Under Directive No. 85-3, beginning January 1, 1986, which entities are required to maintain a General Ledger?

Under Directive No. 85-3, beginning January 1, 1986, which entities are required to maintain a General Ledger?

• A. All municipalities and counties.
• B. Only counties with population over 50,000.
• C. Only municipalities with large budgets.
• D. No requirement; optional.

Answer: (C)

The main idea here is that Directive No. 85-3 sets a threshold-based requirement for how accounting is kept. Beginning January 1, 1986, only municipalities with large budgets are required to maintain a General Ledger. A General Ledger is the central, detailed record of all financial transactions by account, and it provides the basis for accurate financial statements, budgeting, and internal controls. Requiring it only for larger-budget municipalities makes sense because the complexity and volume of transactions in those entities necessitate formal, auditable records, while smaller municipalities with simpler finances can manage with less extensive systems. Therefore, the directive does not apply to all municipalities and counties, nor is it based on population size, and it isn’t optional.

The main idea here is that Directive No. 85-3 sets a threshold-based requirement for how accounting is kept. Beginning January 1, 1986, only municipalities with large budgets are required to maintain a General Ledger. A General Ledger is the central, detailed record of all financial transactions by account, and it provides the basis for accurate financial statements, budgeting, and internal controls. Requiring it only for larger-budget municipalities makes sense because the complexity and volume of transactions in those entities necessitate formal, auditable records, while smaller municipalities with simpler finances can manage with less extensive systems. Therefore, the directive does not apply to all municipalities and counties, nor is it based on population size, and it isn’t optional.