The government-wide financial statements consist of which two reports?

• A. Cash flow statement and fiduciary net position.
• B. Statement of net position and statement of activities.
• C. Balance sheet and income statement.
• D. Financial position statement and revenues and expenditures.

Answer: (B)

Government-wide financial statements provide an overall view of the government’s financial health using accrual accounting. The two reports that make up these statements are the Statement of Net Position and the Statement of Activities. The Statement of Net Position presents assets, deferred outflows of resources, liabilities, deferred inflows of resources, and the resulting net position at a specific point in time, giving a snapshot of what the government owns and owes. The Statement of Activities shows how the government’s net position changed over the period by detailing expenses by function or program, the program revenues that offset those expenses, and the general revenues that support the government as a whole. Together, these reports cover both governmental and business-type activities and provide an economic resources perspective at the government-wide level, not the fund level. Fiduciary activities are not included in these statements and are reported separately, since the government does not control those resources for its own financial reporting. The other options reflect different formats or terminology not used for the government-wide primary statements.