Leah Pasternak

Government & Not for Profit ACC410

Chapter 9: Business-Type Activities and Internal Services- Homework Submission

9-2

1. A
2. A
3. A
4. B
5. A
6. D
7. A
8. C
9. D
10. D

9-5

Cash $10,000,000
Insurance Premiums $10,000,000

Insurance Claims $8,000,000
Cash $8,000,000

9-6

1.
Internal Service Fund General Fund
a. $19,000,000 $0
b. 4,000,000 4,000,000
c. 24,000,000 24,000,000
d. 13,000,000 13,000,000
e. 24,000,000 0
f. 3,000,000 0
g. 1,000,000 1,000,000
h. 14,000,000 14,000,000
i. 0 0

2. $16,000,000

3. Option 1 would be a consolidated total of $37,000,000 and option 2 would be reported separately as
$24,000,000 and $13,000,000.

4. The funds are reported as 0 because the expense of one fund would be reported as revenue of
another fund in the government-wide statements. It does not matter whether the accounting for the
repair shop is reported under the general fund or the internal services fund.

9-8

1. Support services could include the supply store, insurance and/or maintenance.

2. The deficit in the unrestricted net assets has great importance, because this is indicative of the
inefficiencies within the department. Since most governments have long-term liabilities the proper
application of accounting principles is very important to look in to since these things are usually funded
on a pay as you go basis.

3. The deficit in the internal service fund decreases the net assets of the general fund.

4. I would recommend that resources be transferred from the general fund to the internal services fund
by increasing billing rates in the internal service fund.

5. The revenues and expenses of the internal service fund are reported as operating or non operating
revenues and expenses in the government wide statements. It is required by GASB 34 that inter fund
activity in the fund financial statement be eliminated.

6a. The general funds net change in fund balance would be $163,191.
b. The depreciation expenses would not be reported as general fund expenditures.
c. The accumulated depreciation and the bonds payable would not be reported as general fund assets
and liabilities.

9-10

1.

2.

3.