Which of the following statements is (are)correct about the funds used by governmental entities?
A) I only
B) II only
C) I and II
D) Neither I nor II

Question

Which of the following statements is (are)correct about the funds used by governmental entities? 
A) I only 
B) II only 
C) I and II 
D) Neither I nor II

Quizplus · Accepted Answer

I) Governmental entities generally use funds that are restricted in their use and cannot be misappropriated for other purposes.

This statement is correct as governmental entities are required to follow strict rules and regulations when it comes to the use of funds. There are different types of funds that are available for specific purposes such as general funds for daily operations, capital funds for capital projects, special revenue funds for specific programs, etc. Each fund has its own restrictions and limitations on how it can be used, which ensures that the funds are utilized in a responsible manner.

II) Governmental entities are required to maintain detailed records of their financial transactions and are subject to audits to ensure that funds are being used appropriately.

This statement is also correct as governmental entities are accountable to the public and must provide transparency in their financial dealings. Audits are conducted by both internal and external auditors to ensure that the funds are being used appropriately and that the financial statements are accurate. This is an important safeguard to prevent misappropriation or misuse of funds.

Which of the Following Statements Is (Are)correct About the Funds