Final answer:
The correct statement about government financial reporting is that business-type activities should be reported consistently in both government-wide and proprietary fund statements using accrual accounting. Governmental activities and fiduciary activities use different accounting bases and are reported in separate financial statements. Option b.
Step-by-step explanation:
The correct statement about how financial information for the activities of governments should be reported is (b): Information about business-type activities should be reported in both the government-wide and proprietary fund financial statements using the same basis of accounting for both. This means that for business-type activities, such as utilities or public transportation systems, the financial information is consistently reported across both types of statements on an accrual basis, which is reflective of the economic resources measurement focus similar to the private sector.
It's important to note that for governmental activities, reporting in the government-wide and governmental fund financial statements uses different bases of accounting. Government-wide financial statements are prepared using the accrual basis, whereas governmental fund financial statements typically utilize a modified accrual basis. Furthermore, fiduciary activities are reported only in fiduciary fund financial statements and are not included in the government-wide financial statements because these activities are held in a trustee or agency capacity and are not part of the government's operations.