Quiz
State & Local Govt - Business-type Activities
Questions in this quiz (29)
1Under utility regulatory accounting principles (RAP), the account "Utility Plant Acquisition Adjustment" reflects
- AThe difference between the amount paid for utility plant and the amount originally paid by the utility that first placed the plant into public service, less accumulated depreciation.
- BThe difference between the fair market value of the utility plant and the amount paid for it, less accumulated depreciation.
- CThe difference between the amount paid for the utility plant less its current replacement cost.
- DThe difference between the amount paid for the utility plant less the fair market value of its tangible plant assets.
2Which of the following activities or services would most likely not be accounted for by an internal service fund?
- AElectronic data processing.
- BCentral purchasing, warehousing, and issuing of supplies.
- CMunicipal golf course.
- DRisk management.
3Which of the following is not true regarding proprietary funds?
- AThe difference between assets and liabilities of proprietary funds is called "fund balance".
- BProprietary funds record long-term debt directly in the fund accounts.
- CProprietary funds record capital assets directly in the fund accounts.
- DProprietary funds present a statement of cash flows.
4To establish a new internal service fund with a transfer of funds (not to be repaid), which account would be credited in the internal service fund?
- ACash.
- BInterfund Transfer In.
- CInterfund Transfer Out.
- DEstimated Revenues.
5When a new utility customer submits a deposit, the enterprise fund journal entry will include
- AA credit to Customer Deposits.
- BA debit to Customer Deposits.
- CA debit to Sales of Water.
- DA credit to Sales of Water.
6Which of the following account balances would only be reported if a city-owned utility followed regulatory accounting principles?
- ADepreciation expense.
- BPumping expense.
- CRestricted Assets-Cash.
- DUtility Plant Acquisition Adjustments.
7Which of the following is not a true statement about the Allowance for Funds Used During Construction (AFUDC)?
- AAFUDC may have either a debt component or an equity component.
- BThe amount credited to AFUDC may exceed the amount of interest paid during the period on bonds issued for construction.
- CAFUDC may be credited for an imputed amount of interest on the utility's own funds used for construction.
- DAFUDC may include the total amount of borrowing during construction.
8The liability for general obligation bonds issued for the benefit of a governmentally owned electric utility and serviced by its earnings should be recorded in
- A An enterprise fund.
- BAn enterprise fund and disclosed in the notes to the financial statements.
- CAn enterprise fund and the business-like activities accounts.
- DThe governmental activities accounts.
9How should financial information for internal service funds be reported in the government-wide financial statements?
- AAs part of governmental activities.
- BAs part of business-type activities.
- CAmounts allocated proportionately between governmental and business-type activities.
- DUsually as part of governmental activities, unless the internal service fund predominantly serves one or more enterprise funds.
10Primarily, the operating statement of a proprietary fund should provide information useful in answering which of the following questions?
- AWhat are the transactions or events of the period that have increased or decreased the resources available for spending in the near future?
- BHave current financial resources increased or decreased during the period?
- CHave cash balances increased or decreased as a result of transactions and events of the period?
- DWhat are the transactions or events of the period that have increased or decreased the fund's total economic resources?
11Which of the following is true regarding the statement of revenues, expenses, and changes in fund net position—proprietary funds?
- AEnterprise and internal service funds identified as major funds are shown in separate columns.
- BCapital contributions are shown after the nonoperating revenues/expenses section.
- CAny special items are to be included as operating income and expenses.
- DThe statement must be divided into operating, nonoperating, and other revenues and expenses sections.
12How does an internal service fund differ from an enterprise fund?
- AAn internal service fund's primary revenue source is user charges.
- BAn internal service fund is a proprietary fund.
- CAn internal service fund's primary customers are departments of the same government.
- DAn internal service fund's focus is on the economic flow of resources.
13Which of the following is not one of the required financial statements for proprietary funds?
- AStatement of net position.
- BStatement of cash flows.
- CStatement of revenues, expenses, and changes in fund net position.
- DStatement of revenues, expenditures, and changes in fund balances.
14At the government-wide level, financial information for an internal service fund is:
- AGenerally reported in the Governmental Activities column.
- BGenerally reported in the Business-type Activities column.
- CAt management's discretion is reported in the Governmental Activities or Business-type Activities column.
- DGenerally reported in the Component Units column.
15Which of the following activities or services is least likely to be accounted for as an enterprise fund?
- AA city swimming pool.
- BThe provision of water to city residents.
- CThe provision of central purchasing and warehousing of the city's supplies.
- DA municipal golf course.
16Which of the following accounts would least likely be found in the general ledger of an internal service fund?
- AExpenditures.
- BCash.
- CBillings to Departments.
- DAccumulated Depreciation—Machinery and Equipment.
17In an internal service fund the account Billings to Departments is reported as a (an):
- ACurrent asset on the statement of net position.
- BOperating revenue.
- CInterfund loan.
- DNone of the statements are correct.
18A cash flow statement prepared under GASB standards differs from one prepared under FASB standards in which of the following ways?
- AThe GASB statement of cash flows has four categories of cash flows rather than three.
- BThe GASB statement of cash flows reports Cash and Cash Equivalents, not just Cash.
- CThe GASB statement of cash flows reports investments in the securities of other entities as cash flows from investing activities.
- DAll of the statements are correct.
19In enterprise fund accounting, restricted assets are:
- AThose that management has designated for specific purposes or functions, such as future construction.
- BThose that are designed for a limited range of uses; for example, a special purpose vehicle designed for use of personnel of an electric utility in installing power line poles.
- CThose whose use is restricted by contractual agreements or legal requirements.
- DAll of the statements are correct.
20In accounting for a municipally owned electric utility, customer deposits are reported as:
- ARevenues from Customer Deposits.
- BA restricted asset.
- CA liability payable from restricted assets or as a current liability.
- DBoth A restricted asset and A liability payable from restricted assets or as a current liability are correct.
21What is the term that represents the cost of a utility plant to the owner that first devotes the plant to public customers?
- AOriginal cost.
- BHistorical cost.
- CSunk cost.
- DPublic cost.
22If an Allowance for Funds Used During Construction (AFUDC) account is used, which of the following is true?
- AAFUDC will always have a credit balance equal to the total amount of interest paid during the period on bonds payable.
- BAFUDC may represent either actual interest on debt issued for construction or an imputed interest on the utility's own equity capital used to finance construction.
- CAFUDC is reported as a contra-asset on the utility's balance sheet.
- DAll of the statements are true.
23Net position of an enterprise fund should be reported in which of the following categories?
- AContributed capital and retained earnings.
- BUnreserved, reserved, and invested in capital assets.
- CUnrestricted, restricted, and invested in capital assets, net of related debt.
- DNet investment in capital assets; restricted; and unrestricted.
24The Fulton Municipal Golf Course, an enterprise fund, issued a long-term mortgage note to finance the construction of a new clubhouse. Issuance of the note would be reported in which section of the statement of cash flows?
- AInvesting activities.
- BNoncapital financing activities.
- CCapital and related financing activities.
- DOperating activities.
25The city's Solid Waste Disposal Fund transferred $560,000 of cash to the city's General Fund to help the General Fund cover operating expenditures. How would the transfer be reported in the Solid Waste Disposal Fund's statement of cash flows?
- AOperating activity
- BNoncapital financing activity.
- CCapital and related financing activity.
- DIt would not be reported since it involved a transfer between two funds of the same government.
26GASB standards require that pricing of goods or services provided by enterprise funds must:
- ACover at least the marginal costs of the goods or services.
- BCover at least the variable costs of the goods or services.
- CCover the full cost of providing the goods or services.
- DNone of the statements are correct.
27Bates City's municipal solid waste landfill (MSWLF) is accounted for as an enterprise fund. The estimated total closure and postclosure costs are $375,000. At the beginning of the current reporting period the landfill was estimated to be 40 percent filled and the MSWLF had recognized expenses totaling $150,000 (40 percent of $375,000). The city's sanitation engineers have estimated at the end of the current fiscal year that total closure and postclosure costs remain at $375,000 and the landfill is now 45 percent filled. The current year expense, referred to as provision for closure and postclosure costs, should be debited for:
- A$18,750.
- B$168,750.
- C$225,000.
- DSince the units of production are not provided the amount cannot be determined.
28Which of the following is not a true statement regarding segment reporting for enterprise funds?
- AA segment is an identifiable activity reported as or within an enterprise fund or an other stand-alone entity for which one or more revenue-backed debt securities are outstanding.
- BSegment reporting is not required for an activity that is reported as a major fund.
- CFull financial statements are required for each reportable segment.
- DCondensed financial statements are required for each reportable segment.
29The city operates a Risk Management Pool, an internal service fund, for self-insurance purposes. The General Fund requests payment for costs incurred for the repair of damages done to a garage as a result of a storm. How would the General Fund's request be recognized at the fund level by the Risk Management Pool?
- AIt would debit an expense account and credit Cash.
- BIt would debit Interfund Transfer Out and credit Cash.
- CIt would debit Building and credit Cash.
- DIt would not record a transaction since the activity occurred between two funds of the same government.
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