The Use of an Internal Service Fund Is Mandated by Generally

question 35

Multiple Choice

The use of an Internal Service Fund is mandated by generally accepted accounting principles for which of the following activities?

• A) Risk financing activities.
• B) Government motor pool.
• C) Centralized warehouse.
• D) GAAP does not require the use of an Internal Service Fund.

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Definitions:

Standard Cost

The predetermined cost of manufacturing a single unit or a number of product units during a specific period, used for budgeting and performance evaluation.

Budget

A financial plan that estimates income and expenditure for a specific period of time.

Equivalent Units

A concept used in process costing that converts partially completed units into a number of fully completed units, facilitating cost calculation.

Material Price Variance

A calculation that measures the difference between the actual cost of materials and the standard cost multiplied by the quantity purchased.