What Basis of Accounting Is Used to Account for the Transactions

question 24

Multiple Choice

What basis of accounting is used to account for the transactions of a government's permanent fund?

• A)Full accrual basis of accounting.
• B)Modified accrual basis of accounting.
• C)Cash basis of accounting.
• D)Budgetary basis of accounting.
• Use the following information to answer Questions #14-16
• Previously a local private-sector charity received a $1 million gift, the income from which was restricted to support activities for senior citizens.During the current year the endowment earned $40,000 of interest revenues, of which the charity designated $30,000 to support senior citizen activities.

Identify and distinguish between different types of accounts such as prepaid expenses, contra accounts, and nominal accounts.

Analyze and prepare adjusting entries for prepayments, accruals, and estimated items such as depreciation.

Recognize the process and importance of posting from journals to ledgers and preparing trial balances.

Understand the classification of accounts (permanent vs. temporary) and the impact on financial statements.