WGU C252 Practice Questions Chapter 10 | Questions and Verified Answers

WGU C252 Practice Questions Chapter 10 | Questions and Verified Answers 1. The use of an Enterprise Fund is required by generally accepted accounting principles in each of the following situations except a. When user fees are charged for the majority of the activity's operations. b. When an activity is financed with debt that is secured solely by the pledge of revenues. c. When laws and regulations require that the activity's costs be recovered with fees and charges. d. When pricing policies of the activity establish fees and charges are designed for cost recovery. - Answer -When user fees are charged for the majority of the activity's operations. 2. Which of the following statements is false concerning interest capitalization? a. Generally accepted accounting principles require the capitalization of certain types of interest in Enterprise Funds. b. Interest cost should not be capitalized for asset acquisitions financed by restricted gifts or grants. c. Interest capitalization is computed differently for tax-exempt versus taxable debt. d. Interest capitalization is not allowed in Enterprise Funds. - Answer -Interest capitalization is not allowed in Enterprise Funds. 3. When accounting for inventory in an Enterprise Fund, which method should be used for external financial reporting? a. Acquisition method. b. Allocation method. c. Consumption method. d. Purchases method. - Answer -Consumption method. 4. A city Enterprise Fund received an operating grant during the fiscal year. The Enterprise Fund will report this grant on the statement of revenues, expenses, and changes in net position as a. Operating revenues.