Which of the Following Statements Is True Regarding Accounting and Financial

question 75

Multiple Choice

Which of the following statements is true regarding accounting and financial reporting for public colleges and universities?

• A) Public colleges and universities may choose to report in the same manner as private colleges and universities, using FASB standards.
• B) Public colleges and universities may choose to report as special-purpose entities.
• C) Both A and B are true.
• D) Neither A nor B is true.

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Definitions:

Specific Capital

This refers to the various types of capital (debt, equity, etc.) a company uses for financing its operations and investments, with each type having its own cost and characteristics.

Component Costs

The individual costs associated with the different sources of capital a firm utilizes in its capital structure.

Embedded Costs

Embedded costs refer to the expenses that a company has already incurred and cannot be recovered.

External Equity

Refers to funds raised through issuing shares of stock to outside investors, as opposed to internal financing through retained earnings.