Wilma Bates is executive vice president of Mavis Industries Inc., a publicly held industrial corporation. She has just been elected to Gotham City’s council. Before assuming office, she asks you to explain the major differences in accounting and financial reporting for a large city compared with accounting and reporting for a large industrial corporation.
a. Describe the major differences that exist in the purpose of accounting and financial reporting and in the type of financial reports of a large city when compared with that of a large industrial corporation.
b. Why are inventories often ignored in accounting for local governmental units? Explain.