1. Which of the following statements is correct?

1. Endowment fund investments, as well as the earnings on the investments that are used to provide college scholarships to local high school students, should both be accounted for in

a permanent fund.

2. Not reporting accrued but unmatured interest in a debt service fund is a violation of the modified accrual basis of accounting.
3. A and B.
4. Neither A nor B.