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Unformatted text preview: 2-4.A reporting entityconsists of the primary government and all other legally separate organizations for which the government is financially accountable. A primary governmentis defined as a state government, a general purpose local government, or a special purpose government that has a separately elected governing body and that is fiscally independent of other state and local governments. A component unit differs from the primary government mainly in terms of the direction of fiscal accountability. A component unit is financially accountable tothe primary government whereas the primary government is financially accountable fora component unit. 2-5.False. GASB standards indicate that individual component units should prepare separate financial statements and make them available to the public. Reporting financial information of component units in one or more separate columns to the right of those for the primary government in the government-wide financial statements is known as a discrete presentation. Blending is the alternative method if the financial activities of the component unit are so intertwined with those of the primary government that they are, in substance, the same as the primary government. In blended reporting, the financial...
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This note was uploaded on 07/19/2011 for the course ACCOUNT 346 taught by Professor Bino during the Spring '11 term at Rutgers.
- Spring '11