Exam 6: Proprietary Funds

Proprietary Funds use the modified accrual basis of accounting.

According to GASB 34,restricted net assets include those that are the results of constraints imposed by creditors,grantors,contributors,or laws or regulations of other governments.

An example of an activity that would not normally be accounted for in an enterprise fund would be:

GASB requires that the reconciliation of income and cash flows from operations starts with operating income.

The reconciliation on the statement of cash flows for a proprietary fund under GASB requirements is between operating income and cash flows from operating activities.

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.

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.

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

Budgetary comparison schedules are required for proprietary funds.

According to GASB Statement 34,restricted net assets are those that are the result of constraints from:

Solid waste landfills are required to estimate the cost of closure which include:

Which of the following would not be true regarding internal service funds?

The Village of Watkins Glenn operated an educational program for at-risk middle school children.Businesses and nonprofit organizations sponsor the children and pay the registration fee. The following cash receipts were collected: The following cash disbursements were made: Required: A.Prepare the journal entries to record revenues and disbursements if the city treats the program as an enterprise fund B.Prepare the journal entries to record revenues and disbursements if the city treats the program as a special revenue fund

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

Which of the following is false regarding restricted net assets?

Activities that produce goods or services to be provided to other departments or other governmental units would be reported in which fund?

Proprietary funds report using the current financial resources measurement focus and the modified accrual basis of accounting.

Capital assets for internal service funds should be reported:

The Balance Sheet and the Statement of Revenues,Expenditures,and Changes in Fund Balances are required for Proprietary funds.

GASB requires the ____________ method to report cash flows from operating activities in the Statement of Cash Flows.