Final answer:
The correct fund type reporting practice for the city of Leesville allowed by GAAP is segregating individual funds for each department. This practice ensures transparency and accountability in financial reporting.
Step-by-step explanation:
The correct fund type reporting practice for the city of Leesville that is allowed by GAAP is segregating individual funds for each department. GAAP (Generally Accepted Accounting Principles) requires government entities to account for their financial activities and report them accurately. Segregating individual funds for each department allows for better tracking and accountability of financial resources and expenditures.
By maintaining separate funds for each department, the city of Leesville can accurately report the financial activities of each specific area, ensuring transparency and accountability in the financial reporting process. This practice ensures that funds are appropriately allocated and used for their intended purposes.
On the other hand, consolidating all funds into a single account (option b) is not allowed by GAAP as it does not provide a clear picture of how funds are being used in each department or program. Maintaining separate funds but not disclosing them in financial reports (option c) would also be against GAAP as it lacks transparency and does not provide a comprehensive view of the city's financial activities.