Exam 6: Proprietary Funds

Investment pools are an example of an activity that may be accounted for in an internal service fund.

Proprietary funds use the economic resources measurement focus and accrual basis of accounting.

An example of an activity that would not normally be accounted for in an enterprise fund would be:

Revenue bonds sold by a water utility fund, upon sale, would be recorded:

Norton County operated a landfill and accounted for it as an enterprise fund. The closure and postclosure care costs are estimated to be $15,000,000. It is estimated that the capacity of the landfill is 3 million tons of waste and that waste will be accepted for 10 years. During 2009, 500,000 tons of waste was accepted by the landfill. The charge for closure and postclosure care costs for 2009 would be:

If a government decides to account for its risk management activities in a single fund, it must use:.

Cash flow statements of proprietary funds must use the direct method for recording cash flows from operations.

The Proprietary Fund Statement of Net Assets must classify assets and liabilities between current and long-term.

The City of X had the following debt outstanding: General obligation bonds to be paid from a debt service fund $2,000,000 General obligation bonds to be paid from utility revenues $3,000,000 Revenue bonds to be paid from utility revenues $4,000,000 The amount that should be shown as debt in the utility (enterprise) fund would be:

The following Statement of Cash Receipts and Disbursements was prepared by the bookkeeper of The Anchorage Arboretum Authority. The Arboretum Authority is a blended component unit of the City of Anchorage and must be included in the City's financial statements. It began operations on January 1, 2009 with no outstanding liabilities or commitments and only 2 assets: (1) $7,000 cash and (2) land that it had paid $ 12,000 to acquire Cash Basis 12 months Cash Receipts: Admission fees 247,500 Borrowing from bank Total deposits 302,500 Cash Disbursements: Supplies 67,300 Labor 122,900 Utilities 47,500 Purchase of machinery 60,000 Interest on bank note 2,200 Total checks 299,900 Excess of Receipts over Disbursements: 2,600 • The loan from the bank is dated April 1 and is for a five year period. Interest (8% annual rate) is paid on Oct. 1 and April 1 of each year, beginning October 1, 2009 • The machinery was purchased on April 1 with the proceeds provided by the bank loan and has an estimated useful life of 10 years. (straight-line basis) • Supplies on hand amounted to $ 3,760 at December 31, 2009. These included $500 of fertilizer that was received on December 29 and paid in January 2010. All other bills and salaries related to 2009 had been paid by close of business on December 31 Required: Part A. Prepare a Statement of Revenues, Expenses and Changes in Net Assets for the year ended 12-31-09 for the Arboretum assuming the City plans to account for its activities on the accrual basis as a blended enterprise fund Part B. Prepare a Statement of Revenues, Expenditures and Changes in Fund Balance for the year ended 12-31-09 for the Arboretum assuming the City plans to account for its activities on the modified accrual basis as a blended governmental fund

Which of the following is not true regarding enterprise funds?

What is the appropriate accounting for the signing of a contract to build a new water treatment facility by an Enterprise Fund?

Which of the following is not true regarding the Statement of Cash Flows required by the GASB for proprietary funds?

According to GASB 34, Enterprise funds must be used when:

Proprietary funds record capital assets, depreciation on those capital assets and long-term debt.

Solid waste landfills are required to estimate the cost of closure which include:

Proprietary funds use the economic resources measurement focus and modified accrual basis of accounting.

When estimating uncollectible accounts, an enterprise fund will record a debit to Bad Debt Expense and a credit to Accumulated Provision for Uncollectible Accounts.

Proprietary funds use the accrual basis of accounting because these funds engage in activities similar to those of profit-seeking businesses.

Indicate which of the following would not be an example of an internal service fund: