The FASAB Has the Authority to Establish Accounting and Financial

question 73

Multiple Choice

The FASAB has the authority to establish accounting and financial reporting standards for:

• A) State and local governments
• B) Investor owned business
• C) Federal government
• D) Public not-for-profits

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Definitions:

Retained Earnings

Retained earnings are the portion of a company's profits that are kept or retained rather than being paid out as dividends to shareholders, used for reinvestment in the business, debt reduction, or other purposes.

Cost of Equity

The return that investors expect for investing in a company's equity, often calculated using models such as the Capital Asset Pricing Model (CAPM).

Floatation Costs

Expenses incurred by a company in issuing new securities, including underwriting fees, legal fees, and registration fees.

Tax Effect

The impact of taxation on business and investment decisions, including the influence of taxes on cash flows, investment returns, and financial planning.