Which of the Following Statements Regarding the Accounting for Investments

question 21

Multiple Choice

Which of the following statements regarding the accounting for investments in governmental funds is false?

• A) Interest receivable should be accrued as it is earned.
• B) Interest revenue should be recognized on a cash basis.
• C) Interest revenue is accrued as it meets the availability criteria.
• D) Decreases in the fair market value of equity securities with readily determinable fair values result in a decrease in investment income.

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Definitions:

Understanding

The ability to grasp the meaning, significance, or nature of something, often involving comprehension of concepts and relationships.

Sisters

Female siblings who share one or both parents in common.

Sensorimotor Stage

The first stage of Piaget’s theory of cognitive development, where infants learn about the world primarily through their sensory impressions and motor activities.

Preoperational

A stage in Piaget's theory of cognitive development where children, typically aged 2 to 7, are capable of symbolic thought but not yet of logical operations.