Question

Which of the following governmental funds must be reported as a major fund?

A) The General Fund
B) Any fund with total assets, liabilities, revenues or expenditures that are 10% or more of the general Fund and 5% or more of total General Fund and Business-Type Activities
C) The government may opt to include or exclude any fund it choses as a major fund
D) Only the General Fund and special revenue funds that meet the 10% and 5% size criteria

Answer 1

The General Fund and any governmental fund meeting the 10% and 5% size criteria relative to the total governmental and enterprise funds must be reported as major funds in financial statements.

Step-by-step explanation:

The question pertains to the reporting requirements for governmental funds in financial statements according to Generally Accepted Accounting Principles (GAAP). Specifically, it asks which of the following governmental funds must be reported as a major fund. The General Fund is always considered a major fund and must be reported as such. Additionally, any other fund that meets the size criteria—total assets, liabilities, revenues, or expenditures that are at least 10% of the corresponding total governmental funds amounts and 5% of the total of the governmental and enterprise funds combined—must be reported as a major fund. Therefore, the correct answer is (B) Any fund with total assets, liabilities, revenues or expenditures that are 10% or more of the general Fund and 5% or more of total General Fund and Business-Type Activities