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State Whether Each of the Following Is True or False

Question 32

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State whether each of the following is true or false regarding the financial reporting entity.Explain why the false statements are false.

Premises:

Responses:

The relationships between two primary governments and a third organization may be such that the third organization can be a component unit of both primary governments.

False

An example of a state's ability to impose its will on the operations of a legally separate toll road is its ability to approve the road's proposed increases in toll rates.

True

Only general-purpose governments,like states,cities,counties,towns,and villages can be primary governments.Special purpose governmental entities,like school districts and hospitals,can never be primary governments.

When an organization is part of a primary government's financial reporting entity,the accounts of the former are always "blended" with the accounts of the latter;that is,the individual funds of the component unit are added to the funds of the primary government.

Premises:

The relationships between two primary governments and a third organization may be such that the third organization can be a component unit of both primary governments.

An example of a state's ability to impose its will on the operations of a legally separate toll road is its ability to approve the road's proposed increases in toll rates.

Responses:

False

True

Correct Answer:

Premises:

Responses:

The relationships between two primary governments and a third organization may be such that the third organization can be a component unit of both primary governments.

An example of a state's ability to impose its will on the operations of a legally separate toll road is its ability to approve the road's proposed increases in toll rates.