Which of the following would be reported on the operating statement of a governmental fund?

• A. Revenue deferred from prior periods
• B. Current year tax revenue
• C. Grants receivable
• D. Interest income

Answer: (A)

In governmental fund reporting, the operating statement shows revenues as amounts that are measurable and available for spending in the current period. Sometimes resources collected relate to a prior period and are deferred; when those previously deferred inflows become available, they are recognized as revenue in the current period and appear as a line item describing the revenue from prior-period deferrals. This reflects how the fund moves resources from deferral to current-period revenue.

Grants receivable would be shown as an asset on the balance sheet rather than as revenue on the operating statement. Interest income can appear as revenue related to investments, but it isn’t the specific deferral concept being tested. Current year tax revenue is revenue that would be recognized when available, but the item that highlights the deferral-to-revenue process is the revenue deferred from prior periods, which is why it would be reported on the operating statement.