Learn Smart Chapters 7-8

Put the following in the order they would occur in the dissolution of an internal service fund. - Repayment of long-term interfund loans outstanding toggle button Repayment of long-term interfund loans outstanding - Paying outside creditors toggle button Paying outside creditors - liquidation of remaining net resources toggle button liquidation of remaining net resources

1. Paying outside creditors 2. Repayment of long-term interfund loans outstanding 3. Liquidation of remaining net resources

True or false: The "dual-track" approach is used to capture the different bases of accounting for internal service funds. True false question.

False

The entry to record the cash purchase of machinery and equipment for the Supplies fund would be recorded in which of the following? Multiple choice question. the Supplies Fund only both the Supplies Fund and the Governmental Activities the Governmental Activities general ledger

both the Supplies Fund and the Governmental Activities

Utility Plant in Service is a ______.

control account

In order to state assets and revenues correctly at year end, utilities are required to report which of the following? Multiple choice question. Accrued Utilities Revenue Customer Accounts Receivable

Accrued Utilities Revenue

Which of the following results from the fact that utilities prepare billings to customers on the basis of meter readings, but it is not practical to read all meters at year-end and bill all customers as of that time? Multiple choice question. Customer Accounts Receivable Accrued Utilities Revenue

Accrued Utilities Revenue

When Accrued Utility Revenues are recorded on December 31st, which of these statements is true? Multiple choice question. Accrued Utility Revenue is debited on January 1st for the accrued amount. Accrued Utility Revenue is credited on January 1st for the accrued amount. Sales of Water is credited on January 1st for the accrued amount. The accrued amount is ignored the following year since the revenues were already recorded.

Accrued Utility Revenue is credited on January 1st for the accrued amount.

Select all that apply Accounts commonly found in the Current Liabilities section of a statement of net position include which of the following? Multiple select question. Amounts Due to Other Funds General Obligation Bonds Customer Advances for Construction Accounts Payable

Amounts Due to Other Funds Customer Advances for Construction Accounts Payable

The Town of Madison Water Utility Fund has $2,000 due to the General Fund and $3,000 due from the General Fund. What amount will be shown in the Statement of Net Position?

Due from the General Fund of $1,000

The City of Richmond operates an internal service fund to provide repairs to all city owned and operated vehicles. The journal entry to record the purchase of supplies includes a debit to which account in the Supplies Fund? Multiple choice question. Vouchers Payable Inventory of Supplies Cash Cost of Supplies Issued

Inventory of Supplies

Select all that apply The entry to record the cash purchase of land for the Supplies fund would include a debit to which of the following accounts? Multiple select question. Land in the Supplies Fund Supplies in the General Fund Supplies in Governmental Activities Fund Land in the Governmental Activities Fund

Land in the Governmental Activities Fund Land in the Supplies Fund

Conflict can arise between managers and legislators of internal funds because they have competing ideas. Match the group of individuals on the left with their preference for the internal funds on the right. Managers Legislators Wish to exercise considerable control over funds Want the freedom to operate the fund like a business

Managers - Want the freedom to operate the fund like a business Legislators - Wish to exercise considerable control over funds

When Accrued Utility Revenues are recorded on December 31st, which of the following is true? Multiple choice question. Sales of Water is debited on January 1st for the accrued amount. Sales of Water is credited on January 1st for the accrued amount. Accrued Utility Revenue is debited on January 1st for the accrued amount. The accrued amount is ignored the following year since the revenues were already recorded.

Sales of Water is debited on January 1st for the accrued amount.

In conformance with GASB standards, on the Statement of Net Position, how are internal receivables and payables handled?

They are netted.

Select all that apply Governments must prepare which of the following fund financial statements for their major enterprise funds and for the total of their internal service funds? Multiple select question. Statement of Revenues, Expenses, and Changes in Fund Net Position Statement of Net Position Statement Changes in Shareholders' Equity Statement of Cash Flows

Statement of Revenues, Expenses, and Changes in Fund Net Position Statement of Net Position Statement of Cash Flows

Which of the following is true of proprietary fund financial statements? Multiple choice question. They are prepared according to FASB standards which are the same as the statements for business organizations. They are prepared on a cash basis both within the fund and at the government-wide level. They include the balance sheet, statement of revenues, expenses, and changes in fund net position only. They include the balance sheet, statement of revenues, expenses, and changes in fund net position, and a statement of cash flows.

They include the balance sheet, statement of revenues, expenses, and changes in fund net position, and a statement of cash flows.

Which of the following is true of proprietary funds? Multiple choice question. They are included in governmental activities on the statement of net position. They use the cash basis of accounting. They include enterprise funds and debt service funds. They operate on user charges.

They operate on user charges.

For external reporting purposes, how should internal service funds be treated?

They should be aggregated and reported as a separate column in statement of net position—proprietary funds.

How should assets acquired under a capital lease by a proprietary fund be accounted for?

They should be capitalized by that fund.

Which of the following is true of liabilities payable from restricted assets? Multiple choice question. They should be displayed separately from current liabilities. They are included with other financing uses on the statement of net position for an enterprise fund. They are not reported on the statement of net position for an enterprise fund. They are amounts owed for interfund transfers.

They should be displayed separately from current liabilities.

______ is a control account supported in whatever detail required by regulatory agencies and by management needs.

Utility Plant in Service

GASB standards require that general obligation bonds intended to be serviced from utility revenues be reported as which of the following? Multiple choice question. a capital lease a liability payable from restricted assets a special assessment a liability of the enterprise fund

a liability of the enterprise fund

Financial reporting requirements for proprietary funds are reported on the ______ basis of accounting

accrual

Proprietary funds ______.

are used to improve the management of resources

Select all that apply Examples of restricted assets include which of the following? Multiple select question. construction work in progress customer accounts receivable and accrued utilities revenue assets set aside to fund acquisition for capital improvements contributions restricted for capital acquisition

assets set aside to fund acquisition for capital improvements contributions restricted for capital acquisition

The format of the statement of net position for a proprietary fund displays which of the following? Multiple choice question. assets, plus deferred outflows of resources, less liabilities, less deferred inflows of resources, equals net position assets, plus deferred inflows of resources, less liabilities, less deferred outflows of resources, equals owners' equity assets, liabilities, and owners' equity

assets, plus deferred outflows of resources, less liabilities, less deferred inflows of resources, equals net position

How are assets acquired under a lease agreement by an internal service or enterprise fund that do not transfer ownership at the end of the term recorded?

at the initial lease lease liability plus any payments already made to the lessor plus certain indirect costs

Liabilities payable from restricted assets should ___.

be displayed separately from current liabilities

The statement of net position for a proprietary fund shows which of the following? Multiple choice question. current assets, capital assets, current liabilities, and stockholders' equity current assets, capital assets, current liabilities, and net position deferred outflows of resources included with current assets deferred inflows of resources included with current liabilities

current assets, capital assets, current liabilities, and net position

If customer advances for construction are to be refunded, they are classified as which of the following? Multiple choice question. current liabilities other financing sources liabilities payable from restricted assets accrued expenses

current liabilities

Select all that apply When liquidation is needed for an internal service fund, it can be accomplished by which of the following? Multiple select question. selling the fund's assets and maintaining a separate internal service fund liquidation account distributing the fund assets to another fund or another government converting all noncash assets into cash and distributing the cash to another fund transferring the fund's assets to another fund that will continue the operations as a subsidiary activity

distributing the fund assets to another fund or another government converting all noncash assets into cash and distributing the cash to another fund transferring the fund's assets to another fund that will continue the operations as a subsidiary activity

A(n) ______ fund is used by governments to account for services provided to the general public on a user charge basis.

enterprise

Fiduciary activities are ______.

excluded from government-wide financial statements and reported in fund financial statements

Internal balances are reported in the government-wide statement of net position ______.

for purposes of fairly representing each reporting entity

Utility bonds that are intended to be serviced from utility revenues but carry the pledge of the government entity's full faith and credit are technically ______ bonds.

general obligation

Net investment in capital assets is calculated as which of the following? Multiple choice question. gross capital assets net of accumulated depreciation, less any outstanding debt related to the acquisition or construction of capital assets gross capital assets net of accumulated depreciation, plus any outstanding debt related to the acquisition or construction of capital assets the amount left over after identifying restricted net position the total of gross capital assets net of accumulated depreciation

gross capital assets net of accumulated depreciation, less any outstanding debt related to the acquisition or construction of capital assets

In the government-wide statement of net position and statement of activities, how should internal service fund financial information generally be reported?

in the Governmental Activities column

The City of Richmond operates an internal service fund to provide repairs to all city owned and operated vehicles. The journal entry to record the purchase of supplies includes a debit to Inventory of Supplies ______.

in the internal service fund and governmental activities general ledgers

GASB standards require that interfund receivables and payables between governmental and business-types activities are presented as ______.

internal balances

To ensure that any double counting of revenues and expenses does not occur, GASB standards require the elimination of the effect of transactions between governmental funds and ______ funds.

internal service

Select all that apply Under GASB standards, a government must report activities in an enterprise fund if which of the following criteria are met? Multiple select question. the activity is subsidized by the government's general fund laws require that the activity's costs are recovered with fees and charges rather than with taxes or similar revenues pricing policies are designed to recover the costs of the activity, including capital costs the activity is financed with debt from fees and charges of an activity in addition to grants from other governments the activity is financed with debt issued that is backed by the full faith and credit of the government

laws require that the activity's costs are recovered with fees and charges rather than with taxes or similar revenues pricing policies are designed to recover the costs of the activity, including capital costs

Conflict between managers and legislators of internal funds arise due to which of the following? Multiple choice question. legislators wanting to treat the fund like a business and managers wanting to maintain control over the funds managers wanting to treat the fund like a business and legislators wanting to maintain control over the funds

managers wanting to treat the fund like a business and legislators wanting to maintain control over the funds

Net position is divided into which of the following components? Multiple choice question. net investment in capital assets, restricted, and unrestricted deferred inflow of resources and deferred outflow of resources restricted (separated into major categories) and unrestricted net position restricted, unrestricted, deferred inflow of resources, and deferred outflow of resources

net investment in capital assets, restricted, and unrestricted

Under regulatory reporting, Utility Plant in Service is stated at what amount?

original cost

Select all that apply Costs of Municipal Solid Waste Landfills include which of the following? Multiple select question. post closure maintenance and monitoring for a period of 50 years after closure post closure maintenance and monitoring for a period of 30 years after closure equipment and facilities post closure maintenance and monitoring for a period of 20 years after closure

post closure maintenance and monitoring for a period of 30 years after closure equipment and facilities

Select all that apply Other Property and Investments may include which of the following? Multiple select question. property being held for future use restricted assets property currently being used for utility purposes

property being held for future use restricted assets

The GASB defines a(n) ______ as an identifiable activity or group of activities within an enterprise fund.

segment

Governments must prepare ______ for their major enterprise funds and for the total of their internal service funds.

three fund financial statements