Which of the Following Is Not a Statement About the Allowance

question 5

Multiple Choice

Which of the following is not a statement about the Allowance for Funds Used During Construction (AFUDC) ?

• A) AFUDC may have either a debt component or an equity component.
• B) The amount credited to AFUDC may exceed the amount of interest paid during the period on bonds issued for construction.
• C) AFUDC may be credited for an imputed amount of interest on the utility's own funds used for construction.
• D) AFUDC may include the total amount of borrowing during construction.

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Definitions:

Homeowner Bailouts

Financial assistance programs designed to help homeowners facing foreclosure, often as a result of economic crises, by providing refinancing, loan modifications, or other aids to prevent loss of their homes.

Moral Hazard

A situation where one party engages in risky behavior knowing that they are protected against the consequences, often because another party bears the cost.

Irresponsible Borrowings

Financial behavior that involves taking on debt in ways that are unsustainable or without a plan to manage repayment, leading to potential financial harm.

Shirking

The behavior of employees who avoid doing their work or put in less effort than is expected, which can negatively impact productivity.