Why might it be desirable to operate enterprise funds at a profit? Like commercial businesses, operating profits are necessary to establish adequate working capital, provide for expansion of physical facilities, and retire debt.

What is an example of enterprise fund?

Some examples of enterprise funds are activities such as the food service program, the bookstore operation, the athletic stadium, or the community swimming pool. Internal Service Funds. Otherwise, the activity should be reported as an enterprise fund.

What is the purpose of enterprise funds?

An enterprise fund identifies the total direct and indirect costs to provide the service and the sources and amounts of revenues that support the service for which a fee is charged in exchange for service.

Under what circumstances is an enterprise fund required to be used?

Required to be used in three circumstances: when an activity is financed with debt that is secured solely by a pledge of the net revenues from fees and charges of the activity; when laws or regulations require that the activity’s costs of providing services be recovered with fees and charges; or when the activity’s …

What factors should be considered in determining which fund to report the trust activities?

IN DETERMINING THE APPROPRIATE FUND TO RECORD THE TRUST, IT IS IMPORTANT TO DETERMINE: (1) WHETHER THE TRUST BENEFITS THE GOVERNMENT OR ITS CITIZENRY OR (2) ALTERNATIVELY WHETHER THE TRUST BENEFITS INDIVIDUALS, PRIVATE ORGANIZATIONS OR OTHER GOVERNMENTS.

Which financial statement is required for a tax agency fund?

The statement of net position for the agency fund is prepared to report the assets and liabilities of the agency fund and to know the net position of the agency fund. Thus, the correct answer is .

What is an enterprise fund and why is it reported separately?

An enterprise fund establishes a separate accounting and financial reporting mechanism for municipal services for which a fee is charged in exchange for goods or services.

Is an enterprise fund a special revenue fund?

An enterprise fund is a fund that may be used to report any activity for which a fee is charged to external users for goods or services. Activities financed almost exclusively by user fees (utilities) are reported in the general or special revenue funds, when an enterprise fund should be used.

What are the purposes of enterprise funds and internal service funds?

The two types of proprietary funds are enterprise funds and internal service funds. An enterprise fund is used to account for any activity for which external users are charged a fee for goods and services.

Which financial statements are required for an enterprise fund?

Required governmental fund statements are a balance sheet and a statement of revenues, expenditures, and changes in fund balances. Required proprietary fund statements are a statement of net assets; a statement of revenues, expenses, and changes in fund net assets; and a statement of cash flows.

Which of the following is a distinguishing characteristic of a nonbusiness organization?

– The major distinguishing characteristics of nonbusiness organizations include: (a) receipts of significant amounts of resources from resource providers who do not expect to receive either repayment or eco- nomic benefits proportionate to resources provided, (b) operating purposes that are primarily other than to …

What are the major sources of funds for capital project and debt service funds?

In addition to debt proceeds, capital projects funds may receive grants from other governmental units, proceeds of dedicated taxes, transfers from other funds, gifts from individuals or organizations, or a combination of several of these sources.

Is a tax agency fund a fiduciary fund?

2. Financial reporting for agency funds—Agency funds, like all fiduciary funds, use full accrual basis accounting. Technically, also like all fiduciary funds, agency funds prepare a Statement of Net Position and a Statement of Changes in Net Position.

Why would a city choose an enterprise fund?

Provide Better Ability to Implement Capital Improvements – The enterprise fund will allow the department providing the service to better plan for and implement capital improvements. These needs can be forecast and integrated into the long-term financial management of the department.

What is an example of a special revenue fund?

A special revenue fund is established to finance and operate dedicated smaller-scale projects. Parks, libraries, beaches and town plazas may all be financed by special revenue funds. These projects will have their own set of books for recording cash inflows and outflows.

What are special revenue funds used for?

Special revenue funds—to account for the proceeds of specific revenue sources (other than trusts for individuals, private organizations, or other governments or for major capital projects) that are legally restricted to expenditure for specified purposes.

What are the four types of fiduciary funds?

The Statement describes four types of fiduciary funds:

• Pension (and other employee benefit) trust funds,
• Investment trust funds,
• Private-purpose trust funds, and.
• Custodial funds.

  What type of fund is an enterprise fund?

  An enterprise fund is a self-supporting government fund that sells goods and services to the public for a fee. An enterprise fund uses the same accounting framework followed by entities in the private sector, such as GAAP or IFRS.

  What is the main purpose of a non profit organization?

  The purpose of nonprofit organizations is generally to improve quality of life for others at a community, local, state, national, or even global level. These organizations are not dedicated to private or financial gain but to the advancement of public interest.

  What is a municipal enterprise fund?

  The enterprise fund establishes a separate accounting and financial reporting mechanism for a municipal service for which a fee is charged in exchange for goods or services (M.G.L. Once certified, retained earnings may be appropriated only for expenditures relating to the enterprise fund.

  What are the most common uses for private purpose funds?

  T/F One of the most common uses for Private Purpose Funds is as a clearing mechanism for recording property taxes collected by one government on behalf of other governments.