Exam 7: Accounting for the Business-type Activities of State and Local Governments

Premiums or discounts on bonds payable issued by enterprise funds should be accounted for in the same manner as those of a comparable business entity.

What are the alternative methods of dissolving an internal service fund?

The City of Crescent Hill operates a central motor pool as an internal service fund for the benefit of the city's other funds and departments. In the current year, this fund billed the Parks Department $30,000 for vehicle rentals. If the Parks Department is a governmental fund, which account should the Parks Department use to record these billings?

GASB standards require that interfund receivables and payables between governmental and business-type activities be presented as internal balances.

Which of the following items is not required to be included in the segment information that must be reported for a municipality's enterprise funds?

When a new internal service fund is established with a transfer of funds (not to be repaid), which account would be credited in the internal service fund?

All segments within an enterprise fund are subject to segment disclosure requirements.

In which of the following funds is it appropriate to record depreciation of capital assets?

During the current fiscal year, the following transactions (summarized) occurred in the Town of Berthoud Information Technology Internal Service Fund: 1. Employees were paid $290,000 wages in cash. 2. Utility bills received from the Town of Berthoud's Utility Fund during the year amounted to $23,500. The amount had previously been accrued by the Utility Fund. 3. Office expenses paid in cash during the year amounted to $10,500. 4. Service supplies purchased on account during the year totaled $157,500. 5. Parts and supplies used during the year totaled $152,300 (at cost). 6. Charges to departments during the fiscal year were as follows: 7. Payments to the Utility Fund totaled $21,800. 8. Annual depreciation totaled $30,000 for machinery and equipment. Prepare the journal entry. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Which of the following is not a True statement about the Allowance for Funds Used During Construction (AFUDC)?

In the context of regulatory utility plant accounting, original cost and historical cost have the same meaning.

For proprietary funds, governments generally present a statement of net position in a format that displays assets, plus deferred outflows of resources, less liabilities, less deferred inflows of resources, equals net position.

Equipment acquired under a lease for use by an internal service fund will be reported as a capital asset in both the fund and government-wide financial statements.

A statement of cash flows is prepared for enterprise funds but not for internal service funds.

When a supplies internal service fund records a billing to the General Fund, the journal entry in the General Fund will include: