Which of the following identifies the reason that we need reconciliations between governmental funds and government-wide governmental activities (select all that apply)? Internal service funds are often categorized as governmental funds. Governmental funds use the modified accrual basis of accounting, and the government-wide governmental activities use the accrual basis of accounting. Internal service funds are often categorized as governmental activities. Governmental funds use the accrual basis of accounting, and the government- wide governmental activities use the modified accrual basis of accounting.
Which of the following identifies the reason that we need reconciliations between governmental funds and government-wide governmental activities (select all that apply)? Internal service funds are often categorized as governmental funds. Governmental funds use the modified accrual basis of accounting, and the government-wide governmental activities use the accrual basis of accounting. Internal service funds are often categorized as governmental activities. Governmental funds use the accrual basis of accounting, and the government- wide governmental activities use the modified accrual basis of accounting.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![### Reasons for Reconciliation Between Governmental Funds and Government-Wide Governmental Activities
Which of the following identifies the reason that we need reconciliations between governmental funds and government-wide governmental activities (select all that apply)?
1. ☐ Internal service funds are often categorized as governmental funds.
2. ☑ Governmental funds use the modified accrual basis of accounting, and the government-wide governmental activities use the accrual basis of accounting.
3. ☐ Internal service funds are often categorized as governmental activities.
4. ☐ Governmental funds use the accrual basis of accounting, and the government-wide governmental activities use the modified accrual basis of accounting.
**Explanation:**
The primary reason for the need for reconciliations between governmental funds and government-wide governmental activities is the difference in accounting methods used. Governmental funds are reported using the modified accrual basis of accounting, whereas government-wide governmental activities utilize the accrual basis of accounting. This difference necessitates adjustments or reconciliations to ensure consistency and accuracy in financial reporting.
**Note:**
Check the appropriate option based on your understanding or course guidelines.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F09215c4f-da1c-43dc-b246-cc7e3c2ee174%2Fe7aad858-7017-4e3a-a7d4-5091b21d8ac6%2Fazdoksri_processed.jpeg&w=3840&q=75)
Transcribed Image Text:### Reasons for Reconciliation Between Governmental Funds and Government-Wide Governmental Activities
Which of the following identifies the reason that we need reconciliations between governmental funds and government-wide governmental activities (select all that apply)?
1. ☐ Internal service funds are often categorized as governmental funds.
2. ☑ Governmental funds use the modified accrual basis of accounting, and the government-wide governmental activities use the accrual basis of accounting.
3. ☐ Internal service funds are often categorized as governmental activities.
4. ☐ Governmental funds use the accrual basis of accounting, and the government-wide governmental activities use the modified accrual basis of accounting.
**Explanation:**
The primary reason for the need for reconciliations between governmental funds and government-wide governmental activities is the difference in accounting methods used. Governmental funds are reported using the modified accrual basis of accounting, whereas government-wide governmental activities utilize the accrual basis of accounting. This difference necessitates adjustments or reconciliations to ensure consistency and accuracy in financial reporting.
**Note:**
Check the appropriate option based on your understanding or course guidelines.
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