Which of the Following Is Evidence of Fiscal Independence for the Purpose

question 47

Multiple Choice

Which of the following is evidence of fiscal independence for the purpose of considering whether one legally separate organization is a component unit of another?

• A) The potential component unit is precluded from issuing long-term debt.
• B) The potential component unit raises its own taxes without the approval of the primary government.
• C) The potential component unit names its board of directors without the approval of the primary government.
• D) The potential component unit sets user charges with the approval of the primary government.

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Definitions:

NSF Check

A check that cannot be processed due to insufficient funds in the account on which it was drawn, often resulting in a fee.

Bank Statement Adjustment

The process of modifying the balance shown on a bank statement to reflect transactions or corrections not yet recorded by the bank.

Company Books Adjustment

Modifications made to the accounting records of a company to correct errors or align them with actual financial activity.

Note Collected

The receipt of payment or the collection of a note receivable.