Exam 6: Proprietary Funds

Which of the following is not an example of an Enterprise Fund?

GASB Statement 34 requires enterprise funds to be used under which of the following circumstances?

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

The excess of assets over liabilities of proprietary funds is termed "Net Assets".

The following Statement of Cash Receipts and Disbursements was prepared by the bookkeeper of The Anchorage Arboretum Authority.The Arboretum Authority is a component unit of the City of Anchorage and must be included in the City's financial statements.It began operations on January 1,2012 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. ● The loan from the bank is dated April 1 and is for a five year period.Interest (4% annual rate)is paid on Oct.1 and April 1 of each year,beginning October 1,2012. ● 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 31,2012.These included $500 of fertilizer that was received on December 29 and paid in January 2013.All other bills and salaries related to 2012 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. 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.

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

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

Postclosure costs are recorded in a solid waste landfill enterprise fund at the present value of estimated future costs.

In the Statement of Net Assets for proprietary funds,GASB requires a classified format where current assets,noncurrent assets,current liabilities,and noncurrent liabilities are presented:

An example of an internal service fund would include:

Proprietary funds are:

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

As of July 1,2011,the City of Saratoga Springs decided to purchase a privately operated swimming pool and to create a Swimming Pool (Enterprise)Fund.During the year,the following transactions occurred: (a)A permanent contribution of $600,000 was received from the General Fund. (b)Revenue Bonds were sold at par in the amount of $1,200,000. (c)Purchased for cash several items,the cost breakdown was: land,$300,000; building,$400,000,land improvement,$400,000; equipment,$200,000; supplies,$150,000. (d)Charges for services amounted to $600,000,all received in cash. (e)Cash expenses included: salaries,$200,000; utilities,$100,000; interest (paid on 6/30/09),$72,000. (f)Supplies were consumed in the amount of $120,000. (g)Depreciation was recorded for: building,$20,000,land improvement,$20,000; equipment,$20,000. (h)The books were closed.Close all accounts to Net Assets. Required: 1.Record the above transactions in general journal form (on the books of the swimming pool fund). 2.Prepare,in good form,a Statement of Revenues,Expenses,and Changes in Fund Net Assets for the City of Saratoga Springs Swimming Pool Fund for the Year Ended June 30,2012. 3.Prepare,in good form,a Statement of Fund Net Assets for the City of Saratoga Springs Swimming Pool Fund as of June 30,2012. 4.Prepare,in good form,a Statement of Cash Flows for the City of Saratoga Springs Swimming Pool Fund for the Year Ended June 30,2012.Assume all of the revenue bonds payable are for capital-related acquisitions and that the transfer was to establish working capital (i.e.a non-capital-related purpose).

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

Revenue bonds

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

Which financial statements are required for proprietary funds?

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

An enterprise fund should be used when the government has a policy to establish fees to cover the costs of providing services for an activity.

The four categories on the Statement of Cash Flows for a proprietary fund are operating,non-capital financing activities,capital and related financing activities,investing activities.