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• D) Fund accounting for internal and external reporting purposes has been replaced by FASB with the two classes of net assets (without donor restrictions, and net investment in restricted assets).

---

Definitions:

Standard Rate (SR)

Standard Rate (SR) refers to a predefined or established cost or value used in financial and operational calculations, often applied in budgeting and cost accounting.

Actual Hours (AH)

The real number of hours worked or required to complete a specific task or project, as opposed to estimated or planned hours.

Standard Hours (SH)

Standard Hours (SH) refer to the estimated time considered necessary to perform a task or produce a good under normal conditions, used for planning and efficiency analysis.

Materials Price Variance

The difference between the actual cost of materials used in production and the standard cost of those materials.