Question

Which of the following best describes the recommended format for the government-wide statement of activities? Multiple Choice

a)Revenues minus expenses equals change in net position.
b)Revenues minus expenditures and outstanding encumbrances equals change in net position.
c)Expenses minus program revenues equals net (expense) revenue.
d)Net (expense) revenue plus general revenues equals change in net position.
e)Program revenues minus expenses minus general revenues equals changes in net position.

Answer 1

The recommended format for the government-wide statement of activities is 'Net (expense) revenue plus general revenues equals change in net position'. This format illustrates both the cost of governmental services and how they are supported by revenues.

Step-by-step explanation:

The recommended format for the government-wide statement of activities can be understood by examining the elements it includes. The correct format according to accounting standards is:

d) Net (expense) revenue plus general revenues equals change in net position.

This format is particularly designed to showcase the cost of providing governmental services and to highlight the level at which these services are financially supported by specific program revenues. It also displays the necessity of relying on general revenues to cover the entire cost of these services. This format helps provide a clear understanding of the government's financial health and whether its revenues are sufficient to cover expenses.