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Proprietary Funds & Financial Statements

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I need about 200 words for each of these questions

What are the types of proprietary funds? What are they used for? How are they similar? How are they different?

Why is it necessary to reconcile government-wide financial statements with fund statements?

What is contained in the resources section of an interim financial statement? What is this section used for?

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What are the types of proprietary funds? What are they used for? How are they similar? How are they different?

Proprietary funds show the accounting for the government organizations' activities that are business-like in nature. The funds shown are usually funded through charges made by the user or on a basis that is cost refundable.

There are two types of proprietary funds: the enterprise funds and the internal service funds. The enterprise funds account for ongoing activities of organizations and a fee is charged to the external users of the goods or services. The activities need to submit documents that are going to be reported as enterprise funds in relation to the sources of the principal revenue of the activities. However, they have to meet the following criteria as a requirement:
1. The funds that are funding the activity come from a debt that is dependent upon a pledge of the net revenues coming from the charges of the activity,
2. The activity's cost of administering and providing the services, e.g., capital costs, should be recovered with charges and fees arising from the activity and not from taxes or related revenues, or
3. The fees and charges are priced in such a way that its costs, (including capital costs such as depreciation or debt service), are included.
Internal service funds accounts for the goods or services that are provided by one department to another agency of the state in which cost is done on a cost refund basis. This type of fund should be used only in cases when the state is the sole or dominant participant in the activity.

Both types use the GAAP just like the other private businesses and recover the full cost of services ...

Solution Summary

The solution is composed of more than 600 words explaining the following: proprietary funds, reconciling government-wide financial statements with fund statements, and the content of the resources section of an interim financial statement. References are included.

See Also This Related BrainMass Solution

Government and Not-for-Profit accountability in financial reporting

Most of your average governmental entities engage in three broad categories of activities/funds:

1. Governmental activities - stuff financed mostly with taxes and intergovernmental grants; these correlate with governmental funds. There are five types of these:
a. General fund - resources not restricted.
b. Special revenue funds - restricted purpose.
c. Debt service funds - payment of principal and interest.
d. Capital projects funds - for things like buildings and highways.
e. Permanent funds - corpus locked, only earnings expendable.

2. Business-type activities - stuff financed mostly with user fees; these correlate with proprietary funds. There are two types:
a. Enterprise funds - for business type activities.
b. Internal service funds - for stuff provided to different departments within the government.

3. Fiduciary activities - where the government acts as a trustee or agent for someone or something else; these correlate with fiduciary funds. There are two types:
a. Trust funds - pension trusts, investment trusts, private purpose trusts (like for an escheat fund).
b. Agency funds - For resources held for another agency on a short-term basis.

And we all know the purpose of accounting in any sector is accountability (accounting/accountability). I see a common root word).

1. There are two types of accountability that the GASB talks about - what are they and what is a brief definition?
2. Which concept applies to which of the three types of activities from the previous question?
3. Based on the preceding answer, what type of accounting does each of these use?
4. Each of those three activities requires three different sets of financial statements. What are the basic statements required for each? When listing these, please note what the for-profit equivalent is to help you with a frame of reference.
5. What is deferred revenue and how is treated depending on the type of fund reporting?
6. What is the difference between a financial statement that combines funds with one that consolidates them?
7. What are major funds and in what key ways are major funds reported differently then nonmajor funds?
8. Look at cook county, IL CAFR and tell us on what type of activities/funds your government entity reports. What type of revenues and expenses are in each?

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