1. Which of the following correctly states the role of budgeting in proprietary funds?

a. Proprietary fund managers should ensure that a valid appropriation exists before providing goods or services to other funds or departments of the same government.

b. Proprietary fund managers should have discretion to operate within a flexible budget consistent with pricing and other policies established by the legislative body.

c. To ensure that appropriations are not overspent, all proprietary funds should use encumbrance procedures.

d. Expenditures from proprietary funds should not be made unless there is a valid appropriation authorizing the expenditure.

2. Which of the following would most likely be accounted for in an internal service fund?

a. City golf courses.

b. The citys investments, which are pooled with the countys and the school districts investments.

c. An asphalt plant used to supply the asphalt needed to resurface the citys streets.

d. Proceeds from an endowment that are used to maintain the citys cemeteries.