Question

Capital assets used by an enterprise fund should be accounted for in the a. Business-type activities journal but no depreciation on the capital assets should be recorded. b. Enterprise fund and depreciation on the capital assets should be recorded c. Governmental activities journal and depreciation on the capital assets should be recorded d. Enterprise fund but no depreciation on the capital assets should be recorded

Answer 1

Answer:

b. Enterprise fund and depreciation on the capital assets should be recorded.

Explanation:

Cash flow can be defined as the net amount of cash and cash- equivalents that is flowing into (received) and out (given) of a business. There are three components of the cash flow;

1. Operating cash flow: all cash generated from the business activities of an organization.

2. Financing cash flow: all payments made by an organization and profits from issuance of debts and equity.

3. Investing cash flow: costs associated with purchasing of capital assets and investments of cash resources in other businesses.

Capital assets used by an enterprise fund should be accounted for in the enterprise fund and depreciation on the capital assets should be recorded.

Additionally, depreciation can be defined as the reduction of cost of a fixed asset systematically until the value of the asset becomes zero.