Final answer:
Government-wide financial statements require certain eliminations to provide an accurate picture of a government's finances. These eliminations involve removing transactions and activities between different funds or component units.
Step-by-step explanation:
Eliminations in government-wide financial statements are adjustments made to remove certain transactions or balances that occur between different funds or component units. These eliminations are necessary to provide a more accurate picture of the government's financial position and performance. In the context of the given question, there are three types of eliminations:
- Interfund services: water and utilities - This refers to the elimination of transactions related to water and utility services provided between different funds within the government.
- Internal activity associated with blended component units - Blended component units are entities that are legally separate from the government but closely related. The elimination of internal activities associated with these units ensures that the financial statements reflect only the government's operations.
- Internal activity associated with discretely presented component units - Discretely presented component units are entities that are legally separate from the government and do not meet the criteria to be blended. The elimination of internal activities associated with these units ensures that the financial statements reflect only the government's operations.