GAAP

question 34

Multiple Choice

GAAP

• A) require all firms to use the same depreciation method.
• B) provide the basis for determining economic earnings.
• C) are set by the SEC.
• D) provide parameters within which a firm can manage its reported earnings.

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Definitions:

Proprietary Fund Types

Types of funds in governmental accounting used to account for activities similar to those found in the private sector, where the determination of net income is necessary or useful.

Statement of Cash Flows

A financial report that details the inflows and outflows of cash within a company over a specific period.

Governmental Fund Types

Types of funds used by governmental entities to account for their financial resources, including general, special revenue, debt service, capital projects, and permanent funds.

Modified Approach

Modified Approach is a method in governmental accounting allowing certain assets to be reported at historical cost, exempt from the regular depreciation accounting if they are maintained at predefined condition levels.