Which of the following is NOT true regarding the presentation of major individual component units?

The correct answer indicates that major individual component units can indeed be excluded from the financial statements if they are not significant. This aligns with the principles of materiality in accounting. Materiality dictates that information that does not significantly impact the users' understanding of the financial statements may not need to be included.

In the context of governmental accounting, component units are separate legal entities that are financially accountable to the primary government. However, not all component units may be pertinent to every financial statement, especially if their financial position does not significantly affect the overall financial health or decision-making processes of the primary government. Therefore, the assessment of significance plays a crucial role in determining whether a component unit should be presented.

In contrast, the inclusion of component units within the basic financial statements adheres to the requirement that major components must be reported to provide a comprehensive view of the financial activities of the government. The ability to display them in separate columns allows users to differentiate between various components easily, enhancing clarity. The reporting in accordance with government-wide financial statements ensures that the components are integrated appropriately, reflecting the overall financial picture of the government as a whole.