Proprietary Funds Financial Statements Flashcards
What is an internal service fund?
it is established to finance and account for services and supplies provided exclusively to other departments within a government unit or to other governmental units, typically on a cost-reimbursement basis (ex. central garages and motor pools, central repair shops, self-insurance, etc.)
restricted grant revenues, if any, would be recognized as revenues in the year monies are spent
operating revenues, or billings for services provided, are recognized when earned
even though billing and collection for services is between funds, the transaction is not treated as an interfund transfer; the internal service fund records revenues, and the fund paying for services records an expenditure or expense in an equal amount
nonoperating revenues, such as interest earnings, are segregated from operating revenues for financial statement display
normal and customary operating expenses related to the delivery of services appear in the internal service funds
nonoperating expenses, such as interest expense, are segregated from operating expenses for financial statement display
internal service funds may be established by contributions from other funds or interfund transfers from other funds, such as the general fund or an enterprise fund
sale of “general obligation bonds” or (most likely) lease obligations representing contracts that transfer ownership
long-term advances from other funds to be repaid from the earnings to the service (revolving) fund
What is an enterprise fund?
it is used to account for operations that are financed and operated in a manner similar to private business enterprise; activities are required to be reported as enterprise funds if any one of the following criteria are met:
the activity is financed with debt that is secured solely by a pledge of the net revenue from fees and charges
laws and regulations require that the cost of providing services be recovered through fees
the pricing policies of the activity establish fees and charges designed to recover its costs
revenues for enterprise (and all proprietary funds) must be presented by a major source and distinguished between operating and nonoperating; classification of transactions as operating or not should be consistent with transaction classification in the statement of cash flows
operating revenues (and operating expenses) are defined by the main purposes of the fund
nonoperating revenues are earnings or non-exchange transactions (such as taxes and certain fees and charges) and interest
shared revenues are revenues collected by one government (state) and shared on a predetermined basis with another government (local); they are nonoperating revenues of the enterprise fund
operating expenses are generally classified by object, to include such major categories as personal services, utilities, and depreciation
nonoperating expenses most commonly include interest expense
capital assets contributed to proprietary funds by governmental funds are recorded as capital contributions; these capital contributions are not classified as transfers
equity transfers from other funds would be recorded as interfund transfers
the enterprise fund will carry long-term debt, which is backed by the proprietary fund or paid with revenues
Municipal landfills (the dump) aka municipal solid waste landfill (MSWLF)
the estimated total current cost of MSWLF closure and postclosure care, based on applicable federal, state, or local laws/regulations, should include the:
cost of equipment expected to be installed and facilities expected to be constructed near or after the date that the MSWLF stops accepting solid waste and during the postclosure period; this equipment should be limited to items that, once installed or constructed, will be exclusively used for the MSWLF
cost of a gas monitoring and collection system
cost of final cover (capping) expected to be applied near or after the date that the MSWLF stops accepting solid waste
this estimate should be adjusted annually; under proprietary fund reporting, a portion of this estimated cost is recognized as an expense and as a liability, based on usage, each period the MSWLF is operating; all costs are recognized as of the date of closure
purchases of equipment anticipated by the liability accrual reduce the liability and do not increase assets
