Which of the Following Is the Best Rationale/justification for Reporting

question 12

Multiple Choice

Which of the following is the best rationale/justification for reporting the business-type activities of a government in a separate fund?

• A)Laws or regulations require that the activity's costs of providing services be recovered by fees and charges rather than general purpose taxes or similar charges.
• B)Separate funds facilitate budgeting, planning, and controlling.
• C)Separate funds facilitate the assessment of performance of the activity.
• D)Separate funds facilitate the assessment of fiscal status of the activity.

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Definitions:

Par Value

The nominal or face value of a bond, share of stock, or coupon as stated by the issuing party, often used in the accounting of share capital.

Capital in Excess of Par

The amount by which the proceeds from the issuance of shares exceed the par value of the shares, often recorded in the shareholders' equity section of the balance sheet.

Homemade Dividend

A strategy where investors create their own dividend policy by selling a portion of their portfolio.

Required Return

The minimum annual percentage earned by an investment that will entice individuals or companies to put money into a particular security or project.