Question

A city enterprise fund received an operating grant during the fiscal year. How will the enterprise fund report this grant on the statement of revenues, expenses, and changes in net assets?

1) As revenue
2) As an expense
3) As a change in net assets
4) Cannot be determined

Answer 1

The operating grant received by a city enterprise fund during the fiscal year will be reported as revenue on the statement of revenues, expenses, and changes in net assets.

Step-by-step explanation:

The operating grant received by a city enterprise fund during the fiscal year will be reported as revenue on the statement of revenues, expenses, and changes in net assets.

This is because the grant represents an inflow of economic resources to the enterprise fund, which increases its net assets. The grant is not classified as an expense because it does not represent an outflow of resources to generate revenue.

By reporting the grant as revenue, the statement of revenues, expenses, and changes in net assets shows the total amount of funding received by the enterprise fund during the fiscal year.