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Questions and Answers
Enterprise funds are intended to cover their full cost of operation through user charges.
True
Internal service funds are primarily created to provide goods and services to the general public.
False
Internal Service Funds provide goods or services to the general public on a cost-reimbursement basis.
False
Enterprise Funds mainly serve other departments or agencies of the government.
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Agency funds are used to account for assets held by a government for its own use.
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Proprietary funds of a government use cash-basis accounting principles.
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Enterprise Funds and Internal Service Funds differ primarily in terms of the sources of their funding.
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Fiduciary funds always follow cash basis accounting principles.
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The governing body decides when to use Enterprise Funds based on capital maintenance needs only.
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Private-purpose trust funds are a type of fiduciary fund.
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Accrual accounting is not necessary for governments in determining the full cost of providing business-type services.
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Investment trust funds generally hold cash on a custodial basis for the government itself.
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Expenditures in governmental fund accounting reflect the cost of goods or services used during a period.
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Transfers of resources among funds should be recorded only when cash has been remitted from one fund to another fund.
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Budget is a plan of financial operation that includes actual expenditures for a given period.
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Proprietary fund accounting focuses on expenses which include costs expired during a period.
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Long-term debt principal retirement expenditures are considered as expenses in governmental fund accounting.
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The accounting system is not required to support appropriate budgetary control according to the text provided.
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In agency funds, total assets always equal total liabilities.
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Trust funds and agency funds are similar in how resources are held and managed.
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Trust fund assets do not include investments.
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Pension trust funds are an example of private-purpose trust funds.
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Investment trust funds are used to account for the assets and liabilities of other governments.
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Private-purpose trust funds can be established to provide scholarships for specific groups of individuals.
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Capital assets should be depreciated over their estimated useful lives, unless they are either inexhaustible or are infrastructure assets.
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Depreciation expense should be reported only in the government-wide statement of activities.
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Donated capital assets should not be reported at their estimated fair value at the time of acquisition.
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Long-term liabilities should not be distinguished between fund long-term liabilities and general long-term liabilities.
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The government-wide financial statements should be prepared using the cash basis of accounting.
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Revenues resulting from exchange transactions should be recognized when the exchange takes place.
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