Which of the Following Funds Should Use the Accrual Basis

question 10

Multiple Choice

Which of the following funds should use the accrual basis of accounting?

• A)Enterprise and private-purpose trust funds.
• B)Permanent funds and internal service funds.
• C)Debt service and agency funds.
• D)Special revenue and capital projects funds.

---

Definitions:

Average Daily Float

Average daily float refers to the average amount of uncollected funds in a company's bank account, essentially representing checks that have been issued but not yet cleared.

Lockbox System

A service offered by banks to companies for the collection of payments from customers, involving the customers sending their payments to a special post office box.

Net Present Value

A technique utilized in the process of capital budgeting to assess an investment's profitability by determining the difference between the present value of cash inflows and outflows.

Treasury Bills

Short-term government securities with maturation periods of one year or less, considered a safe and liquid investment option.