Under the Modified Accrual Basis of Accounting Used by Governments

question 72

Multiple Choice

Under the modified accrual basis of accounting used by governments, transactions that result in long-term liabilities

• A) are included on the fund statements as an expenditure.
• B) are included as a contra-account to revenue.
• C) are not recorded as expenditures.
• D) hidden for 10 years from the taxpayers.

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Definitions:

Journalize

The process of recording transactions in a journal before they are posted to ledger accounts.

Paid-In Capital

Funds raised by a company through the issuance of securities, reflecting the total amount of invested capital that shareholders have contributed directly.

Retained Earnings

Profits that a company keeps after dividends are paid, often reinvested into the business or used to pay off debt.

Preferred Stock

A type of stock that gives its holders preference over common stockholders in terms of dividends and claims on assets during liquidation.