Which asset type could NOT be included on a governmental fund balance sheet?

In a governmental fund balance sheet, capital assets used in operations cannot be included because governmental funds are designed to account for the current financial resources and focus on short-term financial position rather than the long-term assets. The Governmental Accounting Standards Board (GASB) states that capital assets are generally recorded in the government-wide financial statements rather than in governmental funds. This is due to the modified accrual basis of accounting used for governmental funds, which recognizes revenue when it is measurable and available to finance expenditures of the current period, and expenditures when they are incurred, without accounting for long-term capital assets.

On the other hand, inventories and prepayments can be included on a governmental fund balance sheet since these represent current financial resources. Inventories that are expected to be used within the current period and prepayments that provide future economic benefits and relate to services that will be received within the current fiscal year are appropriate to include, aligning with the focus of governmental funds on short-term resources.