Which of the Following Statements Best Describes the Reporting Process

question 10

Multiple Choice

Which of the following statements best describes the reporting process for profit seeking and governmental entities?

• A) In profit-seeking enterprises the measurement focus is on the flow of all economic resources of the firm, whereas the focus for governmental funds is on current financial resources
• B) In profit-seeking enterprises the measurement focus is on the flow of current financial resources, whereas the focus for government funds is on all economic resources.
• C) Both Profit-seeking enterprises and governmental entities have an objective to measure profitability.
• D) Both Profit-seeking enterprises and governmental entities use the accrual or cash basis of accounting to record and report transactions.

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Definitions:

Solvency Ratio

A financial metric used to measure a company's ability to meet its long-term debts and financial obligations.

Price-Earnings Ratio

A valuation metric for companies, calculated by dividing the current market price of a stock by its earnings per share.

Discontinued Operations

Components of a company that have been sold or terminated, reported separately in financial statements for clarity.

Continuing Operations

Refers to the parts of a business expected to continue operating and generating revenue over the long term, excluding any discontinued operations.