Which Statement Is Accurate

question 10

Multiple Choice

Which statement is accurate?

• A)The taxes payable method is also known as the "deferral method."
• B)The deferral method and the accrual method are "tax allocation" approaches.
• C)The income statement approach is also known as the "accrual method."
• D)The balance sheet approach is also known as the "deferral method."

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Definitions:

Obligation Recorded

The accounting process of documenting a liability or duty to pay an amount as a result of a contractual agreement or other legal requirement.

Restricted Fund Method

An accounting method used for reporting restricted funds separately from unrestricted funds in nonprofit organizations' financial statements.

Externally Restricted Fund

Funds designated for a specific purpose by an external party or donor, limiting the fund's use by the receiving organization.

NFP Organization

A not-for-profit organization (NFP) is a type of organization that does not earn profits for its owners. All the money earned by or donated to an NFP is used in pursuing the organization's objectives and keeping it operational.