Which of the Following Statements Is True Regarding Fund Accounting

question 22

Multiple Choice

Which of the following statements is True regarding fund accounting for not-for-profit organizations (NFPs) ?

• A) Fund accounting can be used by NFPs for external purposes, but not internal purposes.
• B) Fund accounting can provide a good mechanism for facilitating reporting to donors.
• C) Fund accounting is not allowed.
• D) Fund accounting for internal and external reporting purposes has been replaced by FASB with the two classes of net assets (without donor restrictions, and net investment in restricted assets).

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Definitions:

Economic Profit

The discrepancy across total turnover and total spendings, including expenses both explicit and implicit.

Profit Per Unit

The profit earned for each unit of a good or service sold, calculated by subtracting the cost per unit from the selling price per unit.

Monopoly Firm

A single company that possesses exclusive control over the supply of a particular product or service, allowing it to influence price.

Profit-Maximizing

A strategy or approach aimed at achieving the highest possible profit through adjustments in production or pricing.