Question 1

Describe the differences in cash flow statements required by GASB standards when compared with cash flow statements required by FASB standards.

Accepted Answer

The GASB requires four categories be used: operating,investing,noncapital financing,and capital and related financing.Noncapital financing cash flows include proceeds and repayment of debt and interest not related to capital outlay; transfers from other funds for noncapital activities; and receipt of grants from other governments for noncapital activities.Capital and related cash flows include proceeds and repayment of debt related to capital projects as well as interest on that debt,and also includes the purchase and acquisition of capital assets.Cash flows from investing activities includes the purchase and sale of investments as well as interest on investments.GASB requires that the direct method be used.Finally,the reconciliation for operating cash flows begins with operating income,not net income.

Question 2

Which of the following is not true regarding proprietary funds?

Accepted Answer

A)  Accrual accounting and the economic resource measurement focus are used. 
B)  Statements required are the Balance Sheet, the Statement of Revenues, Expenditures, and Changes in Fund Balances, and the Statement of Cash Flows. 
C)  Long Term debt is recorded directly in the accounts. 
D)  Proprietary funds financial reports include the Statement of Net Assets, Statement of Revenues, Expenses, and Changes in Fund Net Assets, and Statement of Cash Flows. 
A)  Accrual accounting and the economic resource measurement focus are used. 
B)  Statements required are the Balance Sheet, the Statement of Revenues, Expenditures, and Changes in Fund Balances, and the Statement of Cash Flows. 
C)  Long Term debt is recorded directly in the accounts. 
D)  Proprietary funds financial reports include the Statement of Net Assets, Statement of Revenues, Expenses, and Changes in Fund Net Assets, and Statement of Cash Flows. B

Question 3

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

Accepted Answer

A) True 
 B)False  True

Question 4

The city is using an internal service fund to self-insure its risk financing activities.Claims accrued or paid by this fund are recorded as:

Accepted Answer

A)  Transfers out. 
B)  Operating Expense - Claims. 
C)  Special Items - Claims. 
D)  Nonoperating Expense - Claims. 
A)  Transfers out. 
B)  Operating Expense - Claims. 
C)  Special Items - Claims. 
D)  Nonoperating Expense - Claims.

Question 5

Long-term liabilities of an enterprise fund should be reported in the:

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Question 6

The City of Thomasville had the following debt outstanding:
General obligation bonds to be paid from a debt service fund $2,400,000
General obligation bonds to be paid from utility revenues $3,100,000
Revenue bonds to be paid from utility revenues $3,900,000
The amount that should be shown as debt in the utility (enterprise)fund would be:

Accepted Answer

A)  $3,100,000. 
B)  $3,900,000. 
C)  $8,000,000. 
D)  $7,000,000. 
A)  $3,100,000. 
B)  $3,900,000. 
C)  $8,000,000. 
D)  $7,000,000.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

GASB requires the indirect method to determine cash flows.

Accepted Answer

A) True 
 B)False

Question 9

What statement is not required for proprietary funds?

Accepted Answer

A)  Statement of Net Assets. 
B)  Statement of Revenues, Expenditures, and Changes in Fund Balance. 
C)  Statement of Revenues, Expenses, and Changes in Fund Net Assets. 
D)  Statement of Cash Flows. 
A)  Statement of Net Assets. 
B)  Statement of Revenues, Expenditures, and Changes in Fund Balance. 
C)  Statement of Revenues, Expenses, and Changes in Fund Net Assets. 
D)  Statement of Cash Flows.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

All of the following are true about proprietary funds EXCEPT:

Accepted Answer

A)  They include Internal Service Funds and Enterprise Funds. 
B)  The economic resources focus is used. 
C)  They include the General Fund and Special Revenue Fund. 
D)  Accrual accounting is used as the basis of accounting. 
A)  They include Internal Service Funds and Enterprise Funds. 
B)  The economic resources focus is used. 
C)  They include the General Fund and Special Revenue Fund. 
D)  Accrual accounting is used as the basis of accounting.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

The General Fund of the City of Lansing made a permanent contribution of $100,000 to an internal service fund in 2012.Also,during the year,the internal service fund had revenues of $500,000,expenses of $475,000,and a transfer out of $10,000.Assuming this was the first year of operations for the internal service fund,the ending net assets balance,after closing entries,would be:

Accepted Answer

A)  $15,000. 
B)  $250,000. 
C)  $115,000. 
D)  $125,000. 
A)  $15,000. 
B)  $250,000. 
C)  $115,000. 
D)  $125,000.

Question 15

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:

Accepted Answer

A)  Special Revenue Fund. 
B)  Internal Services Fund. 
C)  Enterprise Fund. 
D)  General Fixed Asset Group. 
A)  Special Revenue Fund. 
B)  Internal Services Fund. 
C)  Enterprise Fund. 
D)  General Fixed Asset Group.

Question 16

The estimated costs of closure of solid waste landfills are measured using:

Accepted Answer

A)  Actual future costs. 
B)  Actual closure costs. 
C)  Historical costs. 
D)  Current costs. 
A)  Actual future costs. 
B)  Actual closure costs. 
C)  Historical costs. 
D)  Current costs.

Question 17

Internal Service Funds account for activities that produce goods or services to be provided to outside customers on a cost reimbursement basis.

Accepted Answer

A) True 
 B)False

Question 18

The General Fund of a city made a permanent transfer of $100,000 to an enterprise fund.At year-end,the balance sheet accounts that would reflect the $100,000 in the enterprise fund would be cash and:

Accepted Answer

A)  Contributed Capital. 
B)  Equity Transfer In. 
C)  Net Assets. 
D)  Other Financing Sources. 
A)  Contributed Capital. 
B)  Equity Transfer In. 
C)  Net Assets. 
D)  Other Financing Sources.

Question 19

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

Accepted Answer

A)  Enterprise fund. 
B)  Internal Service fund. 
C)  Special Revenue fund. 
D)  Debt Service fund. 
A)  Enterprise fund. 
B)  Internal Service fund. 
C)  Special Revenue fund. 
D)  Debt Service fund.

Question 20

An enterprise fund should be used when debt is back solely by fees and charges.

Accepted Answer

A) True 
 B)False

Describe the differences in cash flow statements required by GASB standards when compared with cash flow statements required by FASB standards.

Which of the following is not true regarding proprietary funds?

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

The city is using an internal service fund to self-insure its risk financing activities.Claims accrued or paid by this fund are recorded as:

Long-term liabilities of an enterprise fund should be reported in the:

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

GASB requires the indirect method to determine cash flows.

What statement is not required for proprietary funds?

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

All of the following are true about proprietary funds EXCEPT:

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

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

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:

The estimated costs of closure of solid waste landfills are measured using:

Internal Service Funds account for activities that produce goods or services to be provided to outside customers on a cost reimbursement basis.

The General Fund of a city made a permanent transfer of $100,000 to an enterprise fund.At year-end,the balance sheet accounts that would reflect the $100,000 in the enterprise fund would be cash and:

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

An enterprise fund should be used when debt is back solely by fees and charges.

Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Organizations

Overview of Financial Reporting for State and Local Governments

Modified Accrual Accounting: Including the Role of Fund Balances and Budgetary Authority

Accounting for the General and Special Revenue Funds

Accounting for Other Governmental Fund Types: Capital Projects, debt Service, and Permanent

Fiduciary Trustfunds

Government-Wide Statements, capital Assets, long-Term Debt

Advanced Topics for State and Local Governments

Accounting for Private Not-For-Profit Organizations

College and University Accounting

Accounting for Hospitals and Other Health Care Providers

Auditing, tax-Exempt Organizations, and Evaluating Performance

Financial Reporting by the Federal Government

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Exam 6: Proprietary Funds

Describe the differences in cash flow statements required by GASB standards when compared with cash flow statements required by FASB standards.

Which of the following is not true regarding proprietary funds?

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

The city is using an internal service fund to self-insure its risk financing activities.Claims accrued or paid by this fund are recorded as:

Long-term liabilities of an enterprise fund should be reported in the:

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

GASB requires the indirect method to determine cash flows.

What statement is not required for proprietary funds?

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

All of the following are true about proprietary funds EXCEPT:

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

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

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:

The estimated costs of closure of solid waste landfills are measured using:

Internal Service Funds account for activities that produce goods or services to be provided to outside customers on a cost reimbursement basis.

The General Fund of a city made a permanent transfer of $100,000 to an enterprise fund.At year-end,the balance sheet accounts that would reflect the $100,000 in the enterprise fund would be cash and:

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

An enterprise fund should be used when debt is back solely by fees and charges.

Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Organizations

Overview of Financial Reporting for State and Local Governments

Modified Accrual Accounting: Including the Role of Fund Balances and Budgetary Authority

Accounting for the General and Special Revenue Funds

Accounting for Other Governmental Fund Types: Capital Projects, debt Service, and Permanent

Fiduciary Trustfunds

Government-Wide Statements, capital Assets, long-Term Debt

Advanced Topics for State and Local Governments

Accounting for Private Not-For-Profit Organizations

College and University Accounting

Accounting for Hospitals and Other Health Care Providers

Auditing, tax-Exempt Organizations, and Evaluating Performance

Financial Reporting by the Federal Government

Filters