An organization is a component unit of a primary government and hence part of the primary government's financial reporting entity,provided that:
A)the primary government provides grants to the organization
B)the primary government sells tax-exempt debt on behalf of the organization
C)the primary government is financially accountable for the organization
D)the primary government makes appropriations to the organization

Question

Quizplus · Accepted Answer

According to GASB Statement No. 14, a component unit is a legally separate organization that the primary government is financially accountable for. This means the primary government is accountable for ensuring the component unit meets its financial obligations, or has a fiscal dependency on the primary government. The other answer choices may or may not indicate a financial relationship between the primary government and the organization, but do not necessarily make the organization a component unit.

An Organization Is a Component Unit of a Primary Government