The basis of accounting selected by or imposed on a government 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 can impact all of the options mentioned. For (A), if the government is using an accrual basis, it may have a better understanding of the costs and benefits of contracting out versus providing the service in-house. For (B), if the government is using a cash basis, it may not accurately reflect the true cost of salary increases, and therefore may impact negotiations. For (C), if the government is using a restricted fund accounting, it may impact the availability of funds for specific projects or services.

The Basis of Accounting Selected by or Imposed on a Government