In Which of the Following Circumstances Must an Enterprise Fund

question 66

Multiple Choice

In which of the following circumstances must an enterprise fund be used to account for the activity?

• A) A newly created electric utility fund will finance its operations by a charge to users based on kilowatt hours used.
• B) To finance the acquisition of plant facilities, a newly created electric utility issues general obligation debt.
• C) To finance the acquisition of plant facilities, a newly created electric utility issues revenue bonds that will be repaid solely from operations of the electric utility.
• D) To acquire needed plant facilities, a newly created electric utility enters into long-term lease agreements.

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Definitions:

Income Statement

A financial statement that shows a company's revenues, expenses, and profits or losses over a specific period of time.

Trial Balance

A report that lists the balances of all general ledger accounts at a certain date, used to verify that the total of all debit balances equals the total of all credit balances.

Journalizing Transactions

The process of recording financial transactions in a company's accounting records, or journals, in chronological order.

Balance Sheet

A statement that outlines an enterprise's assets, liabilities, and the equity held by shareholders, pinpointed to a specific time frame.