Exam 6: Proprietary Funds

Unlike internal service funds, it is frequently desirable for enterprise funds to operate at a profit.

Funds that are used to account for activities similar to those often engaged in by profit-seeking businesses are:

This fund accounts for activities that produce goods or services to be provided to other departments or other governmental units

The City of Sinasonville operated a motor pool fund as an internal service fund. A loan of $500,000 was made from an enterprise fund, to be repaid over 10 years with no interest. Capital assets were purchased as follows: land, $200,000; buildings (40 year life), $800,000; equipment (10 year life), $300,000; automobiles (4 year life, $1,200,000. In addition, fuel costs were expected to be $100,000 and salaries were expected to be $200,000. A budget is prepared to breakeven, using full accrual accounting, plus pay back one year's principal on the loan. It is anticipated that cars will be driven 2,000,000 miles. The cost per mile would be:

Which of the following is true regarding the recording of long term debt in an enterprise fund?

Which of the following would generally be included in the Statement of Net Assets of an Enterprise Fund? Reserve for Revenue Bonds Encumbrances Payable A) No No B) No Yes C) Yes Yes D) Yes No

Enterprise Funds and Internal Service Funds are part of the larger category of Proprietary Funds.

Which of the following would not be true regarding internal service funds?

All of the following are types of debt issued to finance state and local governmental enterprises except:

An enterprise fund should be used when a legal requirement exists that the cost of providing services are to be recovered through fees or charges.

GASB Cash Flow Statements requires four classifications of cash flows instead of the 3 required by FASB.

When an activity is created to provide goods or services to provide assistance to other departments or other governmental units it should be accounted for in the:

Describe the accounting required for risk management activities of governmental units when the government is self-insured

Under GASB Statement 34, enterprise funds must be used in which of the following circumstances?

Revenue bonds sold by a water utility fund, upon sale, would be recorded in an enterprise fund as:

Long term liabilities of an enterprise fund are not reported in the proprietary fund statements, but are reported in government-wide statements.

Proprietary funds report using the current financial resources measurement focus and the modified accrual basis of accounting

Which of the following is not correct regarding the GASB Cash Flow Statement?

An example of an internal service fund would include:

The reconciliation on the statement of cash flows for a proprietary fund under GASB requirements is between operating income and cash flows from operating activities