One of the Differences Between Accounting for a Governmental Unit

question 28

Multiple Choice

One of the differences between accounting for a governmental unit and a commercial unit is that a governmental unit should:

• A) not record depreciation expense in any of its funds.
• B) always establish and maintain complete self-balancing accounts for each fund.
• C) use only the cash basis of accounting.
• D) use only the modified accrual basis of accounting.

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Definitions:

Gross Margin

The difference between sales revenue and the cost of goods sold, indicating the profitability of a company's core business activities.

Operating Expenses

Operating expenses are the costs associated with the day-to-day operations of a business, excluding the cost of goods sold, such as rent, utilities, and payroll.

High-Low Method

A technique used in managerial accounting to estimate fixed and variable costs based on the highest and lowest levels of activity.