Final answer:
All listed fund types, including Capital projects, Debt service, and Permanent funds, use modified accrual accounting in governmental accounting, where revenues are recognized when measurable and available, and expenditures when the liability is incurred.
Step-by-step explanation:
The question relates to the type of accounting system used by certain types of government funds. The type of accounting referred to in the question is modified accrual accounting.
In the context of governmental accounting, modified accrual accounting is used for funds categorized under governmental funds. The correct answer to which fund types use modified accrual accounting is 'd. All of the above.' This includes:
- Capital projects funds, which are used to account for financial resources to be used for the acquisition or construction of major capital facilities other than those financed by proprietary funds and trust funds.
- Debt service funds, which are used to account for the accumulation of resources for, and the payment of, general long-term debt principal and interest.
- Permanent funds, which are used to account for resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government's programs.
Therefore, when we talk about governmental funds, we are referring to funds that adhere to modified accrual accounting principles, where revenues are recognized when they are both measurable and available to finance the expenditures of the current period, and expenditures are recognized when the related fund liability is incurred.