Question 1

For items reported in the restricted assets section of an enterprise fund balance sheet,how are the related items reported in the liability and fund equity sections of the balance sheet?

Accepted Answer

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Question 2

"Reporting 'utility plant in service' as a single line on the balance sheet provides adequate information for regulatory purposes and/or sound management." Do you agree with the statement? Explain why or why not.

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Question 3

In some local government financial reports you will find activities such as solid waste disposal and sewage disposal accounted for as a part of the General Fund.In other reports apparently identical activities are accounted for as enterprise funds.Under what conditions would each treatment be proper?

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Question 4

Explain how governmental entities that use internal service funds to account for risk financing and risk management activities should account for those activities.

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Question 5

Enterprise funds for utilities often report in their operating statement an "Allowance for Funds Used During Construction (AFUDC)" for interest paid or imputed during construction of plant assets.What purposes are served by reporting AFUDC in the manner described?

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Question 6

What factors should be considered in determining whether an activity or operation should be accounted for as an enterprise fund or as a governmental fund? As an internal service fund?

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Question 7

What are the alternative methods of dissolving an internal service fund? What factors should be considered in choosing the appropriate method?

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Question 8

Explain how capitalization of interest costs differs for enterprise funds as opposed to governmental funds.

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Question 9

"Enterprise funds should not be permitted to accumulate unrestricted net position,since to do so would indicate overpricing of its services." Do you agree? Why or why not?

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Question 10

The Motor Vehicle Repair Fund of Laramee County provides centralized repair for county-owned vehicles.For the following summarized transactions and events for the year ended June 30,provide the fund level entries in general journal form required to conform to generally accepted accounting principles.If no entry is needed,so indicate.
1)The Motor Vehicle Repair Fund ordered supplies at an estimated cost of $92,000.
2)The supplies ordered in (1)above were received at invoice costs of $91,400; these invoices were approved for payment.
3)Supplies costing $800 were used to repair a police car,and the Motor Vehicle Repair Fund billed to the General Fund at a markup of 20 percent on cost.
4)Expenses paid in cash during the year were: purchasing,$5,700; warehousing,$7,100; and general and administrative,$6,200.

Accepted Answer

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Question 11

How does GASB reporting of uncollectible accounts for governmental funds and proprietary funds differ from the reporting of uncollectible accounts under FASB standards?

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Question 12

The Supplies Fund,an internal service fund,of a certain city recorded the following journal entry:
  In the entry above,explain the difference between the accounts "Interfund Loan from Water Utility Fund" and "Interfund Transfer In from General Fund."

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Question 13

On July 1,the first day of its fiscal year,Yale Township issued bonds with a face value of $1,000,000 at 102 percent of par on the date of issue.The bonds bear annual interest at 6 percent; interest is payable semiannually.The bonds will mature in equal annual installments over 20 years.Bond premium must be used for eventual bond redemption and is recorded as a restricted asset.Assuming the bonds are revenue bonds sold to finance the construction of a parking garage to be operated in a manner similar to an investor-owned business:
1)Name the type of fund in which each of the following should be recorded.(If any of the following should not be recorded at all,enter "none" on the appropriate line.)
(a)The cash received for the sale of the bonds
(b)The liability of $1,000,000 for bonds payable
(c)The cost of the parking garage
(d)Interest paid or accrued during the period of construction
2)Show in general journal form all entries that should be made to record the sale of the bonds.For each entry indicate the fund in which the entry is made.

Accepted Answer

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Question 14

A government provided original financing for its supplies fund by a transfer of $40,000 cash from the General Fund.The transferee fund credited the amount to Interfund Loan from General Fund-Noncurrent.Assuming that the terminology is correct,how should the transfer be classified in the statements of the supplies fund? Suggest an appropriate name for the corresponding account in the General Fund; how should the corresponding account be shown in the statements of the General Fund?

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