Question 1

Sales revenues of a utility for a certain fiscal period

Accepted Answer

A)  Are equivalent to total debits to Customer Accounts Receivable for that period. 
B)  Include receivables billed during a fiscal period,plus receivables billed early in the next year if meters were read before year-end. 
C)  Should be reported on the cash basis for the sake of conservatism. 
D)  Include billed receivables and an accrual for unbilled receivables as of the balance sheet date. 
A)  Are equivalent to total debits to Customer Accounts Receivable for that period. 
B)  Include receivables billed during a fiscal period,plus receivables billed early in the next year if meters were read before year-end. 
C)  Should be reported on the cash basis for the sake of conservatism. 
D)  Include billed receivables and an accrual for unbilled receivables as of the balance sheet date. D

Question 2

Enterprise funds for utilities often report in their operating statement an "Allowance for Funds Used During Construction (AFUDC)" for interest paid or imputed during construction of plant assets.What purposes are served by reporting AFUDC in the manner described?

Accepted Answer

Reporting AFUDC in the operating statement of enterprise funds for utilities serves several purposes. Firstly, it allows for the proper matching of expenses with the revenues generated from the use of the constructed assets. By capitalizing the interest paid or imputed during the construction of plant assets, the enterprise fund can spread the cost of these expenses over the useful life of the assets, aligning the recognition of costs with the benefits derived from the assets.

Secondly, reporting AFUDC in this manner provides transparency and accuracy in financial reporting. It ensures that the true cost of constructing the plant assets is reflected in the financial statements, giving stakeholders a clear understanding of the total investment made in the utility infrastructure.

Additionally, capitalizing interest through AFUDC can have a positive impact on the financial ratios and metrics used to evaluate the financial health and performance of the enterprise fund. By spreading the cost of interest over time, the fund's profitability and debt coverage ratios may be improved, presenting a more favorable financial picture to investors, creditors, and regulatory agencies.

Overall, reporting AFUDC in the operating statement of enterprise funds for utilities helps to accurately reflect the cost of constructing plant assets, align expenses with revenues, and improve the financial reporting and analysis of the fund.

Question 3

Budgets for enterprise funds should be recorded in the accounts in the same manner as budgets for a General Fund or a special revenue fund.

Accepted Answer

A) True 
 B)False  False

Question 4

What factors should be considered in determining whether an activity or operation should be accounted for as an enterprise fund or as a governmental fund? As an internal service fund?

Accepted Answer

Several factors should be considered whe

Question 5

What amount of the following items should be accounted for in an enterprise fund?

Accepted Answer

A)  $2,100,000. 
B)  $1,760,000. 
C)  $1,640,000. 
D)  $350,000. 
A)  $2,100,000. 
B)  $1,760,000. 
C)  $1,640,000. 
D)  $350,000.

Question 6

Primarily,the operating statement of a proprietary fund should provide information useful in answering which of the following questions?

Accepted Answer

A)  What are the transactions or events of the period that have increased or decreased the resources available for spending in the near future? 
B)  Have current financial resources increased or decreased during the period? 
C)  Have cash balances increased or decreased as a result of transactions and events of the period? 
D)  What are the transactions or events of the period that have increased or decreased the fund's total economic resources? 
A)  What are the transactions or events of the period that have increased or decreased the resources available for spending in the near future? 
B)  Have current financial resources increased or decreased during the period? 
C)  Have cash balances increased or decreased as a result of transactions and events of the period? 
D)  What are the transactions or events of the period that have increased or decreased the fund's total economic resources?

Question 7

In the information for the Supplies Fund that follows,the account "Interfund Loan from Electric Utility Fund" should be credited for $320,000 because this amount was borrowed from and will have to be repaid by the Supplies Fund.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not true regarding proprietary funds?

Accepted Answer

A)  The difference between assets and liabilities of proprietary funds is called "fund balance." 
B)  Proprietary funds record long-term debt directly in the fund accounts. 
C)  Proprietary funds record capital assets directly in the fund accounts. 
D)  Proprietary funds present a statement of cash flows. 
A)  The difference between assets and liabilities of proprietary funds is called "fund balance." 
B)  Proprietary funds record long-term debt directly in the fund accounts. 
C)  Proprietary funds record capital assets directly in the fund accounts. 
D)  Proprietary funds present a statement of cash flows.

Question 9

Which of the following is a difference between enterprise funds and internal service funds?

Accepted Answer

A)  The use of cost accounting by enterprise funds but not internal service funds. 
B)  The customers who primarily benefit from the fund's service. 
C)  The number of basic financial statements required. 
D)  The measurement focus on economic resources for enterprise funds and current financial resources for internal service funds. 
A)  The use of cost accounting by enterprise funds but not internal service funds. 
B)  The customers who primarily benefit from the fund's service. 
C)  The number of basic financial statements required. 
D)  The measurement focus on economic resources for enterprise funds and current financial resources for internal service funds.

Question 10

On July 1,the first day of its fiscal year,Yale Township issued bonds with a face value of $1,000,000 at 102 percent of par on the date of issue.The bonds bear annual interest at 6 percent; interest is payable semiannually.The bonds will mature in equal annual installments over 20 years.Bond premium must be used for eventual bond redemption and is recorded as a restricted asset.Assuming the bonds are revenue bonds sold to finance the construction of a parking garage to be operated in a manner similar to an investor-owned business:
1)Name the type of fund in which each of the following should be recorded.(If any of the following should not be recorded at all,enter "none" on the appropriate line.)
(a)The cash received for the sale of the bonds
(b)The liability of $1,000,000 for bonds payable
(c)The cost of the parking garage
(d)Interest paid or accrued during the period of construction
2)Show in general journal form all entries that should be made to record the sale of the bonds.For each entry indicate the fund in which the entry is made.

Accepted Answer

1) (a)Enterprise Fund.
(b)Ente

Question 11

Proprietary funds are accounted for in a manner similar to investor-owned businesses; among other features,the accrual basis of accounting is used and all of the capital assets used in fund operations are accounted for by the using fund.

Accepted Answer

A) True 
 B)False

Question 12

In some local government financial reports you will find activities such as solid waste disposal and sewage disposal accounted for as a part of the General Fund.In other reports apparently identical activities are accounted for as enterprise funds.Under what conditions would each treatment be proper?

Accepted Answer

The treatment of activities such as soli

Question 13

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?

Accepted Answer

A)  Material enterprise fund capital assets. 
B)  Material enterprise fund operating income or loss. 
C)  Material enterprise fund tax revenues. 
D)  Material intergovernmental operating subsidies to an enterprise fund. 
A)  Material enterprise fund capital assets. 
B)  Material enterprise fund operating income or loss. 
C)  Material enterprise fund tax revenues. 
D)  Material intergovernmental operating subsidies to an enterprise fund.

Question 14

Internal service funds account within the fund for any long-term liabilities to be serviced from revenue derived from fund operations.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following accounts would least likely be found in the general ledger of an internal service fund?

Accepted Answer

A)  Cash. 
B)  Expenditures. 
C)  Billings to Departments. 
D)  Machinery and equipment. 
A)  Cash. 
B)  Expenditures. 
C)  Billings to Departments. 
D)  Machinery and equipment.

Question 16

The liability for utility revenue bonds should be reported in business-type activities on the government-wide statements,as well as in the enterprise fund.

Accepted Answer

A) True 
 B)False

Question 17

Capital assets acquired under a capital lease for use by an internal service fund should be recorded in the General Fund in order to report all leased assets in one financial statement.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following funds of a government would account for depreciation in the accounts of the fund?

Accepted Answer

A)  General. 
B)  Internal service. 
C)  Capital projects. 
D)  Special revenue. 
A)  General. 
B)  Internal service. 
C)  Capital projects. 
D)  Special revenue.

Question 19

Which of the following activities or services would most likely not be accounted for by an internal service fund?

Accepted Answer

A)  Electronic data processing. 
B)  Central purchasing,warehousing,and issuing of supplies. 
C)  Municipal golf course. 
D)  Risk management. 
A)  Electronic data processing. 
B)  Central purchasing,warehousing,and issuing of supplies. 
C)  Municipal golf course. 
D)  Risk management.

Question 20

Under GASB standards,an internal service fund should prepare all of the following financial statements except for a

Accepted Answer

A)  Statement of revenues,expenditures,and changes in fund balance. 
B)  Statement of revenues,expenses,and changes in net position. 
C)  Statement of net position. 
D)  Statement of cash flows. 
A)  Statement of revenues,expenditures,and changes in fund balance. 
B)  Statement of revenues,expenses,and changes in net position. 
C)  Statement of net position. 
D)  Statement of cash flows.

Sales revenues of a utility for a certain fiscal period

Enterprise funds for utilities often report in their operating statement an "Allowance for Funds Used During Construction (AFUDC)" for interest paid or imputed during construction of plant assets.What purposes are served by reporting AFUDC in the manner described?

Budgets for enterprise funds should be recorded in the accounts in the same manner as budgets for a General Fund or a special revenue fund.

What factors should be considered in determining whether an activity or operation should be accounted for as an enterprise fund or as a governmental fund? As an internal service fund?

What amount of the following items should be accounted for in an enterprise fund?

Primarily,the operating statement of a proprietary fund should provide information useful in answering which of the following questions?

In the information for the Supplies Fund that follows,the account "Interfund Loan from Electric Utility Fund" should be credited for $320,000 because this amount was borrowed from and will have to be repaid by the Supplies Fund.

Which of the following is not true regarding proprietary funds?

Which of the following is a difference between enterprise funds and internal service funds?

Proprietary funds are accounted for in a manner similar to investor-owned businesses; among other features,the accrual basis of accounting is used and all of the capital assets used in fund operations are accounted for by the using fund.

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?

Internal service funds account within the fund for any long-term liabilities to be serviced from revenue derived from fund operations.

Which of the following accounts would least likely be found in the general ledger of an internal service fund?

The liability for utility revenue bonds should be reported in business-type activities on the government-wide statements,as well as in the enterprise fund.

Capital assets acquired under a capital lease for use by an internal service fund should be recorded in the General Fund in order to report all leased assets in one financial statement.

Which of the following funds of a government would account for depreciation in the accounts of the fund?

Which of the following activities or services would most likely not be accounted for by an internal service fund?

Under GASB standards,an internal service fund should prepare all of the following financial statements except for a

Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Entities

Principles of Accounting and Financial Reporting for State and Local Governments

Governmental Operating Statement Accounts; Budgetary Accounting

Accounting for Governmental Operating Activities-Illustrative Transactions and Financial Statements

Accounting for General Capital Assets and Capital Projects

Accounting for General Long-Term Liabilities and Debt Service

Accounting for Fiduciary Activities-Agency and Trust Funds

Financial Reporting of State and Local Governments

Analysis of Governmental Financial Performance

Auditing of Governmental and Not-For-Profit Organizations

Budgeting and Performance Measurement

Accounting for Not-For-Profit Organizations

Not-For-Profit Organizations-Regulatory, Taxation, and Performance Issues

Accounting for Colleges and Universities

Accounting for Health Care Organizations

Accounting and Reporting for the Federal Government

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

Sales revenues of a utility for a certain fiscal period

Enterprise funds for utilities often report in their operating statement an "Allowance for Funds Used During Construction (AFUDC)" for interest paid or imputed during construction of plant assets.What purposes are served by reporting AFUDC in the manner described?

Budgets for enterprise funds should be recorded in the accounts in the same manner as budgets for a General Fund or a special revenue fund.

What factors should be considered in determining whether an activity or operation should be accounted for as an enterprise fund or as a governmental fund? As an internal service fund?

What amount of the following items should be accounted for in an enterprise fund?

Primarily,the operating statement of a proprietary fund should provide information useful in answering which of the following questions?

In the information for the Supplies Fund that follows,the account "Interfund Loan from Electric Utility Fund" should be credited for $320,000 because this amount was borrowed from and will have to be repaid by the Supplies Fund.

Which of the following is not true regarding proprietary funds?

Which of the following is a difference between enterprise funds and internal service funds?

Proprietary funds are accounted for in a manner similar to investor-owned businesses; among other features,the accrual basis of accounting is used and all of the capital assets used in fund operations are accounted for by the using fund.

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?

Internal service funds account within the fund for any long-term liabilities to be serviced from revenue derived from fund operations.

Which of the following accounts would least likely be found in the general ledger of an internal service fund?

The liability for utility revenue bonds should be reported in business-type activities on the government-wide statements,as well as in the enterprise fund.

Capital assets acquired under a capital lease for use by an internal service fund should be recorded in the General Fund in order to report all leased assets in one financial statement.

Which of the following funds of a government would account for depreciation in the accounts of the fund?

Which of the following activities or services would most likely not be accounted for by an internal service fund?

Under GASB standards,an internal service fund should prepare all of the following financial statements except for a

Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Entities

Principles of Accounting and Financial Reporting for State and Local Governments

Governmental Operating Statement Accounts; Budgetary Accounting

Accounting for Governmental Operating Activities-Illustrative Transactions and Financial Statements

Accounting for General Capital Assets and Capital Projects

Accounting for General Long-Term Liabilities and Debt Service

Accounting for Fiduciary Activities-Agency and Trust Funds

Financial Reporting of State and Local Governments

Analysis of Governmental Financial Performance

Auditing of Governmental and Not-For-Profit Organizations

Budgeting and Performance Measurement

Accounting for Not-For-Profit Organizations

Not-For-Profit Organizations-Regulatory, Taxation, and Performance Issues

Accounting for Colleges and Universities

Accounting for Health Care Organizations

Accounting and Reporting for the Federal Government

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