According to GASB, Enterprise Funds Must Be Used When

question 25

Multiple Choice

According to GASB, Enterprise funds must be used when:

• A) Debt is backed solely by fees and charges.
• B) A legal requirement exists that the cost of providing services for an activity, including capital costs, be recovered through fees or charges.
• C) A government has a policy to establish fees and charges to cover the cost of providing services for an activity.
• D) Any of the above apply.

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Definitions:

Cash Flows

The sum of all money transactions both incoming and outgoing in an establishment, affecting its ability to maintain liquid resources.

Discounted Payback Period

The time required to recoup the cost of an investment taking the time value of money into account, effectively the period it takes for an investment's cash flows to cover its initial cost.

Cash Inflows

Money coming into a business from various sources, including sales, investment income, and financing activities.

Required Rate

The minimum percentage return that an investor expects to achieve from an investment.