ExpertHard1 markMultiple Choice
CPA · Question 43 · Area III: State & Local Governments
Which of the following funds of a City government uses the Accrual Basis of accounting and the Economic Resources Measurement Focus?
Which of the following funds of a City government uses the Accrual Basis of accounting and the Economic Resources Measurement Focus?
Answer options:
A.
General Fund
B.
Capital Projects Fund
C.
Internal Service Fund
D.
Debt Service Fund
How to approach this question
Governmental Funds (GRaSPP) = Modified Accrual. Proprietary (SE) and Fiduciary (CIPPOE) = Full Accrual.
Full Answer
C.Internal Service Fund✓ Correct
Internal Service Funds are Proprietary funds. They operate like businesses (charging other departments) and thus use full accrual accounting to match revenues and expenses.
Common mistakes
Thinking all government funds use modified accrual.
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