Proprietary Funds

Question 1

What is the purpose of the Internal Service Fund?

Answer 1

Purpose:

Established to finance and account for services and supplies provided exclusively to other departments:

The other funds are customers.

E.G:

Central Garage
Central Repair Shops
Central Computer Processing Dept.

Question 2

When are restricted grant revenues recognized?

Answer 2

Restricted grant revenues are recognized as revenue in the year monies are spent.

Question 3

What are billings for services provided called?

Answer 3

Operating Revenues

Dr: Cash (due from other fund)
Cr: Billings to other departments

Question 4

What are interest earnings called for Internal service fund?

Answer 4

Nonoperating revenues

Question 5

Do you use BAE-BAE in internal service fund?

Answer 5

BAE-BAE not used in SE-PAPI

Question 6

What are three categories of Net Position?

Answer 6

1. Restricted
2. Unrestricted
3. Net investment

Question 7

How to record following journal entries for establishing an Internal Service Fund?

1) Journal entry to record other fund contributions
2) Sale of “general obligation bonds” or capital leases
3) Journal entry to record a long-term payable to another fund

Answer 7

1) Journal entry to record other fund contributions

Dr: Cash
Cr: Interfund transfer

2) Sale of “general obligation bonds” or capital leases

Dr: Cash
Cr: Long-term bond payable

3) Journal entry to record a long-term payable to another fund

Dr: Cash
Cr: Due to other fund