Question 1

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 2

Describe the requirements for disclosure of segment information for enterprise funds.

Accepted Answer

The answer of Describe the requirements for disclosure of segment...

Question 3

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?

Accepted Answer

The answer of A city government has decided to build...

Question 4

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

Accepted Answer

The answer of Describe the differences in cash flow statements...

Question 5

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

Accepted Answer

The answer of In a proprietary fund Statement of Net...

Question 6

Why might it be desirable for an enterprise fund to operate at a profit?

Accepted Answer

The answer of Why might it be desirable for an...

Question 7

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 1,2011 the first day of the City's fiscal year.During the fiscal year ended June 30,2012 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:
1.Prepare journal entries in the general journal of the Village of Lake George Print Shop
Fund to reflect the above transactions.
2.Prepare closing entries for the year.
3.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 30,2012.

Accepted Answer

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

Question 8

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

Accepted Answer

Internal service funds are used to account for activities that provide goods or services to other departments or agencies within the same government. Centralized purchasing, computer services, and janitorial services are all examples of services that one department may provide to another within a government entity. Therefore, these activities are commonly reported in internal service funds. Enterprise funds are used to account for activities that provide goods or services to the general public for a fee, while capital project funds are used to account for the construction or acquisition of major capital assets. Debt service funds are used to account for the repayment of principal and interest on long-term debt. None of these funds would be appropriate for reporting centralized purchasing, computer services, or janitorial services.

Question 9

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).

Accepted Answer

The answer of Describe the accounting required by the GASB...

Question 10

Revenue bonds

Accepted Answer

Revenue bonds are issued by government entities, such as cities or states, to finance projects that are expected to generate revenue, such as toll roads or public utilities. The repayment of these bonds is intended to come from the revenues generated by the project, rather than from the government's general funds. This means that revenue bonds carry a higher risk than general obligation bonds, which are backed by the government's ability to raise taxes to repay the debt.

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

Claims paid or accrued by an internal service fund for self-insurance are recorded as operating expenses under the applicable governmental function, function/activity, or program. Therefore, the best choice is option B, which records such claims as Operating Expense - Claims.

Question 12

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 are known as internal service funds. Therefore, it should be accounted for in the Internal Services Fund.

Question 13

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

Accepted Answer

Cash received from Interest and Dividend Income is recorded in the Investing Section, not the Operating Section, on the GASB Cash Flow Statement.

Question 14

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

Accepted Answer

Depreciation expense is typically found in an Enterprise Fund Financial Statement as it relates to the depreciation of assets used for business-type activities. The other options listed are more commonly found in governmental fund financial statements.

Question 15

Which of the following would be an example of an Enterprise fund?

Accepted Answer

An Enterprise fund is a government accounting term used for a fund established to account for operations that are financed and operated in a manner similar to private business enterprises. A water utility fund is an example of an enterprise fund as it provides goods or services to the public for a fee, with the intention of recovering the costs of those services. Runway construction fund, pension fund, and teacher fund do not fit the criteria of an enterprise fund.

Question 16

In the government-wide statements,enterprise funds are a(n)______ activity,whereas Internal Service funds are typically a(n)______activity.

Accepted Answer

Enterprise funds are considered a business-type activity because they operate like a commercial business, charging fees for goods or services provided to the public. On the other hand, internal service funds are typically considered governmental activities because they provide services to other departments within the same government entity, and are not intended to generate revenue or earn a profit.

Question 17

The City of Carlsbad 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.
  Capital assets used by the Stores and Services Fund include a building which cost $350,000 and had a 10 year life,and equipment which cost $200,000 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 Carlsbad 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

The answer of The City of Carlsbad established a Stores...

Question 18

An example of an internal service fund would include:

Accepted Answer

An internal service fund is used to account for the financing of goods or services provided by one department to other departments on a cost-reimbursement basis. A supplies fund fits this description as it provides goods to other departments within the same government entity.

Question 19

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

Accepted Answer

The answer of Describe the accounting required for risk management...

Question 20

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.

Quiz 6: Proprietary Funds

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?

Describe the requirements for disclosure of segment information for enterprise funds.

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?

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

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

Why might it be desirable for an enterprise fund to operate at a profit?

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

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).

Revenue bonds

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:

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:

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

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

Which of the following would be an example of an Enterprise fund?

In the government-wide statements,enterprise funds are a(n) activity,whereas Internal Service funds are typically a(n) activity.

An example of an internal service fund would include:

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

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?

Quiz 6: Proprietary Funds

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?

Describe the requirements for disclosure of segment information for enterprise funds.

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?

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

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

Why might it be desirable for an enterprise fund to operate at a profit?

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

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).

Revenue bonds

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:

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:

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

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

Which of the following would be an example of an Enterprise fund?

In the government-wide statements,enterprise funds are a(n) ______ activity,whereas Internal Service funds are typically a(n) ______activity.

An example of an internal service fund would include:

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

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?

In the government-wide statements,enterprise funds are a(n) activity,whereas Internal Service funds are typically a(n) activity.