Which of the following statements best describes the reporting process for profit seeking and governmental entities?
A)In profit-seeking enterprises the measurement focus is on the flow of all economic resources of the firm,whereas the focus for governmental funds is on current financial resources.
B)In profit-seeking enterprises the measurement focus is on the flow of current financial resources,whereas the focus for government funds is on all economic resources.
C)Both profit-seeking enterprises and governmental entities have an objective to measure profitability.
D)Both profit-seeking enterprises and governmental entities use the accrual or cash basis of accounting to record and report transactions.

Question

Quizplus · Accepted Answer

The reporting process for profit-seeking enterprises focuses on the flow of all economic resources of the firm, whereas the focus for governmental funds is on current financial resources. This reflects the different objectives of these entities; profit-seeking enterprises are focused on generating a profit for stakeholders, while governmental entities are focused on providing services to the public. Both types of entities use the accrual basis of accounting to record and report transactions.

Which of the Following Statements Best Describes the Reporting Process