Question: (Nature of proprietary-type funds and measurements within them) State whether the following sentences are true or false regarding proprietary-type funds and the accounting measurements made within them. If the sentence is false, state why.
1. Enterprise Funds are used when a governmental entity sells products or services primarily to external parties (such as the general public) for a fee or user charge.
2. An Enterprise Fund may not be used if the entity, such as a provider of mass transit services, receives subsidies from the General Fund.
3. To ascertain the amount of capital assets acquired by an Enterprise Fund during the year, you should read the statement of revenue, expenses, and changes in net position.
4. When Enterprise Funds are used, expenses are accrued only if they are expected to be paid within 60 days after the end of the year.
5. When Enterprise Funds are used, revenues are recognized in the period they are earned, even if cash has not been received.