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If an internal service fund is created to improve the management of resources devoted to the supply function,the supplies fund should use periodic inventory accounting instead of perpetual physical inventory accounting.

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Which of the following accounts would appropriately be included in the net assets section of an enterprise fund balance sheet?


A) Fund Balance: No; Net Assets-Unrestricted: Yes
B) Fund Balance: Yes; Net Assets-Unrestricted: No
C) Fund Balance: No; Net Assets-Unrestricted: No
D) Fund Balance: Yes: Net Assets-Unrestricted: Yes

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The balance sheet format recommended for financial statements submitted to the NARUC and FERC for utilities subject to regulatory reporting requirements displays Utility Plant before Current and Accrued Assets and Long-Term Debt before Current and Accrued Liabilities.

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Customers' meter deposits,which cannot be spent for normal operating purposes,would be classified as restricted cash in the balance sheet of which fund type?


A) Internal service.
B) Private-purpose trust fund.
C) Enterprise.
D) Special revenue.

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The water utility fund of the City of Pikesville uses cycle billing procedures.Under these procedures,the City of Pikesville will likely do which of the following on December 31,the end of its fiscal year


A) Read meters and bill all customers on December 31.
B) Accrue revenue and a receivable for the number of days from the last billing date for each customer until December 31.
C) Ignore water consumed by customers from their last billing date until December 31.
D) Call the unbilled customers and request that they read their own meters.

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Which of the following is not a typical means of dissolving an internal service fund that a city no longer needs or wants?


A) Conversion of the fund's noncash assets to cash and distribution of the cash to another fund or funds.
B) Transfer the fund's assets to another fund that will continue the same or similar operating activities.
C) Distribute the fund's assets in kind to another fund or funds that will not continue the same or similar operating activities.
D) Transfer the fund's assets to a not-for-profit organization that provides charitable services in the community.

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A municipal solid waste landfill (MSWLF) accounted for by an enterprise fund should recognize an expense and liability for the year in the amount of


A) The estimated total current costs for closure and postclosure of the MSWLF determined at the time the landfill is placed into initial operation divided by the estimated number of years the landfill will be operated.
B) The estimated total current costs for closure and postclosure of the MSWLF as reevaluated at the end of each fiscal year divided by the remaining estimated number of years the landfill will be operated.
C) A portion of the estimated total current costs for closure and postclosure of the MSWLF,determined at the time the landfill is placed into initial operation,equal to the ratio of landfill used during the year to its total capacity.
D) A portion of the estimated total current costs for closure and postclosure of the MSWLF,as reevaluated at the end of the fiscal year,equal to the ratio of landfill used during the year to its total capacity.

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On July 1,the first day of its fiscal year,Yale Township issued bonds with a face value of $1,000,000 at 102 percent of par on the date of issue.The bonds bear annual interest at 6 percent; interest is payable semiannually.The bonds will mature in equal annual installments over 20 years.Bond premium must be used for eventual bond redemption and is recorded as a restricted asset.Assuming the bonds are revenue bonds sold to finance the construction of a parking garage to be operated in a manner similar to an investor-owned business: 1)Name the type of fund in which each of the following should be recorded.(If any of the following should not be recorded at all,enter "none" on the appropriate line.) (a)The cash received for the sale of the bonds (b)The liability of $1,000,000 for bonds payable (c)The cost of the parking garage (d)Interest paid or accrued during the period of construction 2)Show in general journal form all entries that should be made to record the sale of the bonds.For each entry indicate the fund in which the entry is made.

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1)(a)Enterprise Fund.
(b)Enter...

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What are the alternative methods of dissolving an internal service fund? What factors should be considered in choosing the appropriate method?

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As Chapter 7 explains,dissolution of an ...

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The 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.
B) An enterprise fund and disclosed in the notes to the financial statements.
C) An enterprise fund and the business-like activities accounts.
D) The governmental activities accounts.

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An internal service fund normally uses which of the following budgetary accounts?


A) Estimated Revenues.
B) Appropriations.
C) Encumbrances.
D) An internal service fund normally does not use budgetary accounts.

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Which of the following funds of a government would account for depreciation in the accounts of the fund?


A) General.
B) Internal service.
C) Capital projects.
D) Special revenue.

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In the information for the Supplies Fund that follows,the account "Interfund Loan from Electric Utility Fund" should be credited for $320,000 because this amount was borrowed from and will have to be repaid by the Supplies Fund. In the information for the Supplies Fund that follows,the account Interfund Loan from Electric Utility Fund should be credited for $320,000 because this amount was borrowed from and will have to be repaid by the Supplies Fund.

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Enterprise funds for utilities often report in their operating statement an "Allowance for Funds Used During Construction (AFUDC)" for interest paid or imputed during construction of plant assets.What purposes are served by reporting AFUDC in the manner described?

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As stated in Chapter 7 separate reportin...

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Plant and equipment utilized by a governmentally owned utility should be depreciated in the same manner as if it belonged to an investor-owned utility.

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Under utility regulatory accounting principles (RAP) ,the account "Utility Plant Acquisition Adjustment" reflects


A) The 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.
B) The difference between the fair market value of the utility plant and the amount paid for it,less accumulated depreciation.
C) The difference between the amount paid for the utility plant less its current replacement cost.
D) The difference between the amount paid for the utility plant less the fair market value of its tangible plant assets.

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What amount of the following items should be accounted for in an enterprise fund? What amount of the following items should be accounted for in an enterprise fund? A) $2,100,000. B) $1,760,000. C) $1,640,000. D) $350,000.


A) $2,100,000.
B) $1,760,000.
C) $1,640,000.
D) $350,000.

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Which of the following funds of a government uses the same basis of accounting as a proprietary fund?


A) Permanent trust.
B) Investment trust fund.
C) Special revenue.
D) Capital projects.

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Which of the following is (are) an appropriate basis of accounting for an internal service fund?


A) Modified accrual basis: Yes; accrual basis: No:
B) Modified; Accrual basis: No; accrual basis: Yes
C) Modified accrual basis: Yes; accrual basis: Yes
D) Modified accrual basis: No; accrual basis: No

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"Internal service funds used for risk financing should recognize as operating revenues the full charges billed to other departments even if those charges substantially exceed the full cost of providing risk financing service." Do you agree? Why or why not?

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No.The statement is incorrect.GASB accou...

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