William Bates is executive vice president of Mavis Industries Inc., a publicly held industrial corporation. Bates has just been elected to the city council of Gotham City. Before assuming office as a city councilman, he asks you to explain the major differences that exist in accounting and financial reporting for a large city when compared with a large industrial corporation.

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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 a large industrial corporation.

b. Why are inventories often ignored in accounting for local governmental units? Explain.