CH 10 MC

The City received $200,000 to help maintain a local art museum that is owned and operated by a not-for-profit organization. During the year the City transferred net earnings of $20,000 to the appropriate entity/fund. The $20,000 transfer would be reported by the fund that made the transfer as a (an)

Deduction from Net Assets—Benefits.

What basis of accounting is used to account for the transactions of a government's permanent fund?

Modified accrual basis of accounting.

Which of the following would NOT be accounted for in a fiduciary fund of a governmental entity?

Nonexpendable resources held for the benefit of the government holding the resources.

A governmental entity receives a gift of cash and investments with a fair value of $200,000. The donor specified that the earnings from the gift must be used to beautify city-owned parks and the principal must be re-invested. The $200,000 gift should be accounted for in which of the following funds?

Permanent fund.

In previous years, Center City had received a $400,000 gift of cash and investments. The donor had specified that the earnings from the gift must be used to beautify city-owned parks and the principal must be re-invested. During the current year, the earnings from this gift were $24,000. The earnings from this gift should generally be considered revenue to which of the following funds?

Permanent fund.

In which of the following funds would a government report depreciation expense?

Private-purpose trust fund.

The City received $200,000 to help maintain a local art museum that is owned and operated by a not-for-profit organization. During the year the City transferred net earnings of $20,000 to the appropriate entity/fund. The $200,000 gift would be reported in a (an):

Private-purpose trust fund.

Previously a local charity received a $1 million gift, the income from which was restricted to support activities for senior citizens. During the current year the endowment earned $40,000 of interest revenues, of which the charity designated $30,000 to support senior citizen activities. 16. On its year-end statement of financial position, the charity would report permanently restricted net assets of:

a) $1 million.

Previously a local charity received a $1 million gift, the income from which was restricted to support activities for senior citizens. During the current year the endowment earned $40,000 of interest revenues, of which the charity designated $30,000 to support senior citizen activities. On its year-end statement of financial position, the charity would report temporarily restricted net assets of:

a) $40,000.

32. The City of Highland Hills receives a federal grant to assist in nutrition programs for its senior citizens. The City will select the contractors that will provide meals and approve the participants in the program. The proceeds of this grant should be accounted for in which of the following funds of the City?

a) A governmental fund.

19. A wealthy citizen provided in her will for a gift of cash and other assets to the City. Her will specified that the gift was to be kept intact and that the earnings from the gift were to be used to support public parks. At the time of the donation, the gift had a book value in the hands of the donor of $300,000 and a fair value of $500,000. When recording this gift the City would credit

a) Contributions revenues $500,000

20. At the beginning of the year, the permanent fund of Rapid City had an investment portfolio with a historical cost of $300,000 and a fair value of $330,000. There were no purchases or sales of securities during the year. At year end the portfolio had a fair value of $360,000. At the end of the year Rapid City will account for this increase in fair value in which of the following ways?

a) Credit Investment income, $30,000.

What basis of accounting is used to account for transactions of a governmental private-purpose trust fund?

a) Full accrual basis of accounting.

Permanent funds are classified as

a) Governmental funds.

35. Assets reported in a government's investment trust fund should include:

a) Only investments owned by external participants in the investment pool.

18. During the year, a state-owned university received a $5 million gift. The donor specified that the principal of the gift must be held intact for 3 years, but the earnings from the gift can be used to support technology improvements in the College of Business. At the end of the 3 years, the donor together with the University President and the College Dean will decide how the $5 million gift can be used. The University will report the gift in what type of fund?

a) Permanent fund.

22. A defined contribution pension plan is one in which the employer agrees to which of the following?

a) The employer agrees to make payments to a specified pension plan with no guarantee of a specific pension amount to be paid to the employee.

40. The fiduciary fund financial statements report contain

b) A separate column for each fund type

Several years ago, a donor gave $5 million to the City and specified that the principal was to be kept intact but the earnings were to be used to support operations of the city parks. During the current year, the City earned $300,000 on the gift. To what type of fund, should the City transfer the $300,000 earnings?

b) A special revenue fund.

31. Citizens within a defined geographic area of Hill City created a special assessment district to facilitate the construction of sidewalks. Hill City was responsible for overseeing the entire construction project. Hill City issued bonds in its own name to pay the contractor for the construction. However, Hill City was not responsible in any manner for the bonds. The bonds were secured by the special assessments that are levied against properties within the special assessment district. Collections of special assessments would be recorded in which of the following funds of Hill City?

b) Agency fund.

36. Financial assets reported by 2a7-like investment pools should be reported at

b) Amortized historical cost.

25. In which of the following funds would Net Pension Obligation be most likely to appear?

b) Enterprise fund.

Which of the following activities of a governmental entity should be accounted for in a fiduciary fund?

b) Funds received from an individual who specified that the principal must be kept intact but the income can be used to support families of police officers killed in the line of duty.

37. Under proposed GASB standards, accounting for other postemployment benefits (OPEB) would

b) Require governments to report actuarially required contributions as OPEB expense, regardless of whether these contributions are actually made by the government.

26. The Schedule of Changes in Long-Term Obligations contains an account Net Pension Obligation. Which of the following describes the event that gave rise to this account?

b) The actual contribution by a governmental fund was less than the actuarially required contribution.

24. During the fiscal year ended December 31, 2010, the Highland City General Fund contributed $60 million to a defined benefit pension plan for its employees. On February 27, 2011, Highland made an additional $3 million contribution related to the 2010 pension contribution requirements. The actuarially determined contribution requirement for 2010 is $65 million. The amount of pension expenditure recognized by Highland City General Fund for 2010 should be:

c) $ 63 million

Cedar City has a permanent fund that reported current year investment earnings (realized and unrealized) of $80,000. The endowment principal is $800,000 and the city council has adopted a policy of considering only the inflation-adjusted rate of return to be available for transfer to the recipient fund. During the current year the Council declared the inflation-adjusted rate of return to be 8%. How much revenue would be recognized in the permanent fund?

c) $ 80,000.

Previously a local charity received a $1 million gift, the income from which was restricted to support activities for senior citizens. During the current year the endowment earned $40,000 of interest revenues, of which the charity designated $30,000 to support senior citizen activities. 14. On its year-end statement of activities, the charity would report interest revenues of:

c) $40,000

29. Which of the following is NOT a criterion that an employer's annual required contribution must satisfy to be considered acceptable?

c) Actuarial value of pension plan assets must be based on market values on the financial statement date.

30. A plan's unfunded actuarially accrued liability is the excess of the:

c) Actuarially determined pension liability over the plan assets.

33. The City of Highland Hills receives a federal grant to assist in nutrition programs for its senior citizens. Senior citizens whose income is below a specified amount (the amount was specified by the Federal government) are eligible to participate in the program. Monthly checks of $100 (this amount was specified by the Federal government) will be mailed to eligible senior citizens. The proceeds of this grant should be accounted for in which of the following funds of the City?

c) An agency fund.

34. Financial assets reported by most governmental investment trust funds should be reported at

c) Fair value on the date of the financial statements.

38. Liabilities reported in pension trust funds consist of

c) Liabilities accrued using the accrual basis of accounting, excluding the actuarial accrued liability for the plan.

12. Which of the following is NOT a fiduciary fund?

c) Permanent fund.

28. The primary financial statements for a government-sponsored pension plan are:

c) Statement of Fiduciary Net Assets and a Statement of Changes in Fiduciary Net Assets

In the current year, the City of Katerah earned $24,000 on the principal of a private-purpose trust fund but disbursed only $20,000. During the current year the private-purpose trust fund will recognize, related to earnings:

c.) $24,000 addition to net assets.

23. Hill City Light & Water (a proprietary fund) contributes to a defined benefit plan for its employees. During 2011, Hill City contributed $36 million to its pension plan. The City also made an additional $4 million contribution related to 2010. The actuarially determined contribution requirement for 2011 was $43 million. The amount of pension expense recognized by Hill City Light & Water for 2011 should be:

d) $ 43 million

In the current year, the City of Katerah earned $24,000 on the principal of a private-purpose trust fund but disbursed only $20,000. During the current year the private-purpose trust fund will recognize, related to the cash outflow:

d) $20,000 deduction from net assets.

27. Required disclosure by a government General Fund related to its pension plan does NOT include which of the following?

d) The present value of the future benefits to be paid.

41. The liabilities relating to benefits and refunds of a Defined Benefit Pension Plan are reported in a governmental entity's fiduciary fund financial statements using the

d) Yes No Yes No

39. The following financial statements must be reported for fiduciary funds.

e) b & c only