When a governmental enterprise fund has restricted assets on its balance sheet, which of the following is a true statement?
A)The total of the restricted assets in the asset section will be equal to the "Restricted Net Assets" amount in the equity section.
B)The total of the restricted assets will be offset by a liability of an equal amount.
C)The total of the restricted assets less related liabilities will be equal to the "Restricted Net Assets" amount in the equity section.
D)None of the above statements is true.

Question

Quizplus · Accepted Answer

When a governmental enterprise fund has restricted assets on its balance sheet, the total of the restricted assets less related liabilities will be equal to the "Restricted Net Assets" amount in the equity section. This is because the equity section represents the residual amount of assets after all liabilities and other obligations have been satisfied. The restricted assets and their related liabilities are reflected separately on the balance sheet to provide transparency and ensure compliance with any legal or contractual restrictions on their use. Therefore, the total of the restricted assets and their related liabilities will be subtracted from the total unrestricted net assets to arrive at the total restricted net assets, which is reflected in the equity section.

When a Governmental Enterprise Fund Has Restricted Assets on Its