If 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 GAAP,then the budgetary comparison schedule or statements should
A)Not be included as part of the basic financial statements.
B)Be included with the actual figures presented on the budget basis and then reconciled to the GAAP basis.
C)Be included with budget figures adjusted to the GAAP basis and presented only as part of the basic financial statements.
D)Be included as part of management's discussion and analysis (MD&A).

Question

Quizplus · Accepted Answer

Even though the state law requires local governments to prepare budgets on a basis that differs from GAAP, the budgetary comparison schedule or statements should still be included in the basic financial statements. However, the actual figures should be presented on the budget basis and then reconciled to the GAAP basis. This allows users to see how the budgeted amounts compare to the actual amounts and understand any differences due to the different accounting basis. Therefore, option B is the most appropriate choice.

If State Law Requires That Local Governments Prepare General Fund