If a state law requires that local governments prepare General Fund and special revenue fund budgets on a basis that differs from the basis of accounting required by generally accepted accounting principles (GAAP):
A) The actual amounts in the budgetary comparison schedule should be reported using the government's budgetary basis.
B) The actual amounts in the budgetary comparison schedule should be reported on the GAAP basis.
C) Both the budgeted and actual amounts in the budgetary comparison schedule should be reported on the GAAP basis; a separate budget-basis comparison schedule should be prepared for the appropriate state oversight body.
D) Only a budgetary comparison schedule prepared for the appropriate state oversight body is required.

Question

Quizplus · Accepted Answer

If a state law requires a different basis for budget preparation than that required by GAAP, the budgetary comparison schedule should be reported using the government's budgetary basis. This is because the purpose of the schedule is to reconcile budgetary amounts (prepared on the basis of the government's budgetary basis) to actual GAAP-based amounts. Therefore, option A is the best choice.

If a State Law Requires That Local Governments Prepare General