Video: Enterprise Fund

In this lesson, explore the intricacies of governmental accounting with Nick Palazzolo, CPA, as he provides an in-depth analysis of Enterprise Funds. These funds are crucial for understanding how governments manage business-type activities that serve the public, such as utilities, hospitals, and transportation. Nick illustrates this concept with practical examples such as water utilities, public golf courses, and even airports, emphasizing how these operations are typically funded through user fees. He breaks down the categorization of operating and non-operating revenues and expenses within these funds, making sure to clarify the complexities of capital contributions and the role of debt in financing these activities. With his engaging storytelling and vibrant examples, Nick makes learning about Enterprise Funds not only informative but also enjoyable.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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Now, the Enterprise Fund, this is going to be remember our airports. And wouldn't you know it, I failed art class and there's an airplane there. It's beautiful. It's absolutely beautiful. But I passed the exam, so now I spend my free time drawing pictures. You will do that as well once you pass. It's a nice way to relax. Beautiful. Absolutely beautiful. All right, so this fund accounts for normal business type operations that the government performs. They serve external uses of the government, like we mentioned, citizens. These are going to be public utilities like water and electric. I said water and I think I almost said fire before thinking of all the elements, right? Water, fire, earth and air. So they don't give you fire, they take fire away. They try to put fires out. So water and electric utilities, public hospitals, public universities again, questions it'll specify it'll say a non governmental hospital or non governmental, not for profit. But if it doesn't say that, then it's a public government one, right? It might say a government-owned hospital, government-owned university. A public university.

What about other commercial activities? We've got swimming pools, your local swimming pool, your parking garages. What about public housing? That is another business type activity. Your New York City transportation, wonderful subway, public golf courses, lotteries and airports. All of these are going to be set up through the proprietary fund, the Enterprise Fund. Again, think of it like you're setting up an LLC. Setting up that LLC is this new fund. It's a new bank account. And then that fund owns these activities, the fixed assets, everything here.

So laws and regulations require that these services be recovered through fees, right? That we pay for these through fees. You pay for the water

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Governmental Accounting: Part 2

Module: 3 Concepts, 24 Videos

Proprietary Funds Financial Statements Overview and Objectives

1:11

Governmental Fund Structure

0:31

Internal Service Fund

8:16

Enterprise Fund