Which of the Following Statements Is Incorrect

question 101

Multiple Choice

Which of the following statements is incorrect?

• A) Unless use of an agency fund is mandated by law, by GASB standards, or by decision of the governing board, an agency relationship may be accounted for within governmental and/or proprietary funds.
• B) Escheat property generally should be reported as an asset in the governmental or proprietary fund to which the property ultimately reverts.
• C) GASB has proposed a new category of fiduciary fund; the custodial fund which would be used exclusively for escheat property held by the government.
• D) An agency fund accounts for assets held by a government temporarily as agent for individuals, organizations, or other governmental units.

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Definitions:

Accounting Basis

The method by which revenues and expenses are recorded and recognized in financial statements, such as cash basis or accrual basis.

Rate of Return

The profit or deficit incurred on an investment during a designated time, shown as a fraction of the initial investment amount.

Net Income

The profit of a company after all expenses and taxes have been deducted from revenue.

Accounting Break-even

The point at which total revenues exactly equal total explicit costs, leading to neither a profit nor a loss.