The appropriate measurement focus for the business-type activities of the City of Rockford is
A)Current financial resources.
B)Economic resources.
C)Both a and b.
D)None of the above.

Question

Quizplus · Accepted Answer

The appropriate measurement focus for business-type activities is economic resources, as these activities are undertaken to generate revenues and incur costs in order to earn a profit or meet other financial objectives. The economic resources measurement focus recognizes assets, liabilities, revenues, and expenses when they are economically earned or incurred, regardless of when they are received or paid. This approach provides a more accurate representation of the overall financial position and results of business-type activities. Current financial resources measurement focus is appropriate for governmental-type activities, where the emphasis is on the availability or use of funds rather than earning a profit.

The Appropriate Measurement Focus for the Business-Type Activities of the City