The General Fund Contributes $40,000 to an Internal Service Fund

question 39

Multiple Choice

The General Fund contributes $40,000 to an Internal Service Fund to subsidize the purchase of a capital asset. The contribution is not considered to be an interfund loan. The Internal Service Fund will report this contribution as a

• A) Transfer in.
• B) Capital contribution.
• C) Nonoperating revenue.
• D) Direct equity adjustment to restricted net position.

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Definitions:

Relative Mispricing

A situation where the price of an asset does not accurately reflect its value, usually in comparison to similar assets.

Market Exposure

The degree to which an investment or portfolio is exposed to market risk.

Securities Act of 1933

A U.S. federal law aimed at ensuring transparency and fairness in the securities market by requiring companies to disclose relevant financial information.

Investment Company Act of 1940

US federal legislation that regulates the organization of investment companies and the activities they engage in.