[SchruteBeet]

Hey guys, can someone please help me understand the following from F10 in Becker?

The City of Orange routinely collects refundable deposits in its water and sewer fund. Once a customer
discontinues services and final bills are satisfied, deposits are refunded to the customer. Occasionally deposits are abandoned. The city is obligated to hold these monies for a statutory period and either transmit them to the state for deposition or use them for purposes directed by the state. The city would most likely account for these abandoned funds in the:

A. General fund.
B. Special revenue.
C. Enterprise fund.
D. Private purpose fund.

The correct answer is D. Can someone please help me understand why B and C are incorrect? If the City is collecting deposits and putting them towards a specific purpose, shouldn’t that be a Special Revenue? On the other hand, the City is billing its customers so it is set up like a business-type activity so then shouldn’t it be accounted for as an Enterprise Fund? Thanks in advance.

AUD - 79
BEC - 80
FAR - 83
REG - 78

Ethics - 97

"If it were easy, everyone would do it."

"Hard work, perseverance, faith, blessings."

[Ana]

This question describes escheatment money which belongs to private purpose thus not B or C. Special revenue is earmarked for a purpose other than capital projects or debt but this money should go to the customer, not used by the govt. Also, it's not an enterprise fund bc again the money belongs to the customer not for business type activities whereas the services for the water and sewer fund should be in the enterprise fund.

BEC - 78
AUD - 75
REG - 64, 77
FAR - 73, 73, 73, 82
Ethics: 74, 84, 98
Finally done after 23 months.

[Lentilcounter]

Ana's explanation nailed it. Here is the definition of a private purpose fund to add to your toolbox.

Private-purpose fund = accounts for all other trust arrangements under which principal and income are for the benefit of specific individuals, private organizations, and other governments

BEC = 79

AUD = 79

FAR = 84

REG = 86

Prayer + AICPA blueprints = my success

BEC = 72 (6/08/16)
FAR = ?
REG = ?
AUD = ?

[Ana]

Anytime the question deals with escheat property/money the answer is private purpose, that's what that fund is for.

BEC - 78
AUD - 75
REG - 64, 77
FAR - 73, 73, 73, 82
Ethics: 74, 84, 98
Finally done after 23 months.

[SchruteBeet]

Thanks so much, guys. That makes sense now. Appreciate your responses!

AUD - 79
BEC - 80
FAR - 83
REG - 78

Ethics - 97

"If it were easy, everyone would do it."

"Hard work, perseverance, faith, blessings."

[Ana]

glad to help, I mean it.

BEC - 78
AUD - 75
REG - 64, 77
FAR - 73, 73, 73, 82
Ethics: 74, 84, 98
Finally done after 23 months.

[Author]

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