You Are Trying to Decide If an Entity You Are

question 26

Multiple Choice

You are trying to decide if an entity you are reviewing is a government or a not-for-profit. Which of the following would indicate it is a government rather than a not-for-profit entity?

• A) Absence of profit motive.
• B) A primary source of revenues is taxes.
• C) Resource providers do not expect benefits proportional to the resources provided.
• D) Absence of a defined ownership interest that can be sold, transferred, or redeemed.

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Definitions:

Equipment

Tangible assets used in the operation or production process of a business, such as machinery, computers, and tools.

Interest Rate

The percentage of a loan that is applied as interest for the borrower, usually shown as an annual rate.

Account

A record summarizing all the transactions pertaining to a particular item in the financial statements.

Annual Rate

The interest rate stated on a yearly basis, often used in the context of savings accounts, loans, or investments to represent the yearly cost or return.