An Internal Service Fund Had the Following Transactions During the Year

question 64

Multiple Choice

An internal service fund had the following transactions during the year ended June 30,20X9,its first year of existence:
(1) Received $1,000,000 contribution from the general fund.
(2) Acquired fleet of cars for $950,000,paying cash.
(3) Billed departments in other funds $500,000 for using cars.
(4) Incurred operating costs,exclusive of depreciation,of $240,000.
(5) Depreciation expense amounted to $250,000.
-Refer to the above information.On the internal service fund's balance sheet on June 30,20X9,total net assets should be reported at:

• A)$1,000,000.
• B)$1,010,000.
• C)$1,250,000.
• D)$910,000.

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Definitions:

Normal Profit

The minimum profit necessary for a company to remain competitive in the market, essentially covering its opportunity costs.

Competitive Firm

A company that operates in a market where there are many buyers and sellers, and no single entity can control the market price of goods or services.

Lowest Price

The minimum price at which a product or service is offered in the market, typically influenced by competition and cost structures.

Competitive Firm

A company that operates in a market where it has to compete with other firms for customers, setting prices based on market demand and supply.