Question 1

When governments operate landfills as enterprise funds, which of the following is correct?

Accepted Answer

A)  GASB requires that certain post-closure costs be estimated and accrued during the period the landfills receive solid waste. 
B)  GASB requires that a portion of future estimated costs be charged as an expense and liability of the landfill using units-of-production method as waste is accepted. 
C)  The purpose of recording post-closure expenses and liabilities is to match the estimated costs with the revenues during the period of time the waste is accepted. 
D)  All of the above are correct 
A)  GASB requires that certain post-closure costs be estimated and accrued during the period the landfills receive solid waste. 
B)  GASB requires that a portion of future estimated costs be charged as an expense and liability of the landfill using units-of-production method as waste is accepted. 
C)  The purpose of recording post-closure expenses and liabilities is to match the estimated costs with the revenues during the period of time the waste is accepted. 
D)  All of the above are correct D

Question 2

Capital assets of an enterprise fund should be reported in the:

Accepted Answer

A)  Government-Wide Statement of Net Position only. 
B)  Proprietary Fund Statement of Net Position only. 
C)  General Fixed Asset Account Group only. 
D)  Government-Wide Statement of Net Position and Proprietary Funds Statement of Net Position. 
A)  Government-Wide Statement of Net Position only. 
B)  Proprietary Fund Statement of Net Position only. 
C)  General Fixed Asset Account Group only. 
D)  Government-Wide Statement of Net Position and Proprietary Funds Statement of Net Position. D

Question 3

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.

Accepted Answer

A) True 
 B)False  True

Question 4

Revenue bonds

Accepted Answer

A)  Carry less risk than general obligation bonds. 
B)  Are intended to be paid from the revenues of an enterprise. 
C)  Are no longer in existence. 
D)  Are backed by the full faith and credit of the government in addition to enterprise revenues. 
A)  Carry less risk than general obligation bonds. 
B)  Are intended to be paid from the revenues of an enterprise. 
C)  Are no longer in existence. 
D)  Are backed by the full faith and credit of the government in addition to enterprise revenues.

Question 5

Which of the following is nottrue regarding proprietary funds?

Accepted Answer

A)  Enterprise funds are used by governments to account for services provided to the general public on a user-charge basis. 
B)  General obligation bonds that will be paid from enterprise revenues must be reflected in the accounts of enterprise funds. 
C)  Internal service self-insurance should set fees based on anticipated charges or a long-range plan to break even over time. 
D)  The operation of internal service funds has no impact on other funds because it is run as a business and provides services that would have been purchased elsewhere by the other funds. 
A)  Enterprise funds are used by governments to account for services provided to the general public on a user-charge basis. 
B)  General obligation bonds that will be paid from enterprise revenues must be reflected in the accounts of enterprise funds. 
C)  Internal service self-insurance should set fees based on anticipated charges or a long-range plan to break even over time. 
D)  The operation of internal service funds has no impact on other funds because it is run as a business and provides services that would have been purchased elsewhere by the other funds.

Question 6

Major enterprise funds are to be presented in the aggregate with all funds combined.

Accepted Answer

A) True 
 B)False

Question 7

Restricted Net Position for a proprietary fund is:

Accepted Answer

A)  Net resources whose use is restricted by users of the services. 
B)  Reported net of depreciation. 
C)  Reported net of accumulated depreciation and any outstanding debt used to acquire the asset. 
D)  Net resources whose use is restricted by creditors, grantors or laws or regulations of other governments. 
A)  Net resources whose use is restricted by users of the services. 
B)  Reported net of depreciation. 
C)  Reported net of accumulated depreciation and any outstanding debt used to acquire the asset. 
D)  Net resources whose use is restricted by creditors, grantors or laws or regulations of other governments.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The categories of Net Position for a proprietary fund are classified within which of the following categories?

Accepted Answer

A)  Committed Net Position, Assigned Net Position and Unassigned Net Position 
B)  Net Investment in Capital Assets, Restricted Net Position and Unrestricted Net Position 
C)  Spendable Net Position and Spendable Net Position 
D)  Restricted Fund balance, Committed Fund balance, Assigned Fund Balance, and Nonspendable Fund Balance 
A)  Committed Net Position, Assigned Net Position and Unassigned Net Position 
B)  Net Investment in Capital Assets, Restricted Net Position and Unrestricted Net Position 
C)  Spendable Net Position and Spendable Net Position 
D)  Restricted Fund balance, Committed Fund balance, Assigned Fund Balance, and Nonspendable Fund Balance

Question 10

Proprietary funds must prepare the Statement of Cash Flows using the direct method and includes cash flows from operating activities, investing activities, capital and related financing activities, and noncapital-related financing activities.

Accepted Answer

A) True 
 B)False

Question 11

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)  Special Items. 
C)  Operating Expenses. 
D)  Nonoperating Expenses. 
A)  Transfers out. 
B)  Special Items. 
C)  Operating Expenses. 
D)  Nonoperating Expenses.

Question 12

Fund-basis financial statements prepared for proprietary funds include the Statement of Net Position, Statement of Revenues, Expenses, and Changes in Fund Net Position, and the Statement of Cash Flows.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A)  An Internal Service Fund. 
B)  A Fiduciary Fund 
C)  A Special Revenue Fund. 
D)  Either the General Fund or an Internal Service fund. 
A)  An Internal Service Fund. 
B)  A Fiduciary Fund 
C)  A Special Revenue Fund. 
D)  Either the General Fund or an Internal Service fund.

Question 14

Budgetary comparison schedules are not required for proprietary funds.

Accepted Answer

A) True 
 B)False

Question 15

Long term liabilities of an enterprise fund are reported in the proprietary fund statement and in government-wide statements.

Accepted Answer

A) True 
 B)False

Question 16

Internal Service funds are reported in the fund-basis statements only.

Accepted Answer

A) True 
 B)False

Question 17

Enterprise funds are reported in the fund-basis statements only.

Accepted Answer

A) True 
 B)False

Question 18

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 19

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

Accepted Answer

A) True 
 B)False

Question 20

As was true for governmental funds, major enterprise funds are to be presented, along with columns for nonmajor funds and total enterprise funds, where appropriate.

Accepted Answer

A) True 
 B)False

When governments operate landfills as enterprise funds, which of the following is correct?

Capital assets of an enterprise fund should be reported in the:

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.

Revenue bonds

Which of the following is nottrue regarding proprietary funds?

Major enterprise funds are to be presented in the aggregate with all funds combined.

Restricted Net Position for a proprietary fund is:

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

The categories of Net Position for a proprietary fund are classified within which of the following categories?

Proprietary funds must prepare the Statement of Cash Flows using the direct method and includes cash flows from operating activities, investing activities, capital and related financing activities, and noncapital-related financing activities.

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:

Fund-basis financial statements prepared for proprietary funds include the Statement of Net Position, Statement of Revenues, Expenses, and Changes in Fund Net Position, and the Statement of Cash Flows.

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

Budgetary comparison schedules are not required for proprietary funds.

Long term liabilities of an enterprise fund are reported in the proprietary fund statement and in government-wide statements.

Internal Service funds are reported in the fund-basis statements only.

Enterprise funds are reported in the fund-basis statements only.

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.

As was true for governmental funds, major enterprise funds are to be presented, along with columns for nonmajor funds and total enterprise funds, where appropriate.

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 Funds, Interfund Transactions

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

Exam 6: Proprietary Funds

When governments operate landfills as enterprise funds, which of the following is correct?

Capital assets of an enterprise fund should be reported in the:

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.

Revenue bonds

Which of the following is nottrue regarding proprietary funds?

Major enterprise funds are to be presented in the aggregate with all funds combined.

Restricted Net Position for a proprietary fund is:

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

The categories of Net Position for a proprietary fund are classified within which of the following categories?

Proprietary funds must prepare the Statement of Cash Flows using the direct method and includes cash flows from operating activities, investing activities, capital and related financing activities, and noncapital-related financing activities.

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:

Fund-basis financial statements prepared for proprietary funds include the Statement of Net Position, Statement of Revenues, Expenses, and Changes in Fund Net Position, and the Statement of Cash Flows.

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

Budgetary comparison schedules are not required for proprietary funds.

Long term liabilities of an enterprise fund are reported in the proprietary fund statement and in government-wide statements.

Internal Service funds are reported in the fund-basis statements only.

Enterprise funds are reported in the fund-basis statements only.

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.

As was true for governmental funds, major enterprise funds are to be presented, along with columns for nonmajor funds and total enterprise funds, where appropriate.

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 Funds, Interfund Transactions

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