Which statement is FALSE regarding accounting for claims and judgments?

The statement indicating that governmental funds should not report an expenditure until amounts are due and payable is correct in the context of fund accounting, which is primarily used by governments. In governmental accounting, expenditures are typically recognized at the time liabilities are incurred, which does not necessarily mean they have to be due and payable. This approach aligns with modified accrual accounting principles, where expenditures are recognized when the liability is incurred, even if payment is not immediately due.

In the context of the other statements, reporting the amount of liability for incurred but not reported claims ensures that the financial statements accurately reflect potential future liabilities, providing a more comprehensive picture of financial obligations. For structured settlements, flexibility in reporting at either gross amount or present value allows for different accounting methods based on the situation. Finally, including incremental claims adjustment expenses in the calculation of liabilities recognizes all costs that will likely be incurred related to claims processing, ensuring that the liability is adequately reserved for the total anticipated payments.