Question

In order to get a good rating, please explain how you arrived at each answer. Thank you.

EX. 9-1

Select the best answer.

1. What basis of accounting do enterprise and internal service funds use?

Enterprise                          Internal Service

1. Modified accrual Modified accrual
2. Modified accrual Full accrual
3. Full accrual                        Modified accrual
4. Full accrual                        Full accrual

2. Which of the following is not a GASB-required statement for proprietary funds?

1. Statement of net position
2. Statement of revenues, expenses, and changes in fund net position
3. Statement of cash flows
4. Statement of changes in fund net position

3. A government need not necessarily account for an activity in an enterprise fund even though it

1. Charges fees for the activity and those fees are material in amount
2. Finances the activity solely with revenue debt
3. Is required by law or policy to recover the cost of the activity by fees
4. Opts to establish pricing policies to recover its costs, including capital costs

4. Tap fees, to the extent that they do not exceed the cost of hooking customers into the utility, should be accounted for as

1. Capital contributions
2. Ordinary revenues
3. A combination of capital contributions and ordinary revenues
4. Extraordinary items

5. Tap fees, a portion of which, exceed the cost of hooking customers into the utility, should be accounted for as

1. Capital contributions
2. Ordinary revenues
3. A combination of capital contributions and ordinary revenues
4. Extraordinary items

6. Landfill closure and postclosure costs should be recognized as expenses

1. In the periods incurred
2. In the period that the landfill is closed
3. In the periods that the landfill is in operation
4. In the period in which the landfill is opened

7. Which of the following would not be included in the computation of the amount to be recognized as a landfill closure expense?

1. The total estimated closure costs
2. The capacity of the landfill
3. The proportion of capacity used in prior years
4. An appropriate discount rate

8. A city maintains a staff of internal auditors. It may properly account for its internal audit costs in an internal service fund only if

1. It is required to do so by state or city statutes or regulations
2. The internal audit activity is carried out in a discrete organizational unit
3. It charges a fee to the city departments for which it provides service
4. A GASB pronouncement specifies that internal audit activity is eligible for internal service fund accounting

9. A government accounts for its self-insurance activities in an internal service fund. Per GASB guidelines, the premiums charged to other funds

1. Must, in total and over time, cover the actual losses incurred by the fund
2. Cannot include a provision for catastrophic losses
3. Must be competitive with what an independent insurer would charge
4. Must be at least as great as the losses incurred each year

10. If a government accounts for self-insurance activities in its general fund, then premiums charged in excess of actual claims should be accounted for as

1. Ordinary revenues
2. An offset against claims expenditures
3. An increase in claims reserves
4. A nonreciprocal transfer-in

Answer 1

Dear Student,

As per the HomeworkLib policy, only the first four questions should be answered. kindly take note of it.

1. Answer is option D Full accrual Full accrual

Enterprise- full accrual

Internal Service- full accrual

As a proprietary fund, an enterprise and internal service fund use accrual accounting along with the total economic resources measurement focus. Therefore, income is recognized when earned and expenses are recognized when incurred.

2. Answer is option D Statement of changes in fund net position

According to Statement No. 9, the statement of cash flows is needed instead of statement of changes in net position.

3. Answer is option A Charges fees for the activity and those fees are material in amount

Because if enterprise fund does not meet the conditons stated in the GASBS 34, it will be not be included.

4. Answer is option B Ordinary revenues

As no capital contribution is required in this case, it will be treated as ordinary revenues. If it exceeds, then it will be referred as the combination of capital contributions and ordinary revenues