When a Cash and Investment Pool of a Certain City

question 6

Multiple Choice

When a cash and investment pool of a certain city was established,the debt service fund transferred investments to the pool having a cost of $3,000,000 but a current fair market value of $3,100,000.To record this transaction,the journal entry made by the debt service fund will include:

• A) A debit to Equity in Pooled Cash and Investments in the amount of $3,000,000.
• B) A credit to Revenues-Change in Fair Value of Investments in the amount of $100,000.
• C) A debit to Investments in the amount of $3,000,000.
• D) A credit to Investments in the amount of $3,100,000.

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Definitions:

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EPS

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Myron Gordon

An economist best known for his work on dividend policy and stock valuation, including the Gordon Growth Model which relates a company's dividend policy to its stock valuation.

John Lintner

A prominent economist known for his work on dividend policies and the capital asset pricing model (CAPM).