What Is the Underlying Reason a Governmental Unit Uses Separate

question 14

Multiple Choice

What is the underlying reason a governmental unit uses separate funds to account for its transactions?

• A) Governmental units are so large that it would be unduly cumbersome to account for all transactions as a single unit.
• B) Because of the diverse nature of the services offered and legal provisions regarding activities of a governmental unit, it is necessary to segregate activities by functional nature.
• C) Generally accepted accounting principles require that nonbusiness entities report on a funds basis.
• D) Many activities carried on by governmental units are short-lived and their inclusion in a general set of accounts could cause undue probability of error and omission.

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Definitions:

Social Security

A government program that provides financial assistance to people with an inadequate or no income, particularly the elderly, disabled, and families with dependent children.

Surpluses

Surpluses are situations in which the supply of a good or service exceeds its demand, often leading to lower prices.

Ronald Reagan

The 40th President of the United States, serving from 1981 to 1989, known for his conservative policies, economic reforms, and role in ending the Cold War.

George Bush

Refers to either George H. W. Bush (41st President of the United States) or George W. Bush (43rd President of the United States), both members of the Bush political family.