How Should Customer Deposits Held for Water Meters That Cannot

question 44

Multiple Choice

How should customer deposits held for water meters that cannot be spent for operating purposes be classified?

• A) As restricted cash in an Enterprise Fund.
• B) As both cash and a liability in an Agency fund.
• C) As Nonspendable fund balance in a Permanent Fund.
• D) Any of the above are acceptable alternatives.

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Definitions:

Retained Earnings

The portion of a company's profits not distributed as dividends to shareholders, but instead reinvested in the business or held as reserves.

Assets

Assets are resources owned by a business or individual, which provide economic value or are expected to generate future benefit.

Revenues

The income generated from normal business operations and includes discounts and deductions for returned merchandise.

Limited Liability

A legal structure that limits the financial liability of owners or shareholders of a business to the amount they've invested, protecting personal assets from business debts.