Question

A city maintains the following fund:

1) general

2) specia revenue

3) capital projects

4) Debt service

5) Enterprise

6) Internal Service

7) Permanent (trust)

8) Agency

For each of the following transactions, indicate the fund in which each transaction would most likely be recorded:

A) the city collect $3 million of taxes on behalf of the county in which it is located

B)it spend $4MIILION to pave city streets, using the proceeds of a city gasoline tax dedicated for road and highway improvemeant

C) It receives a contribution of $5milion.per the stipulation of the donor, the money is to be invested in marketable securities , and the interest from the securities is to be used to maintain a city park

D) it collects $800,000 in landing fees at the city-owned airport

E) it earns $200,000 on investment set aside to make principal payments on the city’s outstanding bonds. The Bonds were issued to finance improvements to the city’s tunnels and bridges

F) it pays $4million to a contractor for work on one of these bridges

G) it pays $80,000 in wages and salaries to police officers

H) it purchases. From an outside supplier $40,000 of stationery that it will “sell’’ to its various operating departments

Answer 1

A) Solution: Agency

Explanation: An agency fund refers to funds assemblage that one government agency do on behalf of another government agency

　

B) Solution: Special revenue

Explanation: A special revenue fund refers to money collected by a government that will be used for a specific project

　

C) Solution: Permanent (trust)

Explanation: Permanent funds are used by various state governments to use funds for different purposes

　

　

D) Solution: Enterprise

Explanation: An enterprise fund refers to a self-supporting fund of government that sells commodities as well as services to the public for a fee

　

E) Solution: Debt service

Explanation: A debt service fund refers to a cash reserve which is utilized for making payment for the interest and principal payments on specific types of debt.

　

　

F) Solution: Capital projects

Explanation: A capital projects fund is utilized by the governmental accounting to determine the financial resources used to construct and/or acquire a major capital asset

　

G) Solution: General

Explanation: General fund is utilized for recording all resource inflows and outflows which are not associated with special funds

　

H) Solution: Internal service

Explanation: An internal service fund are utilized in governmental accounting to determine the products or services shifted between departments on a cost reimbursement basis