Professional Documents
Culture Documents
Internal Service Fund
Internal Service Fund
7
Accounting for the Business-
Type Activities of State and
Local Governments
McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
7-2
Learning Objectives (Cont’d)
7-3
Proprietary Funds
7-4
Proprietary Funds
Accounting Equation
7-5
Proprietary Funds—
Accounting Characteristics
7-6
Proprietary Funds—
Required Financial Statements
Similar to those of a
for-profit entity:
Statement of net assets
(or balance sheet)
Statement of revenues,
expenses, and changes
in fund net assets
(operating statement)
Statement of cash flows
(differs under GASB)
7-7
Proprietary Funds—
Statement of Net Assets
A classified statement is prepared, with current assets
shown in the order of liquidity
Net assets are divided into three categories
Invested in capital assets, net of related debt—
calculated as the value of net capital assets less any
outstanding debt related to capital asset acquisitions or
construction
Restricted—restrictions are placed on asset use by
external parties through contracts, legal requirements,
or donor stipulation
Unrestricted—the residual after adjusting for the
preceding two net asset categories
7-8
Proprietary Funds—
Operating Statement
7-9
Proprietary Funds—
Statement of Cash Flows
7-10
Proprietary Funds—
Statement of Cash Flows (Cont’d)
Used
When authorized by legislative approval
To account for provision of goods and services to
departments of the same government—generally
on a cost reimbursement basis
To improve management of common resources by
placing them under centralized management and
control
7-12
Common Types of Internal Service Funds
Motor pools
Central purchasing
Storage
Issuance of supplies
Self-insurance pools
Central data processing
Printing
7-13
Internal Service Funds—
Pricing Policies
7-14
Internal Service Funds—
Pricing Policies (Cont’d)
7-15
Internal Service Funds—
Accounting Procedures
7-16
Internal Service Funds—
Financial Statements
7-17
Internal Service Funds—
External Reporting
7-19
Internal Service Fund—
Dissolving a Fund
7-20
Enterprise Funds
7-21
Enterprise Funds
7-22
Common Types of Enterprise Funds
7-24
Enterprise Funds—
Restricted Assets
Liabilities Payable
from Restricted Assets
Restricted Assets = + Net Assets, Restricted
for Payment of Debt
Service
From Illustration
7-5
$562,600 = $23,700 + $538,900
7-26
Enterprise Funds—
Utility Plant—Construction in Progress
7-27
Enterprise Funds—Utility Plant—
Construction in Progress (Cont’d)
7-28
Enterprise Funds—
Special Current Liabilities
7-29
Enterprise Funds—
Long-term Liabilities
7-30
Enterprise Funds—
Illustrative Transactions
7-31
Enterprise Funds—
Regulatory Accounting Principles (RAP)
7-32
Enterprise Funds—
RAP (Cont’d)
7-34
Municipal Solid Waste Landfills
(MSWLF)
7-36
Enterprise Funds—
Segment Information
END
7-38