Question 1

Describe the differences in cash flow statements required by GASB standards when compared with cash flow statements required by FASB standards

Accepted Answer

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Question 2

Describe the accounting required for risk management activities of governmental units when the government is self-insured

Accepted Answer

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Question 3

In a proprietary fund Statement of Net Assets, which of the following is not true?

Accepted Answer

Net assets in a proprietary fund Statement of Net Assets are reported by net investment in capital assets, restricted, and unrestricted categories, not just restricted and unrestricted.

Question 4

Which of the following is not correct regarding the GASB Cash Flow Statement?

Accepted Answer

Interest and Dividends are typically recorded in the Investing Section of the GASB Cash Flow Statement, not the Operating Section. Therefore, option C is not correct. A, B, and D are correct statements.

Question 5

Enterprise funds are a(n) ______ activity, whereas Internal Service funds are typically a(n) ______ activity

Accepted Answer

Enterprise funds are business-type activities because they provide goods or services to the general public for a fee. Internal Service funds are typically also business-type activities because they provide goods or services to other departments within the same government entity for a fee.

Question 6

When an activity is created to provide goods or services to provide assistance to other departments or other governmental units it should be accounted for in the:

Accepted Answer

Activities that provide goods or services to other departments or governmental units should be accounted for in the Internal Services Fund. This fund is used to record the cost of providing goods and services to other departments, such as maintenance and repair services, central purchasing, and printing and publishing services. The revenue for this fund comes from charges to other departments or governmental units for the goods or services provided.

Question 7

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

Claims accrued or paid by the self-insurance (internal service) fund are recorded as operating expenses under "Claims," as they are a part of the regular ongoing operations of the city. Transfers out are used for situations where funds are moved from one fund to another, such as from the general fund to a capital projects fund. Special items are reserved for unique, non-recurring transactions. Nonoperating expenses are expenses that are not directly related to the primary activities of the entity, such as interest expense or gains/losses on the sale of investments.

Question 8

Which of the following funds use business accounting?

Accepted Answer

Both Internal Service Fund and Enterprise Fund use business accounting. The Internal Service Fund provides goods and services to other departments within the same government entity and is accounted for like a business. The Enterprise Fund is used for activities that are primarily financed by user fees and charges, such as public transportation or parking services, and is also accounted for like a business. The General Fund, on the other hand, uses governmental accounting and is used for general operating and maintenance expenses of the government entity.

Question 9

Describe the requirements for disclosure of segment information for enterprise funds

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Question 10

An example of an internal service fund would include:

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Question 11

The Village of Lake George decided to establish an internal service fund to account for the operations of a Print Shop. The Print Shop is to begin operations on July 1, 2008 the first day of the City's fiscal year. During the fiscal year ended June 30, 2009 the following transactions occurred:
(a). The General Fund made a permanent contribution of $1,200,000 and a long-term advance of $800,000 to the Print Shop Fund. The advance is to be repaid by the Print Shop Fund in four equal annual installments; the first installment is due 7/1/010. The advance is non-interest bearing and is considered issued for the purchases of equipment
(b). During the year equipment was purchased (for cash) in the amount of $900,000
(c). During the year, printing supplies costing $800,000 were purchased; all but $30,000 was paid in cash
(d). Billings to departments during the year totaled $2,400,000 at selling price. All but $450,000 was received in cash
(e). The cost of supplies used during the year totaled $730,000;
(f). Salaries and wages were $900,000 and utilities were $300,000 (all paid in cash); and
(g). Depreciation was charged on equipment, $80,000
Required:
Prepare journal entries in the general journal of the Village of Lake George Print Shop Fund to reflect the above transactions
Prepare closing entries for the year
Prepare, in good form, the equity section of the Statement of Net Assets for the Village of Lake George Print Shop Fund as of June 30, 2009

Accepted Answer

The answer of The Village of Lake George decided to...

Question 12

Which of the following statements is true regarding estimated closure costs for municipal solid waste landfills, assuming that it is operating as an enterprise fund?

Accepted Answer

When an enterprise fund estimates closure costs for a municipal solid waste landfill, it is required to use the units-of-production method to determine the amount of expense and liability that should be recognized in each period. This method is based on a calculation of the amount of waste received by the landfill during the period in relation to the total estimated waste capacity of the landfill. Therefore, only a portion of the estimated closure costs can be recognized as expense and liability in a given period. Option A is incorrect because it implies that the total estimated closure costs can be expensed fully at the time of the estimate, which is not correct since it violates the matching principle of accounting. Option C is incorrect because modified accrual accounting principles do not apply to enterprise funds, which follow full accrual accounting principles. Option D is incorrect because option B is true.

Question 13

Describe the accounting required by the GASB for municipal solid waste landfill closure and post closure care costs. (It is not necessary to describe footnote disclosures)

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Question 14

A city government has decided to build and operate a convention center. Identify what factors should be considered in deciding whether to account for the convention center as an Enterprise Fund or as part of general governmental activities?

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Question 15

Centralized purchasing, computer services and janitorial services are examples of activities that are commonly reported in:

Accepted Answer

Centralized purchasing, computer services, and janitorial services are typical internal service fund activities. These funds are used to account for activities provided to other departments or agencies within the same government entity.

Question 16

Which of the following would be found in an Enterprise Fund Financial Statement?

Accepted Answer

Depreciation Expense is a common expense found in Enterprise Fund Financial Statements. The other options listed are typically found in governmental funds.

Question 17

The Water Utility (an enterprise fund) has just sent out a purchase order to a vendor for some new equipment. Which of the following would be included in the journal entry to record this event?

Accepted Answer

Enterprise funds use accrual accounting which does not require a journal entry when a purchase order is signed.

Question 18

Internal service funds account for

Accepted Answer

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

Question 19

The City of Westboro established a Stores and Services Fund. To provide working capital, the Stores and Services Fund borrowed $800,000 from the General Fund, to be paid back over 8 years with no interest. The Stores and Services Fund is expected to set user charges at a level which will recover all expenses and provide cash for the repayment of the loan
 $\begin{array}{|l|r|}
\hline\text { Data for the budget year are: }\
\hline\text { Cost of supplies expected to be issued } & \$ 4,000,000 \
\hline \text { Salaries } & 980,000 \
\hline \text { Utility expenses } & 130,000 \
\hline \text { Insurance and miscellaneous expenses } & 90,000\
\hline
\end{array}$ Capital assets used by the Stores and Services Fund include a building which cost $300,000 and had a 10 year life and equipment which cost $150,000 and had a 5 year life. Straight-line depreciation is to be used, with no salvage value
Required:
a. Prepare a break-even budget for the City of Westboro Stores and Services Fund. Include a mark up percentage, as a percentage of cost so that revenue will equal expenses
b. Record the issuance of supplies, costing $16,500, to the Water Utility Fund. The perpetual inventory system is used. Show computations in good form

Accepted Answer

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Question 20

Revenue bonds

Accepted Answer

Revenue bonds are issued to fund the capital improvements of an enterprise, such as toll roads or airports, and payment is made strictly from the revenue generated by the enterprise. As such, revenue bonds are considered to carry less risk than general obligation bonds. They are not backed by the full faith and credit of the government, as only the enterprise's revenues are used to service them, unlike general obligation bonds.

Quiz 6: Proprietary Funds