The Appropriate Basis of Accounting for the Proprietary Funds of a Governmental

question 46

Multiple Choice

The appropriate basis of accounting for the proprietary funds of a governmental entity is

• A)Cash basis.
• B)Modified accrual.
• C)Full accrual.
• D)None of the above.

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Definitions:

Retained Earnings

The portion of net income that is not distributed as dividends to shareholders, but retained by the company for reinvestment in its operations.

Revenue From Rent

Income generated from leasing properties or spaces to tenants.

Collected In Advance

Revenue received before the related goods or services are delivered, also known as deferred revenue.

Inventory Overstated

Refers to a situation where the recorded amount of inventory is higher than the actual physical inventory, potentially distorting financial statements.