ACC 410 WEEK 6 QUIZ 4

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CHAPTER 9

BUSINESS-TYPE ACTIVITIES

TRUE/FALSE (CHAPTER 9)

1. In both the fund statements and the government-wide statements, business-type activities and internal service funds are on a full accrual basis, and their measurement focus is on all economic resources.
2. The operating statement required as one of the three basic financial statements for proprietary funds is called the statement of revenues, expenditures, and changes in net position.
3. The amounts reported in proprietary fund statements are generally the same as those reported in the government-wide statements because both sets of statements are on a full accrual basis of accounting.
4. Governments are required to prepare a statement of cash flows for proprietary funds, but not for governmental funds.
5. GASB Statement No. 34 mandates that governments report their cash flows from operations using the indirect method.
6. The FASB mandates that entities report their cash flows from operations using the direct method.
7. Governments generally do not have to get formal legislative approval for enterprise fund budgets or incorporate them into their accounting systems.
8. In accounting for closure and postclosure landfill costs in an enterprise fund, a government does not necessarily have to “fund” the costs during the landfill’s useful life; it merely has to report both an expense and a liability for them.
9. The revenues of an internal service fund are the expenditures and expenses of other funds of that government.
10. The proprietary fund operating statement includes ALL changes in net position including capital contributions.
11. Governments must account for an activity in an enterprise fund only if local laws specifically require use of an enterprise fund.
12. Governments are not required to incorporate proprietary fund budgets into the accounting system.
13. GASB standards require that governments advance fund landfill closure and postclosure costs on an actuarial basis similar to the advance funding of pension plans.
14. The costs of cleaning up toxic substances seeping out from an abandoned county dump into the town water supply may be accounted for in either a governmental fund or an enterprise fund.
15. Internal service funds should be consolidated with other governmental funds in the government-wide statements.

Governments may choose whether to account for internal service fund activities on an accrual basis or a modified accrual basis.

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