In order to convert the governmental fund statement of revenues, expenditures, and changes in fund balances to a government wide statement of activities, which of the following activities is necessary?
1) Eliminate capital outlay expenditures
2) Reclassify revenues between program revenues and general revenues
3) Record bad debt expenses
4) Convert revenues from the economic flow of resources accrual basis to the current financial resources modified accrual basis
A)1, 3, 4
B)1, 2, 3
C)1, 2, 3, 4
D)1, 2, 4

Question

In order to convert the governmental fund statement of revenues, expenditures, and changes in fund balances to a government wide statement of activities, which of the following activities is necessary? 
1) Eliminate capital outlay expenditures
2) Reclassify revenues between program revenues and general revenues
3) Record bad debt expenses
4) Convert revenues from the economic flow of resources accrual basis to the current financial resources modified accrual basis
A)1, 3, 4
B)1, 2, 3
C)1, 2, 3, 4
D)1, 2, 4

Quizplus · Accepted Answer

1) Capital outlay expenditures are eliminated because they are capitalized and depreciated in government-wide financial statements. 2) Revenues need to be classified correctly between program revenues and general revenues to accurately reflect how resources are generated and used. 3) Bad debt expenses are recognized in government-wide statements to accurately reflect the full accrual basis of accounting, unlike in the governmental funds statements.

In Order to Convert the Governmental Fund Statement of Revenues