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

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.What account should the internal service fund use to record these billings?

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.

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.

The liability for general obligation bonds issued for the benefit of a governmentally owned electric utility and serviced by its earnings should be recorded in:

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

When utility customers are billed during the year,the enterprise fund journal entry will include:

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.

Goods and services provided by internal service funds to other departments of the government are typically priced to:

Explain how capitalization of interest costs differs for enterprise funds as opposed to governmental funds.

Under utility regulatory accounting principles (RAP),the account "Utility Plant Acquisition Adjustment" reflects:

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?

Explain the reporting requirements for internal service funds and enterprise funds.Internal service funds and enterprise funds are both proprietary funds,so why do their reporting requirements differ?

Proprietary funds follow the current financial resources measurement focus and use the accrual basis of accounting.

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

If enterprise funds are the predominant participants in an internal service fund,the government should report the internal service fund's residual assets,deferred inflows and outflows of resources,and liabilities within the business-type activities column in the statement of net position.