Question

Where in the basic financial statements, (most commonly) would one find internal service fund assets reported?

A. In the proprietary funds statements and in the business-type activities column of the government-wide statements.
B. In the governmental funds statements and in the governmental activities column of the government-wide statements.
C. In the governmental funds statements and in the business-type activities column of the government-wide statements.
D. In the proprietary funds statements and in the governmental activities column of the government-wide statements.

Answer 1

Internal service fund assets are found in the proprietary funds statements and the business-type activities column of government-wide statements, as they operate similarly to private businesses within the government.

Step-by-step explanation:

Internal service fund assets would most commonly be found in the proprietary funds statements and in the business-type activities column of the government-wide statements. This is because internal service funds are a type of proprietary fund, which are used to account for services provided by one department of a government to other departments on a cost-reimbursement basis. These types of funds are similar to private business accounting and therefore are classified with the business-type activities when preparing government-wide financial statements. A simplified balance sheet, such as the one for the hypothetical Safe and Secure Bank, demonstrates the format in which financial information, including assets and liabilities, is presented within financial statements.