In accordance with GASB 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, a reconciliation must be shown of the items that cause the difference between (1) the net change in fund balances for the governmental funds on the statement of revenues, expenditures, and changes in fund balances, and (2) the change in net assets of governmental activities on the statement of activities. Which of the following items would be disclosed in this reconciliation?

  1. I. Revenues and expenses of internal service funds that were reported in proprietary funds.
  2. II. The amount by which capital outlays exceeded depreciation expense for the period.
    1. a. I only.
    2. b. II only.
    3. c. Both I and II.
    4. d. Neither I nor II.