Chapter 17 403
The primary government, component units, and other organizations that need to be included in the financial statements make up the ________ ________ of a governmental unit.
Blank 1: reporting Blank 2: entity
Unusual or infrequent transactions that affect the fund balance but are not revenues or expenditures are reported in the _______ _______ section of the fund's operating statement.
Blank 1: special Blank 2: items
Identify the similarity between the sale of bonds and revenue. Multiple choice question. Both must be repaid. Both always create liabilities. Both need not be repaid. Both increase the resources.
Both increase the resources.
Fund expenditures include ______. Multiple select question. amounts used to purchase capital assets purchase of approved goods or services depreciation on assets purchased with fund revenues
amounts used to purchase capital assets purchase of approved goods or services
The ESTIMATED REVENUES CONTROL account is a(n) _______ asset
anticipatory
A governmental fund recognizes an expenditure when ______. Multiple choice question. approved goods or services are ordered approved goods or services are received the approval to order goods or services is obtained
approved goods or services are received
Agency funds report ______. Multiple select question. revenues expenditures assets fund equity liabilities
assets liabilities
The modified accrual basis is used in funds that have a flow of ______ financial resources measurement focus. Multiple choice question. deferred current long-term future
current
The five governmental funds use the ________ measurement focus. Multiple choice question. current financial resources cash basis modified accrual basis long-term financial resources
current financial resources
The balance sheet of a governmental fund reports ______. Multiple select question. current liabilities fund balance current assets property, plant, and equipment long-term liabilities
current liabilities fund balance current assets
The concept of interperiod equity relates to determining whether ______. Multiple choice question. current year revenues are sufficient to provide for services during the current year current year revenues are sufficient to provide for services next year prior year revenues are sufficient to provide for services provided during the current year
current year revenues are sufficient to provide for services during the current year
Elements of a statement of financial condition include: Multiple select question. deferred outflow of resources deferred inflow of resources outflow of resources retained earnings inflow of resources
deferred outflow of resources deferred inflow of resources
Until the revenue recognition requirement is met, resources received prior to an exchange transaction are reported as a _______ for the fund receiving them. Multiple select question. deferred asset nonexchange transaction deferred revenue liability
deferred revenue liability
Interest on investments or delinquent property taxes accrued is accrued in the period in which the ______. Multiple select question. income is earned income is available to finance that period's expenditures cash is received cash is used to finance that period's expenditures
income is earned income is available to finance that period's expenditures
A separate accounting group with accounts to record the transactions and prepare the financial statements of a defined part of a governmental entity that is responsible for specific activities or objectives is termed a(n) _______.
fund
The special items section of a fund's financial statements includes unusual or infrequent items that affect the ______ for the period. Multiple choice question. fund balance total revenues total asset-base of the fund total expenditures
fund balance
All financial resources except those accounted for in another fund are accounted for in the _____ fund.
general
Typical sources of revenue for a governmental fund include ______. Multiple select question. sale of goods to customers in a regular operating cycle grants provided by other governmental agencies charges for services taxes on property, income, or commercial sales
grants provided by other governmental agencies charges for services taxes on property, income, or commercial sales
The city of Alpine, Utah, purchases a large inventory of rock salt every fall to be used during the winter months to spread on the city's roads. The city has $1,000,000 of salt in inventory as of December 31, 20X5. This inventory is included in the city's _________ fund Balance
nonspendable
Capital assets and long-term debt are reported on _________ financial statements. Multiple choice question. only governmentwide only fund-based both fund-based and governmentwide
only governmentwide
Each governmental entity creates ______. Multiple choice question. two or more general funds based on the entity's specific needs only one general fund one or more general funds based on legal and operating requirements
only one general fund
Revenues less expenditures for the period are reported in the _______ section of the statement of revenues, expenditures, and changes in fund balance
operating
Measurement focus refers to the flows of economic and financial resources that are to be measured for ______. Multiple choice question. operations recording the issuing of long-term debt recording the sale of an asset recording the purchase of an asset
operations
The transportation authority of a large metropolitan area decides to revamp operations and purchases a fleet of new vehicles. This activity is called as a(n) ______ of resources. Multiple choice question. inflow deferred inflow deferred outflow outflow
outflow
On January 1, 20X1, the general fund of a town had a balance of $500,000. During the year the town collected $900,000 in taxes and received $100,000 in grants from the state government. Expenditures were $325,000 for the year. This amount does not include a $75,000 loss from hurricane damage. Calculate the December 31, 20X1 balance. Multiple choice question. $1,500,000 $1,175,000 $1,000,000 $1,100,000
$1,100,000 Reason: Ending fund balance = Beginning fund balance + Revenues - Expenditures + Governmental grants - Special and extraordinary items = $500,000 + $900,000 - $325,000 + $100,000 - $75,000 = $1,100,000.
During the current fiscal year, the general fund of a small city recognized revenues of $1,000,000 and $400,000 of expenditures. A transfer of $200,000 was made to a capital projects fund and $50,000 was received from a discontinued enterprise fund. Calculate the net change in the general fund balance. $400,000 $600,000 $200,000 $450,000
$450,000 Reason: The change in the fund balance = Revenues - Expenses + transfers in - transfers out = $1,000,000 - $400,000 + $50,000 - $200,000 = $450,000.
Under the modified accrual basis of accounting, expenditures are recognized in the period in which the related liability is both _______ and _______
Blank 1: measurable Blank 2: incurred
Under the _________ _________ basis of accounting, revenue is recognized when the underlying exchange has occurred and the resources are available.
Blank 1: modified Blank 2: accrual
A governmental unit imposed income tax on its residents on December 31, 20X0. Payments were received between January 15 and March 15 of 20x1. The governmental unit reports income tax revenue in ______. Multiple choice question. either 20X0 or 20X1 20X1 20X0
20X0 Reason: Tax revenues are recognized as assets in the period in which the tax is imposed or when resources are received, whichever comes first.
According to NCGA Interpretation No. 3, property taxes must be collectible within a maximum of _______ days after the end of the current fiscal period to be recognized as revenue in that period.
60
Capital Projects Fund
Accounts for financial resources for the acquisition or construction of major capital facilities
Pension Trust Funds
Accounts for resources required to be held in trust for the members and beneficiaries of postemployment benefit plans or other employee benefit plans
Permanent Fund
Accounts for resources that are restricted such that only earnings, but not principal, may be used in support of governmental programs that benefit a government or its citizenry
Debt Service Fund
Accounts for the accumulation of resources for, and the payment of, general long-term debt principal and interest
Investment Trust Funds
Accounts for the external portion of investment pools reported by the sponsoring government
Private-Purpose Trust Funds
Accounts for trust arrangements under which the fund's resources are to be used to benefit specific individuals as per the trust agreement
The accrual basis of accounting is used in funds that have a flow of _______ _______ measurement focus.
Blank 1: economic Blank 2: resources
The accrual basis of accounting is used in funds that have a flow of ________ _______ measurement focus
Blank 1: economic Blank 2: resources or resource
The two types of propriety funds are __________ funds and ________ __________ funds. (Enter only one word per blank.)
Blank 1: enterprise Blank 2: internal Blank 3: service
GASB 34 specifies two integrated levels of financial statements:__________-________ statements and _______ statements
Blank 1: fund Blank 2: based Blank 3: governmentwide
The two categories of nonexchange transactions are _______-_______ and _______
Blank 1: government Blank 2: mandated Blank 3: voluntary
A key element of accountability is _________ ________ , in which it is determined whether current year revenues are sufficient to pay for services provided during that year.
Blank 1: interperiod Blank 2: equity
A city levied taxes on property owners in its jurisdiction for the fiscal year ended December 31, 20X1. It collected the billed amounts on January 31, 20X2. Which of the following is/are recorded upon collection of property taxes on January 31? Multiple select question. Debit Cash; Credit Property Taxes Receivable Debit Deferred Tax Revenue; Credit Cash Debit Deferred Tax Revenue; Credit Property Tax Revenue Debit Property Tax Revenue; Credit Deferred Tax Revenue
Debit Cash; Credit Property Taxes Receivable Debit Deferred Tax Revenue; Credit Property Tax Revenue
The journal entry to record the general fund budget for a new fiscal year is ______. Multiple choice question. Debit ESTIMATED REVENUES CONTROL; Credit ENCUMBRANCES Debit BUDGETARY FUND BALANCE—UNASSIGNED; Credit ESTIMATED REVENUES CONTROL Debit ESTIMATED REVENUES CONTROL; Credit APPROPRIATIONS CONTROL; Credit BUDGETARY FUND BALANCE—UNASSIGNED Debit APPROPRIATIONS CONTROL; Credit ESTIMATED REVENUES CONTROL
Debit ESTIMATED REVENUES CONTROL; Credit APPROPRIATIONS CONTROL; Credit BUDGETARY FUND BALANCE—UNASSIGNED
The fire safety department of a city uses the internal control structure of a vouchers payable system before making payments to a vendor. The journal entry to record the receipt of $25,000 of equipment from an external vendor is: ______. Multiple choice question. Debit Expenditure $25,000; Credit Voucher Payable $25,000 Debit Fire Safety Equipment $25,000; Credit Expenditure $25,000 Debit Fire Safety Equipment $25,000; Credit Voucher Payable $25,000 Debit Voucher Payable $25,000; Credit Expenditure $25,000
Debit Expenditure $25,000; Credit Voucher Payable $25,000
True or false: Governmental funds report only their own current financial investments (not long-term ones) as assets of the funds.
False Reason: Governmental funds report their own current and long-term financial investments and any accrued interest receivable as assets of the funds.
True or false: The focus of measurement for the governmental funds of a government entity is on changes in economic resources of the firm.
False Reason: The focus of measurement for the funds of a government entity is on changes in current financial resources available to provide services to the public in accordance with the governmental entity's legally adopted budget.
True or false: Under the current financial resources measurement focus, revenues are recognized when they are available to the fund.
False Reason: This is false. Under the current financial resources measurement focus, revenues are both measurable and available.
Which of the following is NOT a spendable fund balance classification? Multiple choice question. Permanent Assigned Unassigned Limited Restricted
Permanent
Which of the following statements about a governmental fund's balance sheet are correct? Multiple select question. The assets section of the balance sheet only reports cash and assets convertible to cash in the normal course of operations. The liabilities section of the balance sheet includes long-term debt due within the next year. Inventories and prepayments are never recorded on a fund's balance sheet. Equipment and other long-term assets belonging to the fund are recorded on the balance sheet.
The assets section of the balance sheet only reports cash and assets convertible to cash in the normal course of operations. The liabilities section of the balance sheet includes long-term debt due within the next year.
True or false: Proceeds from the sale of bonds are not recognized as revenue.
True Reason: Bond proceeds are reported as other financing sources on the statement of revenues, expenditures, and changes in fund balance.
Funds that have a flow of economic resources measurement focus use the _____ basis of accounting. Multiple choice question. cash accrual modified accrual
accrual
GASB 34 established that governmental financial statements be prepared using the _______ basis of accounting. Multiple choice question. accrual cash modified accrual fund
accrual Reason: Accounting for governmental entities is referred to as fund accounting but it is not a basis.
Fiduciary trust funds use the ______. Multiple select question. accrual basis of accounting economic resources measurement focus modified accrual basis of accounting current financial resources measurement focus
accrual basis of accounting economic resources measurement focus
Resources that a government holds solely in a custodial capacity are accounted for in a(n) ________ fund.
agency
A general fund accounts for ______. Multiple choice question. all financial resources except for those accounted for in another fund all assets held by a governmental entity including those accounted for in another fund the proceeds of specific revenue sources that are restricted for specified purposes operations of governmental units that charge for services provided to the general public
all financial resources except for those accounted for in another fund
Net position is the residual of the _____________ as presented on the statement of financial condition. Multiple choice question. assets and deferred inflows of resources liabilities and deferred inflows of resources assets, liabilities, and deferred outflows and inflows of resources assets and liabilities
assets, liabilities, and deferred outflows and inflows of resources
Under the current financial resources measurement focus, revenues are recognized by a fund when they are ______. Multiple select question. available to finance current expenditures vaguely estimated by the fund measurable available to finance probable expenditures of the fund for the next period
available to finance current expenditures measurable
The timing of recognizing a transaction for financial reporting purposes is referred to as the _______ of accounting.
basis
Other financing sources of a governmental fund include proceeds from ______. Multiple select question. bond issues tax collections interfund transfers sale of services to the public
bond issues interfund transfers
Government funds with legally adopted budgets ______. Multiple select question. can easily assess management's stewardship of the entity formally enter both operating and capital budgets into the accounting records are required to compare budgeted to actual amounts as part of RSI
can easily assess management's stewardship of the entity are required to compare budgeted to actual amounts as part of RSI
Miscellaneous revenues such as license fees and fines are generally recorded as revenue when the ______. Multiple choice question. fees or fines are imposed cash is used for current expenditures cash is received
cash is received
The measurement focus for the governmental funds of a government entity is on the ______. Multiple choice question. changes in all economic resources changes in current financial resources flow of all economic resources
changes in current financial resources
Which of the following are included in the reporting entity of a governmental unit? Multiple select question. component units primary government all organizations that have a relationship with the primary government
component units primary government
Income is considered available when it is ______. Multiple select question. measurable due or past due and is collectible within the current period related to property taxes that will be collected within 90 days of the end of the current fiscal period Reason: In order to be considered available, the taxes must be collected within 60 days of the end of the current fiscal period. expected to be collected soon enough after year-end to be used to pay current-period liabilities
due or past due and is collectible within the current period expected to be collected soon enough after year-end to be used to pay current-period liabilities
A propriety fund which accounts for the operations of governmental units that charge for services provided to the general public is a(n) ______ fund
enterprise
Payments local governments are authorized to receive as determined by the federal government are called ______
entitlements
A grant made to reimburse a governmental unit for expenditures made in accordance with legal requirements should be recognized when all eligibility requirements have been met and the ______. Multiple choice question. grant is authorized cash is received expenditure is made
expenditure is made
Decreases in net financial resources available under the current financial resources measurement are called __________
expenditures
Trust and agency funds are the two main types of ________ funds
fiduciary
The purpose of a capital project fund is to account for ______. Multiple choice question. financial resources for the upkeep of major capital facilities the external portion of investment pools reported by the sponsoring government financial resources for specific revenue generating projects financial resources for the acquisition or construction of major facilities
financial resources for the acquisition or construction of major facilities
GASB 34 requires several new _____ that increase the transparency of governmental reporting. Multiple choice question. investments footnote and schedule disclosures standards agreements
footnote and schedule disclosures
An acquisition of net assets that is applicable to the current reporting period is a(n) ______ of resources. Multiple choice question. deferred inflow deferred outflow inflow outflow
inflow
A fund which accounts for operations of governmental units that charge for services provided to other governmental departments is an ______ fund. Multiple choice question. investment trust enterprise agency internal service
internal service
When a state takes custody of private property because the legal owner cannot be found, revenue ____ recognized by the state. Multiple choice question. is is not
is Reason: Revenue is recorded based on the property's FMV less a liability for anticipated claims.
Interest on long-term debt is recorded as an expenditure in the period in which: Multiple choice question. cash is paid it is legally payable or cash is paid, whichever comes first it is legally payable
it is legally payable
A component unit is a(n) ______. Multiple choice question. special-purpose government general-purpose government organization that has a casual relationship with the primary government legally separate organization for which the primary unit has financial accountability
legally separate organization for which the primary unit has financial accountability
Nonexchange transactions include revenue from the ______. Multiple choice question. issue of debt securities sale of goods and services levying of corporate taxes sale of a long-term asset
levying of corporate taxes
The flows that should be recorded for operations are referred to as the _______ focus
measurement
Select all that apply Differences between governmental and for-profit entities include: ______. Multiple select question. government entities do not include budgets as part of their accounting process most governmental entities do not have a general profit motive governmental operations have legal authorization for their existence many governmental funds do not record long-term debt
most governmental entities do not have a general profit motive governmental operations have legal authorization for their existence many governmental funds do not record long-term debt
When a government receives or gives value without directly receiving or giving equal value in return, a(n) transaction occurs
nonexchange
A city is bequeathed $4 million. The endowment is to be used to fund an investment in books to educate people in the community about classical literature. The will stated the money be invested and maintained and that all earnings from the investment be used for this specific purpose. The investment and its earnings should be accounted for in a(n) _________ fund.
permanent
A liability of governmental entities is a(n): Multiple choice question. present obligation to sacrifice resources that the entity has little or no discretion to avoid resource with present service capacity that the entity presently controls consumption of net assets that is applicable to a future reporting period acquisition of net assets that is applicable to a future reporting period
present obligation to sacrifice resources that the entity has little or no discretion to avoid
A state government collected sales taxes that are measurable and available for expenditure. The taxes are to be distributed to cities within the state. The recipient cities recognize the revenue ______. Multiple choice question. when the taxes are used to pay expenditures prior to receipt upon receipt
prior to receipt
When a fund issues long-term bonds, ______. Multiple choice question. the payable is reported on the balance sheet of the fund but the proceeds are not recorded on the operating statement proceeds from the sale of bonds are recorded on the operating statement of the fund but the payable is not reported on the balance sheet proceeds from the sale of bonds are recorded on the operating statement of the fund and the payable is not reported on the balance sheet
proceeds from the sale of bonds are recorded on the operating statement of the fund but the payable is not reported on the balance sheet
Government operations that have a management focus of income determination and capital maintenance establish a(n) _______ fund.
proprietary
The balance sheet of all types of _______ funds reports all assets, including long-term capital assets, and all liabilities, including long-term liabilities. (Enter only one word per blank.)
proprietary
Proprietary funds ______. Multiple select question. use the modified accrual basis of accounting recognize and depreciate long-term assets accrue interest on long-term debt have a management focus of income determination
recognize and depreciate long-term assets accrue interest on long-term debt have a management focus of income determination
Governmentwide financial statements ______. Multiple select question. report other funds not included in fund-based statements include capital assets are the first level of integrated financial statements exclude long-term debt
report other funds not included in fund-based statements include capital assets
Special revenue funds account for ______. Multiple select question. resources and expenditures for operations when a separate tax is levied for their support proceeds of specific revenue sources that are restricted for specified purposes proceeds of specific revenue sources that can be used for general operations resources for the acquisition or construction of major capital facilities that benefit many citizens
resources and expenditures for operations when a separate tax is levied for their support proceeds of specific revenue sources that are restricted for specified purposes
Operating budgets for the general fund of a governmental unit include expected ______. Multiple select question. purchases of long-term investments revenue from various sources provided by law expenditures for various line items costs of proposed construction projects
revenue from various sources provided by law expenditures for various line items
A fund which accounts for the proceeds of specific revenue sources that are restricted for specified purposes is termed a(n) ___________ revenue fund
special
Which of the following are NOT types of governmental funds? Multiple select question. debt service capital projects special expenditures temporary general
special expenditures temporary
Multiple Choice Question The primary emphasis in governmental fund accounting is to measure and report on ______. Multiple choice question. fluctuations in earnings per share stewardship of financial resources revenue recognition regulatory authority
stewardship of financial resources
Under the current financial resources measurement focus and the modified accrual basis of accounting, expenditures are recognized in the period in which ______. Multiple select question. the associated liabilities are both measurable and incurred they are payable out of previous financial resources the associated liabilities are either measurable or incurred they are payable out of current financial resources
the associated liabilities are both measurable and incurred they are payable out of current financial resources
Private-purpose trust funds account for trust arrangements under which ______. Multiple choice question. investment pools are to be reported by the sponsoring government the fund's resources are to be used to benefit a certain class of taxpayers the fund's resources are to be used to benefit a specific individual as per the trust agreement the fund's resources are to be used to benefit all sections of the society
the fund's resources are to be used to benefit a specific individual as per the trust agreement
An example of a transfer of resources in a government-mandated nonexchange transaction is the transfer of financial assets from ______. Multiple choice question. a governmental unit to a governmental unit at another level due to a change in federal statute a governmental unit to a governmental unit at the same level to settle general liabilities the provision of resources of a governmental unit to a governmental unit at another level for a specific purpose one governmental unit's revenue for a period to another governmental fund due to a change in requirement
the provision of resources of a governmental unit to a governmental unit at another level for a specific purpose
Proprietary funds ______. Multiple choice question. use budgets in an advisory nature do not prepare budgets use budgets as a primary control vehicle
use budgets in an advisory nature
Assume that a governmental entity receives imposed nonexchange revenues. Revenue is recognized in the period when ______. Multiple select question. use of the resources for current expenditures is first permitted or required the asset is recorded (if no time restriction on the fund's use of the resources exists) the underlying exchange has occurred and the resources are available the underlying transaction occurs
use of the resources for current expenditures is first permitted or required the asset is recorded (if no time restriction on the fund's use of the resources exists)
If a governmental entity assesses tax revenues from an exchange transaction, the asset is recognized ______. Multiple choice question. when the government has an unenforceable legal claim to the resources or has received them, whichever comes first when the underlying transaction occurs or resources are received by the government, whichever comes first only when the government receives control over the asset only when the government has an enforceable legal claim on the resources to be received
when the underlying transaction occurs or resources are received by the government, whichever comes first