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11 July, 04:25

why are separate operating statements prepared for governmental funds and proprietary funds in the the fund financial statements?

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  1. 11 July, 05:32
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    As a general rule operating statements for governmental funds and proprietary funds should be displayed separately.

    In order to prepare financial statements for governmental funds an accountant must use a modified accrual accounting system which combines accrual basis and cash basis accounting.

    When an accountant prepares financial statements for proprietary funds they will use the accrual basis accounting system.

    The balance sheets also include different accounts. For example, Property, Plant and Equipment accounts are not used in governmental funds' balance sheet. While the governmental fund balances should be segregated in five components: nonspendable, restricted, committed, assigned and unassigned.
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