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Which of the following is a plausible explanation for the difference between the net change in fund balances of governmental funds (fund-level statement of revenues, expenditures, and changes in fund balances) and the change in net position of governmental activities (government-wide statement of activities)?

a. Some expenses reported in the statement of activities do not require the use of current financial resources and are not reported as expenditures in the fund-level statements.
b. Amounts reported as expenditures in the statement of activities are reported as capital assets in the fund-level statements.
c. Debt proceeds provide current financial resources in the statement of activities, but are reported as long-term liabilities in the fund-level statements
d. Depreciation of general fixed assets is not reported as an expense in the statement of activities, but it is reported as an expense in the fund-level

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eooyibo123

Answer:

a. Some expenses reported in the statement of activities do not require the use of current financial resources and are not reported as expenditures in the fund-level statements.

Explanation:

Governments maintain a statement of activities that are carried out, and fund-level statements are also maintained to track expenses of government.

When there is a disparity between the two, a plausible explanation will be that some expenses reported in the statement of activities do not require the use of current financial resources and are not reported as expenditures in the fund-level statements.

For example some long term project that is carried out by the government may be treated by creating a budget. These expenses will not be recognized in the current expenses that make up fund-level expenses.

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