Question 1

Which of the following is true regarding the cash flow statements of a proprietary fund?

Accepted Answer

A)  A reconciliation is required between the Statement of Revenues, Expenses, and Changes in Fund Net Assets and the cash flows from operating activities section of the Cash Flow Statement. 
B)  Interest receipts are reported as increases in cash flows from either capital and related financing or noncapital financing activities, whichever is appropriate. 
C)  The gain from the sale of equipment would be reported in the investing section. 
D)  None of the above. 
A)  A reconciliation is required between the Statement of Revenues, Expenses, and Changes in Fund Net Assets and the cash flows from operating activities section of the Cash Flow Statement. 
B)  Interest receipts are reported as increases in cash flows from either capital and related financing or noncapital financing activities, whichever is appropriate. 
C)  The gain from the sale of equipment would be reported in the investing section. 
D)  None of the above.

Question 2

Proprietary funds use the accrual basis of accounting because these funds engage in activities similar to those of profit-seeking businesses.

Accepted Answer

A) True 
 B)False

Question 3

Which of the funds listed below would include capital assets in its Statement of Net Assets?

Accepted Answer

A)  Internal Service. 
B)  General. 
C)  Special Revenue. 
D)  None of the above; no funds in governmental accounting have capital asset accounts. 
A)  Internal Service. 
B)  General. 
C)  Special Revenue. 
D)  None of the above; no funds in governmental accounting have capital asset accounts.

Question 4

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

Accepted Answer

A)  Water Utility fund. 
B)  Runway construction fund. 
C)  Pension Fund. 
D)  Teacher Fund. 
A)  Water Utility fund. 
B)  Runway construction fund. 
C)  Pension Fund. 
D)  Teacher Fund.

Question 5

Which of the following is not true regarding proprietary funds?

Accepted Answer

A)  Enterprise funds are used by governments to account for services provided to the general public on a user-charge basis. 
B)  General obligation bonds that will be paid from enterprise revenues must be reflected in the accounts of enterprise funds. 
C)  Internal service self-insurance should set fees based on anticipated charges or a long-range plan to break even over time. 
D)  The operation of internal service funds has no impact on other funds because it is run as a business and provides services that would have been purchased elsewhere by the other funds. 
A)  Enterprise funds are used by governments to account for services provided to the general public on a user-charge basis. 
B)  General obligation bonds that will be paid from enterprise revenues must be reflected in the accounts of enterprise funds. 
C)  Internal service self-insurance should set fees based on anticipated charges or a long-range plan to break even over time. 
D)  The operation of internal service funds has no impact on other funds because it is run as a business and provides services that would have been purchased elsewhere by the other funds.

Question 6

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

Accepted Answer

A)  Motor pool. 
B)  Garbage collection. 
C)  Print shop. 
D)  Central storeroom. 
A)  Motor pool. 
B)  Garbage collection. 
C)  Print shop. 
D)  Central storeroom.

Question 7

If a government decides to account for its risk management activities in a single fund,it must use:

Accepted Answer

A)  An internal service fund. 
B)  The General Fund. 
C)  A Special Revenue Fund. 
D)  Either the General Fund or an Internal Service fund. 
A)  An internal service fund. 
B)  The General Fund. 
C)  A Special Revenue Fund. 
D)  Either the General Fund or an Internal Service fund.

Question 8

Norton County operated a landfill,and accounted for it as an enterprise fund.The closure and postclosure care costs are estimated to be $15,000,000.It is estimated that the capacity of the landfill is 3 million tons of waste and that waste will be accepted for 10 years.During 2012,250,000 tons of waste was accepted by the landfill.The charge for closure and postclosure care costs for 2012 would be:

Accepted Answer

A)  $0. 
B)  $1,250,000. 
C)  $1,500,000. 
D)  Impossible to determine from the information given. 
A)  $0. 
B)  $1,250,000. 
C)  $1,500,000. 
D)  Impossible to determine from the information given.

Question 9

Which of the following is an example of an Internal Service Fund?

Accepted Answer

A)  Risk Management. 
B)  Water and Sewer Utilities. 
C)  Lotteries. 
D)  Golf Courses. 
A)  Risk Management. 
B)  Water and Sewer Utilities. 
C)  Lotteries. 
D)  Golf Courses.

Question 10

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

Accepted Answer

Operating

Question 11

A portion of the estimated cost of closure of solid waste landfills should be charged as an expense and a liability of the landfill operation each year on a:

Accepted Answer

A)  Actual cost method. 
B)  units-of-production method. 
C)  Estimated cost method. 
D)  None of the above. 
A)  Actual cost method. 
B)  units-of-production method. 
C)  Estimated cost method. 
D)  None of the above.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Proprietary funds utilize what basis of accounting?

Accepted Answer

A)  Modified accrual. 
B)  Accrual. 
C)  Cash. 
D)  Budgetary. 
A)  Modified accrual. 
B)  Accrual. 
C)  Cash. 
D)  Budgetary.

Question 14

Which of the following are best described as proprietary funds?
I.Internal Service funds
II.Pension funds
III.Enterprise funds

Accepted Answer

A)  I only. 
B)  I and II. 
C)  I and III. 
D)  I, II, and III. 
A)  I only. 
B)  I and II. 
C)  I and III. 
D)  I, II, and III.

Question 15

Long term liabilities of an enterprise fund are not reported in the proprietary fund statements,but are reported in government-wide statements.

Accepted Answer

A) True 
 B)False

Question 16

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

A) True 
 B)False

Question 17

FASB requires that the reconciliation of income and cash flows from operations starts with net income.

Accepted Answer

A) True 
 B)False

Question 18

Indicate which of the following would not be an example of an internal service fund:

Accepted Answer

A)  City Self-Insurance Fund. 
B)  City Print Shop. 
C)  City Data Processing Service Center. 
D)  City Airport. 
A)  City Self-Insurance Fund. 
B)  City Print Shop. 
C)  City Data Processing Service Center. 
D)  City Airport.

Question 19

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

Accepted Answer

A)  Enterprise funds. 
B)  Capital project funds. 
C)  Internal service funds. 
D)  Debt service funds. 
A)  Enterprise funds. 
B)  Capital project funds. 
C)  Internal service funds. 
D)  Debt service funds.

Question 20

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...

Which of the following is true regarding the cash flow statements of a proprietary fund?

Proprietary funds use the accrual basis of accounting because these funds engage in activities similar to those of profit-seeking businesses.

Which of the funds listed below would include capital assets in its Statement of Net Assets?

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

Which of the following is not true regarding proprietary funds?

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

If a government decides to account for its risk management activities in a single fund,it must use:

Which of the following is an example of an Internal Service Fund?

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

A portion of the estimated cost of closure of solid waste landfills should be charged as an expense and a liability of the landfill operation each year on a:

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

Proprietary funds utilize what basis of accounting?

Which of the following are best described as proprietary funds? I.Internal Service funds II.Pension funds III.Enterprise funds

Long term liabilities of an enterprise fund are not reported in the proprietary fund statements,but are reported in government-wide statements.

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.

FASB requires that the reconciliation of income and cash flows from operations starts with net income.

Indicate which of the following would not be an example of an internal service fund:

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

Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Organizations

Overview of Financial Reporting for State and Local Governments

Modified Accrual Accounting: Including the Role of Fund Balances and Budgetary Authority

Accounting for the General and Special Revenue Funds

Accounting for Other Governmental Fund Types: Capital Projects, debt Service, and Permanent

Fiduciary Trustfunds

Government-Wide Statements, capital Assets, long-Term Debt

Advanced Topics for State and Local Governments

Accounting for Private Not-For-Profit Organizations

College and University Accounting

Accounting for Hospitals and Other Health Care Providers

Auditing, tax-Exempt Organizations, and Evaluating Performance

Financial Reporting by the Federal Government

Filters

Exam 6: Proprietary Funds

Which of the following is true regarding the cash flow statements of a proprietary fund?

Proprietary funds use the accrual basis of accounting because these funds engage in activities similar to those of profit-seeking businesses.

Which of the funds listed below would include capital assets in its Statement of Net Assets?

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

Which of the following is not true regarding proprietary funds?

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

If a government decides to account for its risk management activities in a single fund,it must use:

Which of the following is an example of an Internal Service Fund?

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

A portion of the estimated cost of closure of solid waste landfills should be charged as an expense and a liability of the landfill operation each year on a:

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

Proprietary funds utilize what basis of accounting?

Which of the following are best described as proprietary funds? I.Internal Service funds II.Pension funds III.Enterprise funds

Long term liabilities of an enterprise fund are not reported in the proprietary fund statements,but are reported in government-wide statements.

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.

FASB requires that the reconciliation of income and cash flows from operations starts with net income.

Indicate which of the following would not be an example of an internal service fund:

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

Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Organizations

Overview of Financial Reporting for State and Local Governments

Modified Accrual Accounting: Including the Role of Fund Balances and Budgetary Authority

Accounting for the General and Special Revenue Funds

Accounting for Other Governmental Fund Types: Capital Projects, debt Service, and Permanent

Fiduciary Trustfunds

Government-Wide Statements, capital Assets, long-Term Debt

Advanced Topics for State and Local Governments

Accounting for Private Not-For-Profit Organizations

College and University Accounting

Accounting for Hospitals and Other Health Care Providers

Auditing, tax-Exempt Organizations, and Evaluating Performance

Financial Reporting by the Federal Government

Filters