ExpertEasy1 markMultiple Choice
CPA · Question 50 · Area III: State & Local Governments
For a Proprietary Fund (Enterprise Fund), which method must be used to prepare the Statement of Cash Flows?
For a Proprietary Fund (Enterprise Fund), which method must be used to prepare the Statement of Cash Flows?
Answer options:
A.
Direct Method
B.
Indirect Method
C.
Either Direct or Indirect Method
D.
Modified Accrual Method
How to approach this question
GASB = Direct Method required. FASB = Choice (usually Indirect).
Full Answer
A.Direct Method✓ Correct
A
GASB Statement No. 9 requires the use of the Direct Method for the Statement of Cash Flows for proprietary funds. This differs from FASB, which allows a choice.
Common mistakes
Assuming it's the same as commercial accounting (Indirect).
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