The Operation of Internal Service Funds Has Important Implications for Other

question 22

Multiple Choice

The operation of internal service funds has important implications for other funds. Which of the following statements isincorrect?

• A) Charges for services of the internal service fund are recorded as expenditures in the governmental fund purchasing the services.
• B) GASB standards require the use of internal service funds to facilitate comparisons between governments
• C) If the expenditures for the purchasing entity is recorded in the General Fund, a positive operating income in the internal service fund would mean that the expenditures reported in the General Fund exceed the true cost of operating the government.
• D) The problems created by internal service funds are resolved when the government-wide statements are prepared.

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Definitions:

Stock Volatilities

The degree of variation of a trading price series over time, often used to gauge the risk of a security.

Negative Correlation

A relationship between two variables where one variable increases as the other decreases, and vice versa.

Systematic Correlation

The relationship between the return of an asset and the return of the market as a whole, often used in the context of financial risk.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, commonly used in finance to measure the volatility of an investment's return.