Question

Q1. The following are statements for the use of Proprietary Funds State whether the following are true or false. For the false items, explain why they are false.

​​a.​Enterprise Funds are used only when all services are provided to non-governmental entities, and Internal Service Funds are used only when all services are provided to governmental agencies that are a part of the reporting government.

​​b.​Enterprise Funds use the economic resources measurement focus and full accrual basis of accounting only when they want to compute the costs of services; otherwise, they use the current financial resources measurement focus and modified accrual basis of accounting.

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Q.2. Towry School District accepts donations that are used to provide awards to graduating seniors. Record the following transactions in the Towry Private Purpose Trust Fund - Awards Fund. Also, prepare a statement of changes in fiduciary net position for the Fund for the year ended December 31, 2013. This is the first year of operation for the Towry Private Purpose Trust Fund - Awards Fund.

​​a.​Hannah, noted philanthropist, donates marketable securities worth $600,000 to the District, stipulating that all earnings on the securities be used for awards to graduates.

​​b.​The District receives dividends on the securities in the amount of $15,000.

​​c.​The District makes various awards to graduating seniors in the amount of $20,000.

​​d.​When the District prepares financial statements at the end of the year, the marketable securities have a fair value of $590,000.

Q3. Following are December 31, 2013 trial balances (budgetary accounts excluded) for the General Fund, Debt Service Fund, and Capital Projects Fund for Hebert County.

Prepare a governmental funds balance sheet and a statement of revenues, expenditures, and changes in fund balances as of and for the year ended December 31, 2013.

The General Fund had encumbrances of $25 outstanding on December 31, 2013.

​Debits​Credits

General Fund

Cash​​​$1,900

Property taxes receivable - delinquent​330

Allowance for uncollectible property taxes​​$ 10

Accounts payable​​120

Deferred revenues​​250

Unassigned fund balance, January 1, 2013​​1,720

Revenues - property taxes​​3,200

Revenues - licenses and fees​​350

Revenues - parks admissions fees​​40

Investment income​​220

Expenditures - general government​360

Expenditures - public safety​1,800

Expenditures - public works​840

Expenditures - parks and culture​350

Transfer out to Debt Service Fund​250

Transfer out to Capital Projects Fund​ 80​____​​​Totals​​$5,910​$5,910

Debt Service Fund

Cash​​​$70

Assigned fund balance, January 1, 2013​​$60

Expenditures - bond principal​110

Expenditures - interest​130

Transfer in from General Fund​___​250

Totals​​$310​$310

Capital Projects Fund

Cash​​​$240

Expenditures - capital outlay​420

Transfer in from General Fund​​$80

Proceeds of bonds​___​580

Totals​​​​$660​$660

Answer 1

Q1 :

Answer :

a.     The statement is false.

b.    The second statement is true.

Explanation :

a.     The statement is false. This is simply because these enterprise funds are used when the government organization basically make sales of the products and services primarily to the external parties with its associated charges or fees of the services rendered and also provides all services to the general public and the internal service fund provides all services within the government organizations.

b.    The second statement is true. This is because all proprietary funds use the accrual basis of accounting. However they always measure and recognize revenues immediately they are earned and recognize expenses the time the liability and obligation is incurred. Therefore making them use the current financial resources when using this method of accounting system

Q2 :

Answer :

d.    Since it is not being sold out there is no need for showing fair value until it is liquidated.

Q3 :

Answer :