What are enterprise funds in governmental accounting?
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.
Is an enterprise fund a proprietary fund?
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.
What is an enterprise fund and why is it reported separately?
An enterprise fund is a separate accounting and financial reporting mechanism for which revenues and expenditures are segregated into a fund with financial statements separate from all other governmental activities.
What are the 5 governmental funds?
According to the GAAFR (the Blue Book), governmental funds are “used to account for activities primarily supported by taxes, grants, and similar revenue sources.” Within the category of Governmental Funds, there are five types: General Fund, special revenue funds, debt service funds, capital projects funds, and …
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.
Why do governments use enterprise funds?
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. Enterprise funds are incorrectly used for activities when the only revenue sources are taxes, grants and transfers (these activities should be reported in governmental funds)
How do you get a proprietary fund?
The proprietary ratio is expressed in the form of a percentage and is calculated by dividing the shareholders equity with the total assets of the business.
What is an example of proprietary fund?
Examples of Proprietary Funds include interfund loans, proceeds of tax-supported bond issues, as well as transfers from other relevant governments.
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 are the three fund categories?
The three categories of funds are governmental, proprietary, and fiduciary. The fund types included in each category are shown below: The basis of accounting used by governmental funds is modified accrual.
What is an example of an enterprise fund?
How does GaSb 65 apply to proprietary funds?
In all four types, transactions are assumed measurable and probable of collection. A proprietary fund recognizes revenues using the full accrual basis of accounting. GASB 65, paragraph 30, is not applicable to proprietary funds.
How does GaSb 65 eliminate amortization of debt issuance costs?
GASB 65 paragraph 15, eliminates the amortization of issuance costs, except for prepaid insurance. A portion of the proceeds of long-term debt may be withheld for issuance costs (for example, underwriter’s fees) due in connection with the debt issuance.
When to use a local government enterprise fund?
Local governments should analyze the services they are providing and determine if the fund types used are appropriate. 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.
When to reclassified an activity into an enterprise fund?
Also, if a “multiple activity” fund (e.g., general fund) includes a significant activity whose principal revenue source meets any of these three criteria, the activity should be reclassified as an enterprise fund. The determination of an activity’s principal revenue source is a matter of professional judgment.