Question 1

GASB standards require that interfund receivables and payables between governmental and business-type activities be presented as internal balances.

Accepted Answer

A) True 
 B)False

Question 2

The comprehensive annual financial report (CAFR)of a government should contain a statement of revenues,expenses,and changes in fund net position for:

Accepted Answer

A)  Both proprietary and governmental funds. 
B)  Proprietary but not governmental funds. 
C)  Governmental but not proprietary funds. 
D)  Proprietary and fiduciary funds.

Question 3

What are the alternative methods of dissolving an internal service fund?

Accepted Answer

The answer of What are the alternative methods of dissolving...

Question 4

Equipment acquired under a capital lease for use by an internal service fund will be reported as a capital asset in both the fund and government-wide financial statements.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following account balances would only be reported if a city-owned utility followed regulatory accounting principles?

Accepted Answer

A)  Depreciation expense. 
B)  Pumping expense. 
C)  Restricted Assets-Cash. 
D)  Utility Plant Acquisition Adjustments.

Question 6

Legislators often believe an internal service fund function will not be subjected to annual legislative budget review and the legislature will "lose control" of the fund.Do you agree with this line of reasoning? Why or why not?

Accepted Answer

The answer of Legislators often believe an internal service fund...

Question 7

Which of the following accounts would appropriately be included on an enterprise fund balance sheet?

Accepted Answer

A)  Fund Balance: No; Net Position-Unrestricted: Yes. 
B)  Fund Balance: Yes; Net Position-Unrestricted: No. 
C)  Fund Balance: No; Net Position-Unrestricted: No. 
D)  Fund Balance: Yes; Net Position-Unrestricted: Yes.

Question 8

Customers' meter deposits,which cannot be spent for normal operating purposes,would be classified as restricted cash in the balance sheet of which fund type?

Accepted Answer

A)  Internal service fund. 
B)  Private-purpose trust fund. 
C)  Enterprise fund. 
D)  Special revenue fund.

Question 9

Internal service funds are intended to operate on taxes or other financing sources authorized by the legally enacted revenue budget for each year; therefore,they are classified as governmental funds.

Accepted Answer

A) True 
 B)False

Question 10

An internal service fund normally uses which of the following budgetary accounts?

Accepted Answer

A)  Estimated Revenues. 
B)  Appropriations. 
C)  Encumbrances. 
D)  An internal service fund normally does not use budgetary accounts.

Question 11

In which of the following funds is it appropriate to record depreciation of capital assets?

Accepted Answer

A)  Internal service fund. 
B)  Permanent fund. 
C)  General fund. 
D)  Capital projects fund.

Question 12

Which of the following would be reflected in the operating statement of a proprietary fund?

Accepted Answer

A)  Accrual of interest expense. 
B)  Repayment of the principal of debt. 
C)  Issuance of debt. 
D)  Purchase of a capital asset.

Question 13

Which of the following is not regarding proprietary funds?

Accepted Answer

A)  The difference between assets plus deferred outflows of resources and liabilities plus deferred inflows of resources of proprietary funds is called "net assets." 
B)  Proprietary funds record long-term debt directly in the fund accounts. 
C)  Proprietary funds record capital assets directly in the fund accounts. 
D)  Proprietary funds present a statement of cash flows.

Question 14

The Central City Golf Course,an enterprise fund,purchased a new stove for use in the course's snack shop.The debit for the entry to record the purchase should be to:

Accepted Answer

A)  Expenditures. 
B)  Purchases. 
C)  Equipment. 
D)  General capital assets.

Question 15

Enterprise funds are reported as a part of the Governmental Activities column of the government-wide financial statements when they provide services to governmental funds.

Accepted Answer

A) True 
 B)False

Question 16

When a supplies internal service fund records a billing to the General Fund,the journal entry in the internal service fund will include:

Accepted Answer

A)  A debit to Due from General Fund. 
B)  A debit to Due to General Fund. 
C)  A debit to Billings to Department. 
D)  A debit to Inventory of Supplies.

Question 17

An employee pension fund is a common example of an internal service fund.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following may properly be reported as a component of net position in the proprietary fund statement of net position?

Accepted Answer

A)  Retained earnings. 
B)  Designated equity. 
C)  Restricted net position. 
D)  Contributed capital.

Question 19

When a new internal service fund is established with a transfer of funds (not to be repaid),which account would be credited in the internal service fund?

Accepted Answer

A)  Cash. 
B)  Interfund Transfer In. 
C)  Interfund Transfer Out. 
D)  Estimated Revenues.

Question 20

Which of the following activities or services would most likely not be accounted for by an internal service fund?

Accepted Answer

A)  Electronic data processing. 
B)  Central purchasing, warehousing, and issuing of supplies. 
C)  Municipal swimming pool. 
D)  Risk management.

Exam 7: Accounting for the Business-Type Activities of State and Local Governments

GASB standards require that interfund receivables and payables between governmental and business-type activities be presented as internal balances.

The comprehensive annual financial report (CAFR) of a government should contain a statement of revenues,expenses,and changes in fund net position for:

What are the alternative methods of dissolving an internal service fund?

Equipment acquired under a capital lease for use by an internal service fund will be reported as a capital asset in both the fund and government-wide financial statements.

Which of the following account balances would only be reported if a city-owned utility followed regulatory accounting principles?

Legislators often believe an internal service fund function will not be subjected to annual legislative budget review and the legislature will "lose control" of the fund.Do you agree with this line of reasoning? Why or why not?

Which of the following accounts would appropriately be included on an enterprise fund balance sheet?

Customers' meter deposits,which cannot be spent for normal operating purposes,would be classified as restricted cash in the balance sheet of which fund type?

Internal service funds are intended to operate on taxes or other financing sources authorized by the legally enacted revenue budget for each year; therefore,they are classified as governmental funds.

An internal service fund normally uses which of the following budgetary accounts?

In which of the following funds is it appropriate to record depreciation of capital assets?

Which of the following would be reflected in the operating statement of a proprietary fund?

Which of the following is not regarding proprietary funds?

The Central City Golf Course,an enterprise fund,purchased a new stove for use in the course's snack shop.The debit for the entry to record the purchase should be to:

Enterprise funds are reported as a part of the Governmental Activities column of the government-wide financial statements when they provide services to governmental funds.

When a supplies internal service fund records a billing to the General Fund,the journal entry in the internal service fund will include:

An employee pension fund is a common example of an internal service fund.

Which of the following may properly be reported as a component of net position in the proprietary fund statement of net position?

When a new internal service fund is established with a transfer of funds (not to be repaid) ,which account would be credited in the internal service fund?

Which of the following activities or services would most likely not be accounted for by an internal service fund?