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

Internal service funds should not account for depreciation of capital assets used in their operations,since this would,in effect,charge the government twice for the same assets.

When a new utility customer submits a deposit,the enterprise fund journal entry will include

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

Which of the following funds of a government uses the same basis of accounting as a proprietary fund?

Internal service funds should be used only if

Plant and equipment utilized by a governmentally owned utility should be depreciated in the same manner as if it belonged to an investor-owned utility.

The amount of expense and liability to be reported each period for the closure and postclosure costs of a municipal solid waste landfill (MSWLF)is proportional to the amount of landfill capacity used during the period.

Which of the following is (are)an appropriate basis of accounting for an internal service fund?

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

The Encumbrances account should be used by an internal service fund in the same manner as by the General Fund.

Which of the following may properly be reported as a component of net position in the proprietary fund statement of net position?

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

Internal service funds are intended to operate on taxes or other financing sources authorized by the legally enacted revenue budget for each year; therefore,they are classified as governmental funds.

The water utility fund of the City of Pikesville uses cycle billing procedures.Under these procedures,the City of Pikesville will likely do which of the following on December 31,the end of its fiscal year?

Depreciation on capital assets used by an enterprise fund of a government

The Motor Vehicle Repair Fund of Laramee County provides centralized repair for county-owned vehicles.For the following summarized transactions and events for the year ended June 30,provide the fund level entries in general journal form required to conform to generally accepted accounting principles.If no entry is needed,so indicate. 1)The Motor Vehicle Repair Fund ordered supplies at an estimated cost of $92,000. 2)The supplies ordered in (1)above were received at invoice costs of $91,400; these invoices were approved for payment. 3)Supplies costing $800 were used to repair a police car,and the Motor Vehicle Repair Fund billed to the General Fund at a markup of 20 percent on cost. 4)Expenses paid in cash during the year were: purchasing,$5,700; warehousing,$7,100; and general and administrative,$6,200.

To facilitate the combination of utility financial statements with the statements of other enterprise funds,GAAP permits utilities to follow the customary format used by nonutility business organizations.

GASB accounting and financial reporting standards for risk financing activities provide that an internal service fund should recognize claims expense and a related liability when a claim has been asserted and

In order to conform to GASB standards,goods and services provided by internal service funds to other departments of the government must be priced to

Public utilities owned and operated by governments are common examples of enterprise funds.