Question 1

The term "proprietary funds" includes enterprise and internal service funds.

Accepted Answer

Enterprise and internal service funds are both proprietary funds.

Question 2

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

Accepted Answer

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

Question 3

An enterprise fund is required if there is a legal requirement that the cost of providing services for an activity, including capital costs, be recovered through fees or charges.

Accepted Answer

According to GASB Statement 34, enterprise funds must be used when certain criteria are met. They are 1) When debt is backed solely by fees and charges. 2) When a legal requirement exists that the cost of providing services for an activity, including capital costs, be recovered though fees or charges. Or 3) When a government has a policy to establish fees and charges to cover the cost of providing services for an activity.

Question 4

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

Accepted Answer

It is frequently desirable for enterprise funds to operate at a profit to provide capital for things like working capital, expansion of physical facilities and retire debt. Internal service funds account for activities that produce goods or services to be provided to other governmental units on a cost reimbursement basis.
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Question 5

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

Accepted Answer

Internal service funds are typically reported in the governmental activities sections of the government-wide statements.

Question 6

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

Accepted Answer

In proprietary funds, assets minus liabilities is called Net Position.

Question 7

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

Accepted Answer

Enterprise fund balances are entered directly into the business-type activities sections of the government-wide statements.

Question 8

Financial statements for proprietary funds are prepared using the economic resources measurement focus.

Accepted Answer

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

Question 9

Proprietary funds use the modified accrual basis of accounting.

Accepted Answer

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

Question 10

Proprietary Funds use the accrual basis of accounting.

Accepted Answer

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

Question 11

Enterprise funds are used to account for activities similar to those engaged in profit-seeking businesses.

Accepted Answer

Enterprise funds are used by governments to account for services provided to the public on a user-charge basis.

Question 12

Budgetary comparison schedules are not required for proprietary funds.

Accepted Answer

Budgets may be prepared for proprietary funds to facilitate management of fund activities, but GASB standards do not require budget-actual reporting.

Question 13

Activities that produce goods or services to be provided to other departments or other governmental units on a cost-reimbursement basis are accounted for by enterprise funds.

Accepted Answer

Activities that produce goods or services to be provided to other departments or other governmental units on a cost-reimbursement basis are accounted for by internal service funds.

Question 14

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

Accepted Answer

Enterprise Funds Internal Service Funds are both Proprietary Funds

Question 15

An internal service fund is required whenever an activity is funded by fees or charges from other government departments.

Accepted Answer

There is no requirement to use an internal service fund

Question 16

An enterprise fund should be used when a legal requirement exists that the cost of providing services are to be recovered through fees or charges.

Accepted Answer

According to GASB Statement 34, enterprise funds must be used when certain criteria are met. They are 1) When debt is backed solely by fees and charges. 2) When a legal requirement exists that the cost of providing services for an activity, including capital costs, be recovered though fees or charges. Or 3) When a government has a policy to establish fees and charges to cover the cost of providing services for an activity.

Question 17

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

Accepted Answer

According to GASB Statement 34, enterprise funds must be used when certain criteria are met. They are 1) When debt is backed solely by fees and charges. 2) When a legal requirement exists that the cost of providing services for an activity, including capital costs, be recovered though fees or charges. Or 3) When a government has a policy to establish fees and charges to cover the cost of providing services for an activity.

Question 18

The most numerous and important enterprise services rendered by local governments are public utilities.

Accepted Answer

By far, the most numerous and important enterprise services rendered by local governments are public utilities.

Question 19

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

Accepted Answer

Internal service funds provide services to other government departments and charge those departments for the services rendered.

Question 20

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

According to GASB Statement 34, enterprise funds must be used when certain criteria are met. They are 1) When debt is backed solely by fees and charges. 2) When a legal requirement exists that the cost of providing services for an activity, including capital costs, be recovered though fees or charges. Or 3) When a government has a policy to establish fees and charges to cover the cost of providing services for an activity.

Quiz 6: Proprietary Funds

The term "proprietary funds" includes enterprise and internal service funds.

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

An enterprise fund is required if there is a legal requirement that the cost of providing services for an activity, including capital costs, be recovered through fees or charges.

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

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

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

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

Financial statements for proprietary funds are prepared using the economic resources measurement focus.

Proprietary funds use the modified accrual basis of accounting.

Proprietary Funds use the accrual basis of accounting.

Enterprise funds are used to account for activities similar to those engaged in profit-seeking businesses.

Budgetary comparison schedules are not required for proprietary funds.

Activities that produce goods or services to be provided to other departments or other governmental units on a cost-reimbursement basis are accounted for by enterprise funds.

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

An internal service fund is required whenever an activity is funded by fees or charges from other government departments.

An enterprise fund should be used when a legal requirement exists that the cost of providing services are to be recovered through fees or charges.

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

The most numerous and important enterprise services rendered by local governments are public utilities.

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

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.