Which of the Following Is a Valid Argument for Separate

question 16

Multiple Choice

Which of the following is a valid argument for separate accounting principles for proprietary activities?

• A) Two separate measurement focuses and bases for accounting within the same set of financial statements are confusing.
• B) There are no clear-cut distinctions between business and non-business activities.
• C) The measurement focus on all economic resources is more consistent with the GASB's objectives that financial reporting should provide information to help determine whether current-year revenues were sufficient to pay for current-year services.
• D) Surveys of statement users indicate that information on depreciation is not of high priority to government decision makers.

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Definitions:

Obligation Imposed

A duty or responsibility enforced by law, regulation, or agreement.

Contract Formation

The process whereby parties agree upon and establish the terms of a contract, leading to a binding legal agreement.

Relaxation of Requirements

The easing or reduction of stringent rules, standards, or conditions, often to accommodate special circumstances.

Material Misrepresentation

A statement that is significantly untrue or misleading and, if known to be such, could have influenced the decision-making of a party in a contract or agreement.