Under GASB Reporting Entity Standards,a Component Unit Is

question 20

Multiple Choice

Under GASB reporting entity standards,a component unit is

• A)An organization for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete.
• B)A legally separate organization that is financially independent of a primary government and on which the primary government cannot impose its will.
• C)A large department of a primary government.
• D)A not-for-profit organization that is authorized to operate within the boundaries of a city but is not accountable financially or in other way to the city.

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Definitions:

Other Income

Revenue from non-primary business activities, such as rent, patents, or interest earnings, not related to the company's main business operations.

Gain on Sale

The profit realized when an asset is sold for a price higher than its book value.

Indirect Method

A cash flow statement methodology that adjusts net income for changes in non-cash transactions and working capital to calculate cash flow from operating activities.

Net Cash Flow

The difference between a company's cash inflows and outflows within a given period.