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

Revenues of internal service funds should be recognized only when they are expected to be available in time to pay current liabilities of the fund.

The following cash transactions were among those reported by Genesee County's Wastewater Enterprise Fund for the year: Proceeds from sale of revenue bonds for construction $5,000,000 Interest income 300,000 Capital contributed by developers 1,000,000 In the Wastewater Enterprise Fund's statement of cash flows for the year ended December 31,what amount should be reported as cash flows from capital and related financing activities?

Which of the following should be accounted for in an internal service fund? Light poles to be paid for in installments by Affected property owners $350,000 Van used to transport supplies to all city Departments on a cost reimbursement basis 65,000 Equipment used for supplying electric power To residents 1,250,000

Explain the difference between operating revenues/expenses and nonoperating revenues/expenses.Why does the GASB require that operating revenues/expenses be reported separately on proprietary statements of revenues,expenses,and changes in fund net position?

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

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.When is a government required to establish an enterprise fund?

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

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

Proprietary funds report using three net position categories: net investment in capital assets; restricted; and unrestricted.

Internal service funds account for operating expenditures on the accrual basis.

Internal service funds should be used only if:

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

If a business-type activity is subsidized by a government's General Fund rather than fully covering its costs of providing services with fees or charges,that activity need not be reported in an enterprise fund.

Internal service funds utilize encumbrance accounting.

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.

How should financial information for internal service funds be reported in the government-wide financial statements?

During the fiscal year ended September 30,2017,the following transactions (summarized)occurred in the Town of Berthoud Information Technology Internal Service Fund: (summarized)occurred in the Berthoud Information Technology Internal Service Fund: 1.Employees were paid $290,000 wages in cash. 2.Utility bills received from the Town of Fredericksburg's Utility Fund during the year amounted to $23,500. 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: General Fund $308,700 Street Fund 279,300 7.Payments to the Utility Fund totaled $21,800. 8.Annual depreciation totaled $30,000 for machinery and equipment.

Which of the following organizations or units would least likely be accounted for by an enterprise fund?

Unlike the General Fund and other major governmental funds for which a budget is legally adopted,proprietary funds are not required by GASB standards to record budgets in their accounting systems,nor are they required to present a budgetary comparison schedule.

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.