Question

Reporting fund financial information in separate columns for each major fund and aggregate information for non major funds:

a.means only those funds that meet GASB's 10% and 5% rules are reported in separate columns
b.is optional under GAAP, but is generally required by state laws for govt
c.is the same manner of reporting used by business orgs
d.is required by GAAP for state and local govt

Answer 1

Reporting major and non-major funds in separate columns is a GAAP requirement for state and local governments, in accordance with GASB rules, and differs from business organizations' financial reporting. Option a is correct.

Step-by-step explanation:

The practice of reporting fund financial information in separate columns for each major fund and aggregate information for non-major funds is a requirement under Generally Accepted Accounting Principles (GAAP) for state and local governments.

This reporting method ensures that funds that meet the Governmental Accounting Standards Board (GASB) 10% and 5% rules are displayed separately, enabling users of the financial statements to distinguish between major funds and non-major funds.

It is not optional under GAAP, nor is it identical to the reporting methods used by business organizations, since the latter do not follow the fund accounting model that is typically used by governmental entities.