Measurement focus and basis of accounting. Select the best answer for each of the following multiple-choice questions. (Nos. 3 and 7 are AICPA adapted.) 1. What is the underlying reason a governmental...

Measurement focus and basis of accounting. Select the best answer for each of the following multiple-choice questions. (Nos. 3 and 7 are AICPA adapted.)

1. What is the underlying reason a governmental unit uses separate funds to account for its transactions?

a. Governmental units are so large that it would be unduly cumbersome to account for all transactions as a single unit.

b. Because of the diverse nature of the services offered and legal provisions regarding activities of a governmental unit, it is necessary to segregate activities by functional nature.

c. Generally accepted accounting principles require that not-for-profit entities report on a funds basis.

d. Many activities carried on by governmental units are short lived, and their inclusion in a general set of accounts could cause undue probability of error and omission.