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Explain the different objectives, measurement focus, and basis of accounting of the government-wide financial statements and...

Explain the different objectives, measurement focus, and basis of accounting of the government-wide financial statements and fund financial statements of state and local government.

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Answer #1

A. Objectives:

  • Compare actual results with the budget.
  • Assist in determining compliance.
  • Assist in evaluating efficiency and effectiveness.
  • Assess financial condition and results of operation.

B. Measurement focus:

The government wide financial statement consists of Statement of Net Assets and Statement of Activities and are prepared using the economic resources measurement focus. Thus 'Economic Resources' will be the measurement focus for government wide financial statements.

C. Basis of Accounting:

The revenue will be recognised in the accounting period in which they are earned and become measurable without regard to availability, and expenses are recognised in the period incurred, if it is measurable.

Hence the basis of accounting will be on 'Accrual basis'.  

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