The City Created a Legally Separate Entity to Operate a County

question 4

Multiple Choice

The city created a legally separate entity to operate a county hospital. The city council appoints a voting majority of the board of the hospital. The city cannot impose its will on the hospital and there is no potential for a financial benefit or financial burden to the city. The county hospital would be a(n)

• A) Primary government.
• B) Component unit.
• C) Related organization.
• D) Affiliated organization.

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Definitions:

Liquidity

The simplicity of turning an asset into cash without impacting its market value.

Money Market

A segment of the financial market where short-term financial instruments with high liquidity and short maturities are traded.

Float Motive

The rationale for holding money in transaction accounts to satisfy daily operational cash flow needs.

Liquidity

The ease with which an asset or security can be converted into cash without affecting its market price.