Final answer:
The statement that both general purpose and special purpose governments are considered examples of primary governments under GAAP is true. General purpose governments provide a wide range of services, while special purpose governments focus on specific functions but both are fiscally independent and have their own governing bodies.
Step-by-step explanation:
Both general purpose and special purpose governments can indeed be considered examples of primary governments under Generally Accepted Accounting Principles (GAAP). This statement is True.
General purpose governments, such as state and city governments, are comprehensive in nature, providing a wide range of services to residents. They operate on tax revenues to fund various services and programs, such as maintenance of public parks, and the provision of police force and education systems.
Special purpose governments, on the other hand, are created for specific functions. Examples might include school districts or water utility authorities. Despite their more limited focus, these entities are also considered primary governments because they have a separately elected governing body, are legally separate, and are fiscally independent of other state and local governments.