Current economic resources are viewed as the basis of measurement in
Select one:
a. Proprietary Funds Financial Statements
b. Governmental Funds Financial Statements
c. Government-wide Financial Statements
d. Fiduciary Funds Financial Statements
The correct answer and explanation is:
The correct answer is c. Government-wide Financial Statements.
Government-wide financial statements are used to provide a broad overview of a government’s financial activities. These statements focus on the entire government as a whole, rather than on specific departments or funds, and are primarily used for accountability and transparency. The measurement of economic resources plays a critical role in these statements, as they show the government’s overall financial position by focusing on both its assets and liabilities, and the revenues and expenses that have occurred during the reporting period.
In government-wide financial statements, resources are measured on an accrual basis. This means that transactions are recorded when they occur, regardless of when the actual cash is received or paid. The goal is to provide a more comprehensive understanding of the government’s financial health, especially in terms of long-term assets, liabilities, and net position. This approach contrasts with the modified accrual basis used in governmental fund financial statements, which focuses more on current financial resources and short-term spending.
By using the accrual method, government-wide financial statements help stakeholders understand how the government is managing its long-term economic resources, including property, infrastructure, and other assets that are important for public service. These statements are a key part of financial reporting because they reflect the total financial picture of the government, allowing for more informed decision-making by citizens, lawmakers, and other interested parties.
In contrast, other types of financial statements, such as those for proprietary, fiduciary, or governmental funds, focus more on specific types of activities or resources and do not provide the same broad view of economic resources. Thus, the government-wide financial statements are the primary vehicle for assessing the overall economic resources of a government entity.