Question

1) In a recent general election, the city of Perrier citizens approved plans for the city to build a public swimming pool. The city plans to charge fees to swimmers to cover the cost of building and operating the pool and to generate resources to repair and replace equipment when needed. In what fund type should the city report its new swimming pool activities?

A) The General Fund, Because the pool was approved by the citizens

B) In an Enterprise Fund, because a fee will be charged to users

C) In a Capital Projects Fund, because fees will cover the cost of building the pool

D) In an Internal Service Fund because fees will be generated to repair and replace equipment as needed

2) Both internal service funds and enterprise funds use flexible budgets to control their activities but dont incorporate these budgets into their accounts because:

A) Both fund types have a monolopy on the services they provide

B) Encumbrance Accounting is not a good source of control

C) Flexible budgets change based on volume and are difficult to record in the accounts

D) Both fund types use “marketplace” controls instead

Answer 1

1)The city should reports it new swimming pool activities in enterprise fund because a fee will charge to users.

It cannot be General fund because it is not dundfu for specific purpose.

It cannot be Capital project funds as it is a fund to track the Financial resources used to construct a major capital assets.Once the asset has been completed fund is terminated.

It cannot be internal service fund as this fund primary provides either benefits or goods or services to other funds.

2) Both internal service fund and enterprise funds use flexible budgets to control their activities but don't incorporate these budgets into their accounts because flexible budgets change based on volume and are different to record in accounts as long term and short term planning is based on goals , objectives, various conditions that will affect the goals and objectives.