Question 1

Which of the following accounts would least likely be found in the general ledger of an internal service fund?

Accepted Answer

The answer of Which of the following accounts would least...

Question 2

Primarily,the operating statement of a proprietary fund should provide information useful in answering which of the following questions?

Accepted Answer

The answer of Primarily,the operating statement of a proprietary fund...

Question 3

Depreciation of general capital assets is not recorded in the accounts of any of the governmental funds.If a building is transferred from the General Fund to an internal service fund because the character of its use changes,should the internal service fund record building depreciation expense each year after the transfer? Explain.

Accepted Answer

The answer of Depreciation of general capital assets is not...

Question 4

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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The answer of What factors should be considered in determining...

Question 5

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

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The answer of Which of the following would be reflected...

Question 6

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?

Accepted Answer

The answer of In some local government financial reports you...

Question 7

The Gotham City Golf Course,an enterprise fund,purchased new furniture for use in the golf pro's office.The debit for the entry to record the event should be to

Accepted Answer

The purchase of furniture for use in the golf pro's office should be recorded as an asset under Furniture and fixtures. It is not a general capital asset since it is not a major acquisition that will provide benefits for multiple years. Additionally, it is not recorded as an expenditure since it is a capitalizable cost that will provide future economic benefits. Purchases would be appropriate if the transaction was for inventory or supplies, which is not the case in this scenario.

Question 8

For which of the following assets can the "modified approach" be elected in lieu of depreciation?

Accepted Answer

The modified approach can only be elected for eligible infrastructure assets, which include assets such as roads, bridges, and tunnels. It cannot be used for other types of capital assets.

Question 9

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

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The answer of "Enterprise funds should not be permitted to...

Question 10

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?

Accepted Answer

The answer of A government provided original financing for its...

Question 11

"Internal service funds used for risk financing should recognize as operating revenues the full charges billed to other departments even if those charges substantially exceed the full cost of providing risk financing service." Do you agree? Why or why not?

Accepted Answer

The answer of "Internal service funds used for risk financing...

Question 12

Sales revenues of a utility for a certain fiscal period

Accepted Answer

Sales revenues for a utility include both billed receivables and an accrual for unbilled receivables as of the balance sheet date. This method follows the accrual basis of accounting, which recognizes revenue when earned (i.e. when the service is provided) rather than when payment is received. Choice A is incorrect because not all customer accounts receivable are necessarily related to sales revenues, as they may also include other types of charges or fees. Choice B is partially correct, but it only accounts for billed receivables and does not include unbilled receivables. Choice C is incorrect because sales revenues should be reported on the accrual basis, not the cash basis, to give a more accurate view of the company's financial performance.

Question 13

The Stores and Supplies Fund of Walnut City has quietly followed a policy of charging all actual cost and normal overhead for materials and supplies bought from them.Annually an amount of cash equal to the net gain by that method is transferred to the Walnut Library Fund.Is this an appropriate pricing policy? Why or why not?

Accepted Answer

The answer of The Stores and Supplies Fund of Walnut...

Question 14

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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The answer of Explain how governmental entities that use internal...

Question 15

"In order to determine whether user charges are commensurate with operating costs,it is desirable for internal service fund operations to be accounted for on a business basis." Do you agree? Why or why not?

Accepted Answer

The answer of "In order to determine whether user charges...

Question 16

The following are key terms in Chapter 7 that relate accounting for the business-type activities of state and local governments:
A.Customer advances for construction
B.Revenue bonds
C.Utility plant acquisition adjustment
D.Regulatory accounting principles
E.Original cost
F.Historical cost
G.General obligation bonds
For each of the following definitions,indicate the key term from the list above that best matches by placing the appropriate letter in the blank space next to the definition.

Accepted Answer

The answer of The following are key terms in Chapter...

Question 17

How should financial information for internal service funds be reported in the government-wide financial statements?

Accepted Answer

Financial information for internal service funds should be reported in the government-wide financial statements as part of governmental activities unless the internal service fund predominantly serves one or more enterprise funds, in which case it should be reported as part of business-type activities.

Question 18

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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The answer of Enterprise funds for utilities often report in...

Question 19

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

Accepted Answer

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

Question 20

The liability for general obligation bonds issued for the benefit of a governmentally owned electric utility and serviced by its earnings should be recorded in

Accepted Answer

General obligation bonds issued for the benefit of a governmentally owned electric utility and serviced by its earnings are an example of business-type activities, which should be accounted for in an enterprise fund.

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