In converting from the modified accrual basis of accounting information in a governmental fund to accrual basis for the government-wide statements,capital assets acquired by a governmental fund are deducted from fund balance-governmental funds to arrive at net assets of governmental activities.

Question

Quizplus · Accepted Answer

Capital assets acquired by governmental funds are financial uses of resources. As such, in converting to accrual the amount of the capital assets acquired should be added back to total fund balances-governmental funds to arrive at net assets of governmental activities.

In Converting from the Modified Accrual Basis of Accounting Information