A measure of whether the government lived within its means in the measurement year,or was required to use prior year resources to fund a portion of current year costs,or shifted the funding of some current year costs to future periods,is
A) Business-type activities revenues/business-type activities expenses.
B) Unrestricted net position/total revenues.
C) Total revenues/total expenditures.
D) Total net position (governmental activities and business-type activities)less total net position at the beginning of the year.

Question

Quizplus · Accepted Answer

Total revenues represent all the financial resources available to the government, while total expenditures represent all the costs incurred in the current year. If total expenditures exceed total revenues, it means the government has incurred a deficit and had to draw on past reserves (prior year resources) or borrow money (shifted the funding of some current year costs to future periods) to fund its operations. Therefore, total revenues/total expenditures is the best measure of whether the government lived within its means in the measurement year.

A Measure of Whether the Government Lived Within Its Means