Under Which of the Following Circumstances Must an Enterprise Fund

question 3

Multiple Choice

Under which of the following circumstances must an Enterprise Fund be used?

• A)when its activities are partially financed with advances from the general fund
• B)when its activities are financed with debt that is secured solely by the full faith and credit of the related primary government
• C)when its activities are financed with debt that is secured solely by a pledge of the net revenues from the charges made by the activity
• D)when its activities are financed in such a way that all costs except capital costs are covered.

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Definitions:

Cost of Goods Sold

Expenses directly connected with making the products a company offers for sale.

FOB Destination

A shipping term indicating that the seller is responsible for the cost and risk of transport until the goods reach the buyer's location.

Buyer's Place

The agreed location where the buyer takes ownership of goods purchased, significant in determining shipping costs and liability.

Perpetual Inventory System

An inventory management approach where inventory levels are updated in real time with each sale or purchase.