Gov SB 6

If an internal service fund has significant positive operating income, ______. -assets will be effectively shifted from the internal service fund to the general fund -a portion of the General Fund fund balance is shifted to the internal service fund -the expenditures in the General Fund will exceed the cost of providing the service

-a portion of the General Fund fund balance is shifted to the internal service fund -the expenditures in the General Fund will exceed the cost of providing the service

Select all that apply Enterprise funds ______. -do not record depreciation -include capital assets and long-term debt -are reported using the economic resource measurement focus -use the modified accrual basis of accounting

-include capital assets and long-term debt -are reported using the economic resource measurement focus

Select all that apply Net Position for a proprietary fund ______ -includes Retained Earnings -includes Net Investment in Capital Assets -is classified within five categories -has both a Restricted and Unrestricted category

-includes Net Investment in Capital Assets -has both a Restricted and Unrestricted category

Select all that apply Enterprise funds ______. -need operating profits for working capital, expansion, and debt retirement -may not be established with the intent to operate at a significant profit -may use profits to support general government expenditures

-need operating profits for working capital, expansion, and debt retirement -may use profits to support general government expenditures

The excess of assets over liabilities of proprietary funds is called _____ _______.

Net Position

For an internal service fund, any residual fund balance is recorded in _____ _____ _____.

Unrestricted Net Position

To demonstrate that fund management has realistic plans to generate revenue and cover expenses, internal service funds should prepare a(n) ____ but not record it in the accounts.

budget

It is typically desirable for ______ funds to operate at a profit. enterprise both enterprise and internal service neither enterprise nor internal service internal service

enterprise

True or false: GASB standards do not require budget-actual reporting for proprietary funds.

true

Uncollectible balances of accounts receivables for enterprise funds should be ______. -written off to Allowance for Uncollectible Accounts -treated as a reduction in total revenue -recorded as an expense at the time of the write off

written off to Allowance for Uncollectible Accounts

Impact fees that are not associated with specific projects or improvements are credited to the ______ _______ account.

Capital Contributions

Instead of Sales, internal service funds typically account for operating revenue in an account titled ______ for ______.

Charges for Services

Because proprietary funds use the accrual basis of accounting, when governments need guidance on accounting treatment for topics such as contingencies and extraordinary items, they rely on ______ standards. GAO GASB FASB AICPA

FASB

True or false: In recent years, governments have been turning away from self-insurance for risk financing.

False

Select all that apply Which of the following statements regarding pollution remediation costs related to landfills and other waste storage sites are correct? -Note disclosure is required regarding responsibility and estimated costs. -GASB requires governments to accrue the cost as a liability in the basic financial statements. -Costs must always be accrued in an enterprise fund using accrual accounting. -State and local governments can only be held responsible for cleaning up sites they operated.

Note disclosure is required regarding responsibility and estimated costs. GASB requires governments to accrue the cost as a liability in the basic financial statements.

What category of funds charge users enough to at least cover the cost of providing the good or service? Fiduciary Proprietary General Special Revenue

Proprietary

Which of the following financial statements is NOT required for proprietary funds? Statement of Cash Flows Statement of Retained Earnings Statement of Revenues, Expenses and Changes in Net Fund Position Statement of Net Position

Statement of Retained Earnings

The original allocation of resources to an internal service fund often comes from another fund in the form of a(n) _____ or _____.

advance, transfer

A recent GASB standard establishes reporting of _____ _____ obligations for items such as shutting down sewer treatment facilities.

asset retirement

Select all that apply Fund equity categories for proprietary funds do NOT include ______. assigned net investment in capital assets unassigned unrestricted committed restricted

assigned unassigned committed

When supplies are transferred from internal service funds to other funds, ______. -only operating revenue is recorded -only an operating expense is recorded -no operating revenue or expense is recorded because the transfer is made at cost -both an operating expense and revenue is recorded

both an operating expense and revenue is recorded

Materials and supplies issued for use in construction projects are ______. capitalized temporarily expensed as incurred recorded directly to the asset account

capitalized temporarily

When a landfill is closed, closure and postclosure accounts are ______. -charged to the accrued liability account -written off and expenses -capitalized over a period of not more than the total years of operation

charged to the accrued liability account

The performance of a governmental enterprise fund can be evaluated by the same criteria used to evaluate ______. fiduciary funds special revenue funds enterprise funds of other governments commercial businesses in the same industry

commercial businesses in the same industry

When an internal service fund acquires depreciable assets, ______. -depreciation is usually calculated using the straight-line method -no depreciation is recorded because governmental units do not pay taxes

depreciation is usually calculated using the straight-line method

Enterprise funds ______ maintain Allowance for Uncollectible accounts. do do not

do

GASB ______ require the use of internal service funds. do do not

do not

GASB standards require financial statements prepared on the _____ _______ measurement focus to reflect asset retirement obligations on the Statement of Net Position.

economic resource

Public utilities, lotteries, and public housing projects are all accounted for using _____ funds.

enterprise

Services provided to the public are accounted for in the ______ type of proprietary fund.

enterprise

When preparing financial statements, ______. -internal service funds are reported by major fund and enterprise funds are combined into a single column -both enterprise funds and internal service funds are combined into a single column -enterprise funds are reported by major fund and internal service funds are combined into a single column -both enterprise funds and internal service funds are reported by major fund

enterprise funds are reported by major fund and internal service funds are combined into a single column

Proprietary funds record revenues and ____ using the _____ basis of accounting.

expenses, accrual

Select all that apply Which of the following are shown separately on the The Statement of Revenues, Expenses, and Changes in Fund Net Position after nonoperating revenues and expenses? extraordinary items capital contributions advances from other funds special items

extraordinary items capital contributions special items

True or false: GASB does not require the use of enterprise funds for any government services.

false

True or false: Organizations that use perpetual inventory records must periodically adjust revenue for shortages, overages, and out-of-condition stock disclosed by physical inventories.

false

True or false: Under the Superfund Act, responsibility for pollution remediation costs related to landfills and other waste storage sites rests solely with current and past owners.

false

If a landfill is operated as a(n) _____ fund, modified accrual principals apply and the fund _____ and liability for future costs is limited to the amount to be paid with available financial resources.

governmental, expenditure

To pay for capital improvements such as increased water and sewer facilities needed for new developments, governments commonly impose ______ _______ on developers or builders.

impact fees

Duplicate recording of costs, over- or understatement of government expenditures, and lack of comparability between governments are all potential issues when ______ funds are used. enterprise internal service both enterprise and internal service

internal service

Proprietary funds are classified as either _____ ______ funds or _____ funds.

internal service, enterprise

Select all that apply Under GASB, The Statement of Revenues, Expenses, and Changes in Fund Net Position ______. -must use the all-inclusive format -must display operating income -must report operating expenses by object classification -separates operating and nonoperating revenues and expenses

must use the all-inclusive format must display operating income separates operating and nonoperating revenues and expenses

Under GASB, transfers to and from other funds are reported on the Statement of Cash Flows as _______ ________ activities.

noncapital financing

Capital leases and assets developers contribute to governments are reported as ______ items in a statement of cash flows.

noncash

When internal service funds issue supplies or render services to another department of the government, it is recorded as ______. operating revenue a non-revenue exchange transaction an internal transfer

operating revenue

Under GASB, budget-actual reporting is ______ for proprietary funds. optional required

optional

Records must be adjusted periodically to reflect shortages, overages, and out-of-stock conditions when an organization keeps inventory records using the ______ method.

perpetual

Internal service funds should ______. prepare a budget but not record it in the accounts prepare a budget and record it in the accounts not prepare budgets

prepare a budget but not record it in the accounts

Funds used to account for activities similar to those engaged in by commercial businesses are called ____ funds.

proprietary

A centralized supplies internal service fund record supplies when ______. purchased as inventory ordered as encumbrances purchased as an expense

purchased as inventory

The City of Valley Ridge has an internal service fund that purchased a building for $400,000, of which $75,000 is considered the cost of the land. The city should ______. -record $325,000 for the building and $75,000 for the land -record the entire $400,000 as an expenditure -record the entire $400,000 as the cost of the building -not record the purchase in the internal service fund

record $325,000 for the building and $75,000 for the land

When an internal service fund transfers supplies to the General Fund, revenue is ______. never recorded recorded when the cash is received recorded at the time of transfer

recorded at the time of transfer

An allowance for uncollectible accounts ______ for an enterprise fund. increases expenses reduces revenue is not recorded

reduces revenue

Consistent with guidance provided by a GASB, the bad debt provision for an enterprise fund ______. increases expenses reduces revenue

reduces revenue

In most cases, internal service funds will not have_____ Net Position.

restricted

When impact fees are restricted to a specific project the cash is reported as a(n) _____ ______.

restricted asset

Net position (fund equity) for propriety funds is reported in three categories: net investment in capital assets, ______ , and ______.

restricted, unrestricted

Bonds that are payable solely from the revenue of the enterprise and are recorded directly in the accounts of the enterprise fund are called ____ bonds.

revenue

If a government self-insures risk financing activities and decides to use a single fund to accumulate funds and make payments for claims, it must use ______. an internal service or enterprise fund type the General Fund the General Fund or an internal service fund type an internal service fund type

the General Fund or an internal service fund type

To compute Net Investment in Capital Assets, capital assets are decreased by accumulated depreciation and ______. -any transfers received from other government funds used to purchase capital assets -debt associated with the acquisition of the assets and any transfers received from other government funds used to purchase assets -the balance of debt associated with the acquisition of the assets

the balance of debt associated with the acquisition of the assets

Internal service supplies funds account for inventory using ______ inventory system. either the periodic or perpetual the perpetual the periodic

the perpetual

When long-term assets are purchased for internal service funds ______. -they are recorded in the General Fund, not the propriety fund -they are treated as expenditures -they are all recorded and depreciated as applicable -only machinery and equipment are recorded, not land or buildings

they are all recorded and depreciated as applicable

The difference between a transfer and an advance is ______. -whether or not the money has to be repaid -whether the money came from another governmental fund or from an external source -the length of time before the money has to be repaid

whether or not the money has to be repaid Transfer not repaid, advance is

Uncollectible balances of accounts receivables for enterprise funds should be ______. written off to Allowance for Uncollectible Accounts treated as a reduction in total revenue recorded as an expense at the time of the write off

written off to Allowance for Uncollectible Accounts

The City of Valley Ridge billed nongovernmental customers $160,000 and the General Fund $65,000 for water services. The amount of revenue to be recognized when payment is received is ______. $65,000 $225,000 $160,000 $0

$0

The City of Valley Ridge's internal service fund acquired some office equipment at a cost of $28,000. If the equipment has no salvage value and is expected to last 4 years, the annual depreciation expense to be recorded is $_______.

$7,000

The City of Valley Ridge operates a landfill as an enterprise fund. Total estimated closure and postclosure costs are $20 million and the total estimated capacity of the landfill is 80 million tons. If the city accepts 3 million tons in 2020, the charge to operating expenses should be $

$750,000

Select all that apply Which of the following statements regarding enterprise funds are true? -Debt service of a governmental enterprise is accounted for within a special debt service fund. -Construction activities of a governmental enterprise are accounted for within the enterprise fund. -Budgetary accounts are always used for enterprise funds. -The reports of enterprise funds are self-contained.

-Construction activities of a governmental enterprise are accounted for within the enterprise fund. -The reports of enterprise funds are self-contained.

Select all that apply Which of the following statements are correct? -The use of internal service funds enhances comparison between governments. -Internal service funds were a major consideration in the GASB design of government-wide statements. -Government-wide statements resolve many lack of comparability issues between governments. -GASB standards require the use of internal service funds for some governmental activities.

-Internal service funds were a major consideration in the GASB design of government-wide statements. -Government-wide statements resolve many lack of comparability issues between governments.

Select all that apply If a landfill is operated as an enterprise fund ______. -accrual accounting is used to account for estimated future costs -the liability will only be reflected in the government-wide financial statements -entries for future costs are entered directly into the fund -modified accrual principles apply to estimated future costs

-accrual accounting is used to account for estimated future costs -entries for future costs are entered directly into the fund

Select all that apply If an internal service fund has significant negative operating income, ______. -assets will be effectively shifted from the internal service fund to the general fund -a portion of the General Fund fund balance is shifted to the internal service fund -the expenditures in the General Fund will understate the cost of providing the service

-assets will be effectively shifted from the internal service fund to the general fund -the expenditures in the General Fund will understate the cost of providing the service

Select all that apply Construction Work in Progress ______. -is subject to depreciation -includes interest on construction bonds -can include payroll costs -includes materials and supplies

-can include payroll costs -includes materials and supplies

Select all that apply When an internal service fund is used to account for a government that is self-insured, ______. -payments by contributing funds in excess of break-even are recorded as advances -charges should be based on a long-range plan to break even -material deficits must be made up immediately and disclosed in notes to the financial statements -claims are treated as operating expenses of the internal service fund

-charges should be based on a long-range plan to break even -claims are treated as operating expenses of the internal service fund

Select all that apply Examples of noncash activities reported on the statement of cash flows include ______. contributed capital assets operating leases capital leases

-contributed capital assets -capital leases

Select all that apply Under GASB, the use of enterprise funds is required when ______. -a government unit provides goods or services on account to another government unit -debt is backed solely by fees and charges -a legal requirement exists that the costs of providing services for an activity be recovered through fees or charges -a government has a policy to establish fees and charges to cover the cost of an activity's services

-debt is backed solely by fees and charges -a legal requirement exists that the costs of providing services for an activity be recovered through fees or charges -a government has a policy to establish fees and charges to cover the cost of an activity's services

Select all that apply GASB requires the estimated future costs for a landfill site after closing be ______. expensed using the straight-line method over 30 years measured in estimated future costs expensed using the units-of-production method measured in current costs

-expensed using the units-of-production method -measured in current costs

Select all that apply General obligation bonds ______. -pledge the full faith and credit of the government -may be issued for governmental enterprises -are always recorded directly in the accounts of enterprise funds

-pledge the full faith and credit of the government -may be issued for governmental enterprises

Select all that apply Enterprise funds ______. -record revenue when customers are billed for services -do not record revenue until payments for services are received -do not record budgets -only record revenues from nongovernmental customers

-record revenue when customers are billed for services -do not record budgets

Select all that apply When using an internal service self-insurance fund, interfund premiums are recognized as a(n) ______. -revenue to the internal service fund -expense to the internal service fund -revenue to the contributing fund -expenditure or expense to the contributing fund

-revenue to the internal service fund -expenditure or expense to the contributing fund

Select all that apply If an internal service fund has significant negative operating income, ______. -a portion of the General Fund fund balance is shifted to the internal service fund -the expenditures in the General Fund will understate the cost of providing the service -assets will be effectively shifted from the internal service fund to the general fund

-the expenditures in the General Fund will understate the cost of providing the service -assets will be effectively shifted from the internal service fund to the general fund

Select all that apply Differences between the GASB and FASB requirements for the statement of cash flows include ______. the required reconciliations the number of categories that are presented how cash flows from payments to suppliers and employees are treated how cash flows from the acquisition of capital assets are treated

-the required reconciliations -the number of categories that are presented -how cash flows from the acquisition of capital assets are treated

Select all that apply Proprietary funds ______. -do not record capital assets used in fund operations -use the economic resources measurement focus -use the accrual basis of accounting -record long-term debt serviced from fund revenues

-use the economic resources measurement focus -use the accrual basis of accounting -record long-term debt serviced from fund revenues