Question

Which of the following statements is true regarding fund financial statements?

A. Fund financial statements report a government's activities and financial position as a whole.
B. Fund financial statements should tell the amount spent this year on such services as public safety, education, health and sanitation, and the construction of a new road.
C. Fund financial statements utilize the accrual basis of accounting much like any for-profit entity.
D. Fund financial statements help to determine whether the government's overall financial position improved or deteriorated.
E. Fund financial statements report all assets and liabilities in a way comparable to business-type accounting.

Answer 1

Fund financial statements help to determine whether the government's overall financial position improved or deteriorated.

Step-by-step explanation:

The true statement regarding fund financial statements is D. Fund financial statements help to determine whether the government's overall financial position improved or deteriorated.

Fund financial statements are used in government accounting to report the financial activities and financial position of individual funds within a government entity. Each fund represents a separate accounting entity with its own resources and limitations. These statements provide information on the flow of resources and how resources are being used, which helps in evaluating the financial position and performance of a government.

By analyzing the fund financial statements, one can determine whether the government's overall financial position improved or deteriorated over a specific period. This analysis is important for making informed financial decisions and evaluating the effectiveness of financial management within the government.