What is the underlying reason a governmental unit uses separate funds to account for its transactions? a. Governmental units are so large that it would be unduly cumbersome to account for all transactions as a single unit. b. Because of the diverse nature of the services offered and legal provisions regarding activities of a governmental unit, it is necessary to segregate activities by functional nature. c. Generally accepted accounting principles require that not-for-profit entities report on a funds basis. d. Many activities carried on by governmental units are short lived, and their inclusion in a general set of accounts could cause undue probability of error and omission.

What is the underlying reason a governmental unit uses separate funds to account for its transactions? a. Governmental units are so large that it would be unduly cumbersome to account for all transactions as a single unit. b. Because of the diverse nature of the services offered and legal provisions regarding activities of a governmental unit, it is necessary to segregate activities by functional nature. c. Generally accepted accounting principles require that not-for-profit entities report on a funds basis. d. Many activities carried on by governmental units are short lived, and their inclusion in a general set of accounts could cause undue probability of error and omission.

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter11: The Corporate Income Tax

Section: Chapter Questions

Problem 7MCQ

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Question

What is the underlying reason a governmental unit uses separate funds to account for its transactions?
a. Governmental units are so large that it would be unduly cumbersome to account for all transactions as a single unit.
b. Because of the diverse nature of the services offered and legal provisions regarding activities of a governmental unit, it is necessary to segregate activities by functional nature.
c. Generally accepted accounting principles require that not-for-profit entities report on a funds basis.
d. Many activities carried on by governmental units are short lived, and their inclusion in a general set of accounts could cause undue probability of error and omission.

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