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

question 71

Multiple Choice

The appropriate basis of accounting for the proprietary funds of a government is

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

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Definitions:

Debt-To-Equity Ratio

A financial ratio that measures the degree to which a company is financing its operations through debt versus wholly owned funds.

Equity Multiplier

A financial leverage ratio that measures the proportion of a company’s assets that are financed by its shareholders' equity, indicating the level of debt used to finance assets.

Net Profit Margin

A profitability ratio that shows what percentage of sales has turned into profits after all expenses are deducted.

Gross Margin

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