Which of the following statements is FALSE concerning major fund reporting for governmental funds?

The statement that is false concerning major fund reporting for governmental funds pertains to the 10 percent test and its application. According to generally accepted accounting principles (GAAP) for governmental fund reporting, the totals for the 10 percent test should be compared only against the total of all governmental funds, not all government and enterprise funds. This means that this test is focused on the significance of individual funds within the governmental category alone, determining if they should be designated as major funds based on their relative size and importance.

The nature of fund classification allows for a structure that prioritizes transparency and accountability, especially in a governmental accounting context. The general fund, by its nature, is always considered a major fund, which aligns with the established principles of fund accountability. Furthermore, while governments can designate individual funds as major based on their significance, this designation is within the realm of governmental funds and the specific tests (like the 5 percent test) function within these parameters to add further clarity to the major fund status without complicating the analysis by including enterprise funds in the foundational calculations.

This structured approach ensures that the most significant funds are highlighted in financial reporting, providing stakeholders with a clear understanding of where resources are being allocated and how governmental activities are being funded.