When a Governmental Enterprise Fund Has Restricted Assets on Its

question 25

Multiple Choice

When a governmental enterprise fund has restricted assets on its balance sheet, which of the following is a true statement?

• A)The total of the restricted assets in the asset section will be equal to the "Restricted Net Assets" amount in the equity section.
• B)The total of the restricted assets will be offset by a liability of an equal amount.
• C)The total of the restricted assets less related liabilities will be equal to the "Restricted Net Assets" amount in the equity section.
• D)None of the above statements is true.

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Definitions:

Owners' Equity

The residual interest in the assets of an entity after deducting liabilities, representing the ownership interest of the shareholders.

Net Income

The total earnings of a company after subtracting all expenses and losses from total revenue.

Return on Equity

A financial ratio that measures the profitability of a business in relation to the equity held by the shareholders.

Net Income

Net income is the total profit of a company after all expenses, including taxes and operational costs, have been deducted from revenues.