Is it true that the fund is the lowest level at which a balance sheet can be created?

The statement is true because, in accounting, a fund represents a self-balancing set of accounts that is used to track financial resources, and it often forms the lowest level for creating a balance sheet in governmental and not-for-profit accounting. Each fund acts like a separate account, allowing for clarity and control over various financial activities. This structure helps ensure accountability and compliance with regulations, as each fund can be reported independently to show its financial status.

In many organizations, particularly in governmental contexts, different funds are used for different purposes (e.g., general fund, special revenue funds, capital project funds), thereby providing a clear financial picture for each area of activity. Therefore, balance sheets are typically created at the fund level to accurately reflect the financial position associated with each fund’s operations. This establishes the fund as the fundamental unit for financial reporting in those contexts.