Government enterprise funds
Revenue bonds outstanding
The government of Louisville City has revenue bonds outstanding related to business-type activities. It reported revenue bonds outstanding for Louisville Arena Project. There were also Water System Revenue Bonds, Parking Authority of River City, Inc. Revenue Bonds and Sewer and Drainage System Revenue Bonds. The above activities were operated as business-type activities (Fischer, Taylor & Cheng, 2008).
Statement of cash flows for proprietary funds
The financial statements of Louisville City include a statement of cash flows for proprietary funds. The statement of cash flows categorizes cash flows into four different groups. These include cash flows from operating activities, cash flows from noncapital financing activities, cash flows from capital and financing activities and cash flows from investing activities . During the year, proprietary funds had net cash used in operating activities of $1,104,647 implying that cash inflows were less than cash outflows.
Cash flows from noncapital financing activities included transfers from other funds. During the year, proprietary funds received $9,154,769 from other funds. Net cash used in capital and financing activities was $11,161 while net cash flows provided by the City’s investing activities were $1,153,228. Net cash increase during the year was $1,153,228.
Method of statement of cash flows preparation
The City’s statement of cash flows for proprietary funds was prepared using the direct method. Under this method, actual items of cash flows are directly included in the determination of cash flows for cash flows from operations (Fischer, Taylor & Cheng, 2008). The indirect method would have started with the net income followed by adjustments do determine operating cash flows. The statement shown is more informative since one can identify the specific sources and uses of cash for operating activities than an indirect method statement of cash flows (Wilson, Reck & Kattellus, 2010).
References
Fischer, P., Taylor, W., & Cheng, R. (2008). Fundamentals of advanced accounting. Mason, OH: Thomson/South-Western.
Wilson, E., Reck, J., & Kattellus, S. (2010). Accounting for governmental and nonprofit entities. Boston: McGraw-Hill Irwin.