Which of the Following Is a Key Reason for Using

question 57

Multiple Choice

Which of the following is a key reason for using business-type accounting to account for proprietary fund activities?

• A) The modified accrual basis of accounting captures all the resources and obligations associated with an activity.
• B) Depreciation is not recognized in business-type accounting in governments and surveys of statement users indicate that information on depreciation is not of high priority to government decision makers.
• C) The measurement focus on all economic resources is more consistent with the GASB's objectives that financial reporting should provide information to help determine whether current-year revenues were sufficient to pay for current-year services.
• D) Business-type accounting facilitates comparisons with governmental activities.

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Definitions:

Price

The amount of money required to purchase a good or service, determined by factors such as supply and demand.

Normal Good

A type of good for which demand increases when income increases, demonstrating a direct relationship between income and demand.

Consumer Incomes

The total earnings received by consumers, including wages, dividends, and other sources of income.

Demand Curve

A graphical representation showing the quantity of a product that consumers are willing and able to purchase at various prices.