Question

Question A: What do you think are the unique issues and consequences arising when a government, as opposed to a business, declares bankruptcy?

Question B: Enterprise funds are reported differently than are internal service funds in the proprietary fund statements of net position, and in the statements of revenues, expenses and changes in net position. Explain why and justify.

Answer 1

Question A: What do you think are the unique issues and consequences arising when a government, as opposed to a business, declares bankruptcy?

• Instutions like IMF will come to bail out the country by giving them the moneatry assisstance
• Public outage will grip the country.
• Life long earnings of the people invested into government bonds considering them to be the safest would be lost
• Much of the administration would move into the hands of either military or the the wealthiest of the persons in the country

Enterprise funds are reported differently than are internal service funds in the proprietary fund statements of net position, and in the statements of revenues, expenses and changes in net position. Explain why and justify.

In government-wide statements, enterprise funds are classified as business-type activities, whereas internal service funds are generally classified as governmental activities. That is, any of the assets and liabilities of the internal service funds that are not eliminated in the consolidation process are included in the column for governmental activities. Moreover, the expenses of internal service funds are "charged-back" to the funds to which the internal service funds provided services. The rationale for the difference is that internal service funds provide services mainly to governmental funds whereas enterprise funds provide services mainly to parties external to the government.