"Internal Service Funds Used for Risk Financing Should Recognize as Operating

question 50

Essay

"Internal service funds used for risk financing should recognize as operating revenues the full charges billed to other departments even if those charges substantially exceed the full cost of providing risk financing service." Do you agree? Why or why not?

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Definitions:

Trading Securities

Financial assets such as stocks and bonds held by an investor with the intent of selling them in the short term to profit from price fluctuations.

Unrealized Gains

Profits that have been achieved on paper due to an investment increasing in value but have not yet been cashed in by selling the asset.

Fair Value

A measurement of the price at which an asset or liability could be exchanged in an orderly transaction between market participants at the measurement date.

Held-To-Maturity Securities

Held-to-maturity securities are financial assets purchased with the intent and ability to hold them until a specified maturity date, typically including certain kinds of bonds.