Final answer:
To determine special purpose governments financial statements, they follow accounting standards specifically designed for their sector, such as the Generally Accepted Accounting Principles (GAAP) for state and local governments. These financial statements include the Statement of Net Position, the Statement of Activities, and the Statement of Cash Flows.
Step-by-step explanation:
Special purpose governments, such as local governments or school districts, have unique financial reporting requirements. To determine their financial statements, special purpose governments follow accounting standards specifically designed for their sector. In the United States, they typically use the Generally Accepted Accounting Principles (GAAP) for state and local governments.
These financial statements include:
- Statement of Net Position: This provides information about the assets, liabilities, and net position of the government.
- Statement of Activities: This shows the government's revenues, expenses, and changes in net position.
- Statement of Cash Flows: This details the inflows and outflows of cash during a specific period.
By preparing and analyzing these financial statements, special purpose governments can understand their financial health, measure their performance, and provide accountability to their stakeholders.