Question

What constitutes the basic financial statements of a government?

a) Income statement, balance sheet, cash flow statement
b) Statement of activities, statement of net position, statement of cash flows
c) Balance sheet, income statement, statement of cash flows
d) Statement of activities, balance sheet, income statement

Answer 1

The basic financial statements of a government include the statement of activities, statement of net position, and statement of cash flows.

Step-by-step explanation:

The basic financial statements of a government comprise the following:

1. Statement of activities: This statement shows the government's revenues, expenses, and changes in net position over a specific period of time.
2. Statement of net position: This statement provides information about the government's assets, liabilities, and net position at a specific point in time.
3. Statement of cash flows: This statement presents the inflows and outflows of cash from operating, investing, and financing activities of the government.

Therefore, option b) is the correct answer: Statement of activities, statement of net position, statement of cash flows.