Question

        _____ Because of its complexity, cost accounting is used in only limited cases in government. Which of the following statements about the use of cost accounting is NOT true?

1. Because government programs – particularly in the general fund -- don’t generate profits, governments see less value in accounting for costs.
2. Government objectives are not neatly compartmentalized into discrete organizational units. One agency may be serving multiple purposes that overlap with purposes served by other agencies.
3. Some agencies provide services to other agencies without charge. This results in a subsidy that can understate the costs being incurred by the recipient agency.
4. Fixed assets present a different challenge in that they are usually acquired by central offices and, as such, do not appear in the accounts of individual agencies that use these assets.
5. None of the above. They are all true.

Answer 1

a.Because government programs – particularly in the general fund -- don’t generate profits, governments see less value in accounting for costs. - this statement is true

b.Government objectives are not neatly compartmentalized into discrete organizational units. One agency may be serving multiple purposes that overlap with purposes served by other agencies.-this statement is true

c.Some agencies provide services to other agencies without charge. This results in a subsidy that can understate the costs being incurred by the recipient agency.- this statement is true

d.Fixed assets present a different challenge in that they are usually acquired by central offices and, as such, do not appear in the accounts of individual agencies that use these assets.-this statement is true

hence the correct answer is option e- none of the above. They are all true.