Which of the Following Statement Is True Regarding Permanent Funds

question 43

Multiple Choice

Which of the following statement is true regarding permanent funds?

• A)Permanent funds do not have any donor restrictions when they are established.
• B)Permanent funds have a donor restriction on the fund principal but the income from the fund may be used to benefit the government's program.
• C)Permanent funds have a donor restriction on the income generated from the fund principal but the principal may be used to benefit the government's program.
• D)The cash or accrual basis of accounting may be used to account for a permanent fund.

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Definitions:

Income Tax Rate

The proportion of a person's or organization's income that is owed to the government in taxes.

Capital Budgeting

The process of planning and evaluating investments in long-term assets to generate returns over time.

Renovation Expense

Costs incurred in updating or restoring the physical condition of a business asset to increase its value or extend its life.

Straight-Line Depreciation

A method of calculating the depreciation of an asset which assumes the asset will lose an equal amount of value each year over its useful life.