The Use of an Enterprise Fund Is Required by Generally

question 38

Multiple Choice

The use of an Enterprise Fund is required by generally accepted accounting principles in each of the following situations except

• A) When user fees are charged for the majority of the activity's operations.
• B) When an activity is financed with debt that is secured solely by the pledge of revenues.
• C) When laws and regulations require that the activity's costs be recovered with fees and charges.
• D) When pricing policies of the activity establish fees and charges are designed for cost recovery.

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Definitions:

Share Premium

The amount received by a company over and above the face value of its shares when issued.

Treasury Stock

Shares of a company's own stock that have been reacquired by the company and held in the company's treasury.

Contra Equity

An equity account that decreases the total equity of a company, often related to withdrawals or deductions from the total equity.

Common Stock Outstanding

The shares of a corporation's stock that are issued and held by investors, excluding treasury shares.