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29 June, 12:28

Which of the following is correct with respect to rainy day funds? Multiple Choice Rainy day funds are classified as committed or restricted if imposed externally or by law. Rainy day funds are classified as unassigned if the funds are available for emergencies or revenue shortfalls which may be accessed on an ongoing basis. Both of the choices are correct. Neither of the choice is correct.

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  1. 29 June, 12:48
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    The correct answer is letter "A": Rainy day funds are classified as committed or restricted if imposed externally or by law.

    Explanation:

    Rainy day funds refer to reserves of resources states keep in case of emergencies or budget shortfalls. These funds are reserved for periods when revenues do not meet expectations and expenditures are higher. Rainy day funds are also used when the state should not incur debt because its financial situation is not optimal.

    Rainy days are classified as committed if created by resolution and, in such cases, the purpose of those funds is specified.
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