Ch 20 Q and A

Ch 20 Q and A - Chapter 20 AN INTRODUCTION TO ACCOUNTING...

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Chapter 20 AN INTRODUCTION TO ACCOUNTING FOR STATE AND LOCAL GOVERNMENTAL UNITS — PROPRIETARY AND FIDUCIARY FUND Answers to Questions 1 Enterprise and internal service funds are similar in the sense that their operations are like those of similar business enterprises. They use full accrual accounting practices (including depreciation), have a capital maintenance or profit objective, are financed through user charges, and have the same financial reporting requirements. The primary difference between the two fund types is that an EF provides goods and services to citizens and customers outside the government on a user charge basis, while an ISF provides services to other departments and agencies within the same governmental unit (or occasionally to other governmental units). 2 Typical operations of internal service funds include motor pools, centralized risk financing activities, data processing services, printing shops, centralized purchasing, repair shops, and storage or warehouse operations. Internal service funds may engage in almost any kind of operations that one would find in private enterprise. 3 An EF (and also an ISF) is required to prepare a statement of net assets, a statement of revenues, expenses, and changes in net assets (or fund equity), and a statement of cash flows for fair presentation in accordance with GAAP. The governmentwide statement of net assets and statement of activities both include enterprise fund data. 4 In the fund financial statements, governments include internal service funds with the proprietary funds. They are aggregated into a single column within the proprietary fund statement of net assets, the statement
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This note was uploaded on 04/11/2011 for the course ECON 3200 taught by Professor Azevedo during the Spring '11 term at UCM.

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Ch 20 Q and A - Chapter 20 AN INTRODUCTION TO ACCOUNTING...

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