Why do goverments use modified accrual for general fund statements and full accrual for government wide...

Why do goverments use modified accrual for general fund statements and full accrual for government wide statements?

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To prepare their government-wide statements, governments must adjust the governmental fund statements from the modified accrual to the full accrual basis. Statement No. 34 requires that a summary of the principal adjustments be presented with the financial statements, so that users can more readily understand the relationship between the fund financial statements and the government-wide financial statements.

fund balances are subdivided into amounts that are reserved and unreserved, rather than restricted and unrestricted, as is the practice in the government-wide statement of net assets. A reserved fund balance is similar in concept to resources that are restricted for a specific purpose. However, the term reserve is used in governmental fund statements in part because of its long history in governmental fund accounting and reporting and in part because each fund (except the general fund) itself represents a restriction on the use of the resources for which it accounts. A reservation of fund balance is, in essence, an additional restriction on fund resources.

ekkarill92 answered 9 months ago

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