Final answer:
In accounting, establishing an enterprise fund involves recording capital contributions as a nonreciprocal interfund activity.
Step-by-step explanation:
In accounting, establishing an enterprise fund involves recording capital contributions as a nonreciprocal interfund activity. In accounting, establishing an enterprise fund involves recording capital contributions as a nonreciprocal interfund activity.
This typically occurs when a government entity provides resources to a separate entity that operates like a business. The capital contributions would be recorded using journal entries to reflect the increase in the enterprise fund's assets. For example, if the government transfers $10,000 to the enterprise fund, the journal entry would be:
- Debit: Cash (in the enterprise fund) $10,000
- Credit: Capital Contributions (in the enterprise fund) $10,000