An Internal Service Fund Had Investments with an Original Cost

question 37

Multiple Choice

An Internal Service Fund had investments with an original cost of $100,000. As of the end of the fiscal year, the fair market value on these investments was $85,000. The Internal Service Fund would

• A) Report expenses of $15,000.
• B) Report a reduction of revenue of $15,000.
• C) Not adjust the value of the investments reported on the balance sheet.
• D) Report a loss on investments of $15,000.

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Definitions:

Principal Ratifies

Occurs when a principal approves and accepts the actions of an agent that were originally outside the agent's scope of authority.

Expressly Excludes

A contractual term used to specify that certain conditions or provisions are deliberately not covered within an agreement.

Vicarious Liability

Legal responsibility taken by one party for the actions of another, typically in an employer-employee relationship.

Independent Contractors

Individuals or entities hired to perform specific tasks or services for another entity under a contract, but who retain control over how those services are executed.