What Are Enterprise Funds Used For

question 10

Multiple Choice

What are Enterprise funds used for?

• A) To account for pension and employee benefit funds for which the governmental unit is the trustee.
• B) To report resources that are legally restricted so only earnings, not principal, may be expended, and for purposes to benefit the government and its citizenry.
• C) To account for most of the basic services provided by the governmental units.
• D) To account for resources provided primarily through the use of sales and service charges to parties external to the government.

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Definitions:

Nonconvertible Bonds

Bonds that cannot be converted into the issuing company's stock and must be repaid in cash at maturity.

Warrants

Derivative securities that provide the right, but not the obligation, to buy shares of a company at a specified price before the warrant expires.

Convertible Securities

Convertible securities are financial instruments, like bonds or preferred shares, that can be converted into a predetermined number of common stock or equity shares.

Call Options

Financial contracts that give the holder the right, but not the obligation, to buy an asset at a specified price within a specific time period.