Forest City has recently implemented GAAP reporting and is attempting to determine which of the following special revenue funds should be classified as “major funds” and therefore be reported in separate columns on the balance sheet and statement of revenues, expenditures, and changes in fund balances for the governmental funds. As the city’s external auditor, you have been asked to provide a rationale for either including or excluding each of the following funds as a major fund. Prepare a short report to the city manager that gives your recommendation and explanation. Selected information is providedbelow.
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