Revenue and expense on a government-wide statement of activities for a municipality should be measured on a(n)

Question

Quizplus · Accepted Answer

Revenue and expense on a government-wide statement of activities should be measured on the accrual basis, which recognizes revenue when earned and expenses when incurred, in order to provide a more accurate picture of the municipality's financial position and performance. The cash basis only records transactions when cash is received or disbursed, which may not accurately reflect when revenue was truly earned or when expenses were truly incurred. The modified accrual basis is typically used for the operating fund in governmental accounting, but is not appropriate for a government-wide statement of activities. The reconciliation basis is not a recognized basis of accounting.

Revenue and Expense on a Government-Wide Statement of Activities for a Municipality