In the consolidation of fund data for government-wide financial statements, which statement is false?

The correct response indicates that it is false that all interfund activity must be eliminated in the consolidation of fund data for government-wide financial statements. In government accounting, not all interfund activities require elimination, especially when the transactions do not affect the overall financial position of the government as a whole.

Typically, only certain transfers, particularly those that impact revenue and expenditures, require elimination to avoid overstating financial performance. For instance, if funds are simply moving between various governmental activities without affecting the net financial position, those transfers might not need to be eliminated.

Options that discuss the elimination of intra-activity transfers and specify that transfers within activities must also be eliminated reflect the need to clarify the financial picture presented in the consolidated statements. A distinct column for intra-activity eliminations helps in providing transparency regarding operations within the government. It is essential to present financial statements that accurately reflect the government's financial activities without duplicating the effects of internal transfers.