financial operations of these activities are transparent and that they are self-sustaining, as opposed to being subsidized by general tax revenues.

Which of the Following Is the Best Rationale/justification for Reporting