NOVA actg exam 2
The following cash transactions were among those reported by Genesee County's Wastewater Enterprise Fund for the year: Proceeds from sale of revenue bonds for construction$5,000,000 Interest income 300,000 Capital contributed by developers 1,000,000 In the Wastewater Enterprise Fund's statement of cash flows for the year ended December 31, what amount should be reported as cash flows from investing activities?
$ 300,000.
The following cash transactions were among those reported by Genesee County's Wastewater Enterprise Fund for the year: Proceeds from sale of revenue bonds for construction$5,000,000 Interest income 300,000 Capital contributed by developers 1,000,000 In the Wastewater Enterprise Fund's statement of cash flows for the year ended December 31, what amount should be reported as cash flows from investing activities?
$ 300,000.
Which of the following should be accounted for in an internal service fund? Light poles to be paid for in installments by affected property owners $350,000 Van used to transport supplies to all city departments on a cost reimbursement basis 65,000 Equipment used for supplying electric power to residents 1,250,000
$ 65,000.
Which of the following should be accounted for in an internal service fund? Light poles to be paid for in installments by affected property owners$350,000 Van used to transport supplies to all city departments on a cost reimbursement basis 65,000 Equipment used for supplying electric power to residents 1,250,000
$ 65,000.
A government enters into a lease agreement for the purchase of a new snow plow. The present value of the future lease payments is $845,500 and there is a down payment at the inception of the lease of $25,000. The snow plow should be recorded in the General Fund at:
$0.
During the year, a wealthy local merchant donated a building to the city of Rosewood. The original cost of the building was $300,000. Accumulated depreciation at the date of the gift amounted to $250,000. The acquisition value of the donation at the date of the gift was $600,000. At what amount should Rosewood record this donated property in the General Fund?
$0.
The following items were included in Castle City's General Fund expenditures for the year ended June. Personal computer for the city treasurer$ 6,000 Furniture for the mayor's office$ 20,000 How much should be classified as capital assets in Castle City's General Fund balance sheet at June 30?
$0.
In late April, the Acme Construction Co. submitted a $1,200,000 progress billing on a construction contract. On May 2, the bill was approved for payment, subject to a ten percent retention, as provided by the contract. The amount that should be debited to Construction Expenditures is:
$1,200,000.
Which of the following should be accounted for in an enterprise fund? Light poles to be paid for in installments by affected property owners $350,000 Van used to transport supplies to all city departments on a cost reimbursement basis 65,000 Equipment used for supplying electric power to residents 1,250,000
$1,250,000.
Which of the following should be accounted for in an enterprise fund? Light poles to be paid for in installments by affected property owners$350,000 Van used to transport supplies to all city departments on a cost reimbursement basis 65,000 Equipment used for supplying electric power to residents 1,250,000
$1,250,000.
On March 2, 2019, 20-year, 6 percent, general obligation serial bonds were issued at the face amount of $3,000,000. Interest of 6 percent per annum is due semiannually on March 1 and September 1. The first payment of $150,000 for redemption of principal is due on March 1, 2020. Fiscal year-end occurs on December 31. What is the interest expense for the fiscal year ending December 31, 2019?
$150,000.
In 2020, Sunrise City signed a contract in the amount of $8,000,000 for the construction of a new city hall. Expenditures were $4,000,000 in 2020 and $2,050,000 in 2021, which included a change to the original construction design in the amount of $50,000. What amount should be added to capital assets in the governmental activities accounts in 2021?
$2,050,000
The following items were included in Castle City's General Fund expenditures for the year ended June Personal computer for the city treasurer$ 6,000 Furniture for the mayor's office$ 20,000 How much should be classified as capital assets in Castle City's government-wide statement of net position at June 30?
$26,000.
The following balances are included in the subsidiary records of Carrollwood: Town hall building$ 500,000 Town pool (supported by user fees) 100,000 Police cars 20,000 Equipment 7,500 Office supplies 1,000 What is the total amount of general capital assets held by the town?
$527,500.
The following cash transactions were among those reported by Genesee County's Wastewater Enterprise Fund for the year: Proceeds from sale of revenue bonds for construction$5,000,000 Interest income 300,000 Capital contributed by developers 1,000,000 In the Wastewater Enterprise Fund's statement of cash flows for the year ended December 31, what amount should be reported as cash flows from capital and related financing activities?
$6,000,000.
The following cash transactions were among those reported by Genesee County's Wastewater Enterprise Fund for the year: Proceeds from sale of revenue bonds for construction$5,000,000 Interest income 300,000 Capital contributed by developers 1,000,000 In the Wastewater Enterprise Fund's statement of cash flows for the year ended December 31, what amount should be reported as cash flows from capital and related financing activities?
$6,000,000.
The following general capital assets were owned by the Town of Otterville: Town buildings$ 3,250,000 Intangible assets 1,000,000 Streets, sidewalks, and water lines 2,000,000 What amount should be recorded as capital assets in the town's governmental activities accounts?
$6,250,000
During the year, a wealthy local merchant donated a building to the City of Rosewood. The original cost of the building was $300,000. Accumulated depreciation at the date of the gift amounted to $250,000. The acquisition value of the donation at the date of the gift was $600,000. At what amount should this contribution be recorded in the governmental activities accounts at the government-wide level?
$600,000.
A government enters into a lease agreement for the purchase of a new snow plow. The present value of the future lease payments is $845,500 and there is a down payment at the inception of the lease of $25,000. The snow plow should be recorded in the government-wide statement of net position at:
$870,500.
On March 2, 2019, 20-year, 6 percent, general obligation serial bonds were issued at the face amount of $3,000,000. Interest of 6 percent per annum is due semiannually on March 1 and September 1. The first payment of $150,000 for redemption of principal is due on March 1, 2020. Fiscal year-end occurs on December 31. What is the interest expenditure for the fiscal year ending December 31, 2019?
$90,000.
The City of Oak Park constructed a new storage facility using the city's own public works employees. Construction costs were incurred in the amount of $900,000, plus $25,000 in interest on short-term notes used to finance construction. What amount should be capitalized in the government-wide statements?
$900,000.
Which of the following organizations or units would least likely be accounted for by an enterprise fund?
A computer department.
When a new utility customer submits a deposit, the enterprise fund journal entry will include:
A credit to Customer Deposits.
Equipment that had been acquired several years ago by a special revenue fund at a cost of $40,000 was sold for $15,000 cash. Accumulated depreciation of $30,000 existed at the time of the sale. The journal entry to be made in the governmental activities journal will include all of the following except:
A credit to Other Financing Sources for $5,000.
The General Fund of the City of Castle Rock transfers $115,000 to the debt service fund for a $100,000 principal and $15,000 interest payment. The recording of this transaction would include:
A credit to Other Financing Sources — Interfund Transfers In in the debt service fund only.
At the inception of a lease for equipment the journal entry required in the capital projects fund will include which of the following?
A credit to Other Financing Sources—Lease Agreement.
Equipment that had been acquired several years ago by a special revenue fund at a cost of $40,000 was sold for $15,000 cash. Accumulated depreciation of $30,000 existed at the time of the sale. The journal entry to be made in the special revenue fund will include:
A debit to Cash for $15,000.
When utility customers are billed during the year, the enterprise fund journal entry will include:
A debit to Customer Accounts Receivable.
When a supplies internal service fund records a billing to the General Fund, the journal entry in the internal service fund will include:
A debit to Due from General Fund.
The General Fund of the City of Castle Rock transfers $115,000 to the debt service fund for a $100,000 bond principal and $15,000 interest payment. Subsequent payment of the principal and interest would include:
A debit to Expenditures — Bond Interest in the debt service fund.
When a supplies internal service fund records a billing to the General Fund, the journal entry in the General Fund will include:
A debit to Expenditures.
On the due date for a bond interest and principal payment, the debt service fund journal entry (or entries) will include:
A debit to Expenditures—Bond Interest.
If a city has an unpaid lease obligation at the beginning of its fiscal year, the journal entry in the debt service fund to record the lease payment during that fiscal year will include:
A debit to Expenditures—Principal of Lease Obligation.
Which of the following statements regarding debt service funds is true?
A debt service fund is used only for debt service activities related to general long-term liabilities.
When a government transfers the rights and obligations of an asset to another legally separate governmental or private sector entity, the transaction is referred to as:
A service concession arrangement.
Which of the following would be considered a general capital asset?
A vehicle purchased from General Fund revenues.
Which of the following is not a true statement about the Allowance for Funds Used During Construction (AFUDC)?
AFUDC may include the total amount of borrowing during construction.
Which of the following is not a true statement about the Allowance for Funds Used During Construction (AFUDC)?
AFUDC may include the total amount of borrowing during construction. Correct
Which of the following would be reflected in the operating statement of a proprietary fund?
Accrual of interest expense.
Pollution remediation obligations should be recognized if which of the following obligating events has occurred?
All of the given items are obligating events that would require recognition of a pollution remediation obligation.
Governments can opt not to capitalize collections or individual works of art or historical treasures if the collection is:
All of the options are correct.
Which of the following statements is not true for debt service funds?
All tax-supported bond principal is shown as a liability of the debt service fund.
The liability for general obligation bonds issued for the benefit of a governmentally owned electric utility and serviced by its earnings should be recorded in:
An enterprise fund.
An internal service fund normally uses which of the following budgetary accounts?
An internal service fund normally does not use budgetary accounts.
Which of the following financial statements are required for a Debt Service Fund?
Balance sheet and statement of revenues, expenditures, and changes in fund balance only.
The City of Crescent Hill operates a central motor pool as an internal service fund for the benefit of the city's other funds and departments. In the current year, this fund charged the Parks Department $30,000 for vehicle rentals. What account should the internal service fund use to record these charges?
Billings to Departments.
How should a lease for a general capital asset be recorded in the governmental activities accounts at the inception of the lease?
Both Debit to a lease asset account and Credit to Lease Obligations Payable are correct.
A capital projects fund might be used to account for which of the following activities?
Building a parking garage.
The City of Castle Rock issued bonds at par for the construction of a new city office building. Receipt of the bond proceeds would result in journal entries in which funds?
Capital Projects Fund: Yes; Debt Service Fund: No
Which of the following is not a required disclosure about each major class of capital assets?
Capital acquisitions and sales or other dispositions during the year showing the date and method of acquisition or disposition.
When a snowplow is purchased by a government, it should be recorded in the governmental activities general journal as a(an):
Capital asset.
In which of the following would it not be appropriate to record depreciation of capital assets?
Capital projects fund.
Typically, proceeds from general obligation bonds will be recorded in the:
Capital projects fund.
Which of the following is not true for capital projects funds?
Capital projects funds use a Construction Work in Progress account to record costs until the project is completed.
Which of the following illustrates the appropriate basis of accounting for enterprise and internal service funds? Enterprise Funds - Internal Service Funds A.Modified Accrual - Modified Accrual B.Modified Accrual - Accrual C.Accrual - Modified Accrual D.Accrual - Accrual
Choice D.
Which of the following activities or transactions would normally not be accounted for in a capital projects fund?
Construction of airport runways financed by revenue bonds and to be repaid from the revenues of the city airport, an enterprise fund.
When part of a progress payment for construction is withheld until final settlement of the contract, what account is credited?
Contracts Payable—Retained Percentage.
Goods and services provided by internal service funds to other departments of the government are typically priced to:
Cover full costs, plus an additional charge to capital maintenance and anticipated expansion needs.
How should a lease for a general capital asset be recorded in the General Fund accounts at the inception of the lease?
Debit to a capital expenditure account.
Which of the following statements is always true concerning the reporting of debt service funds?
Debt service funds are reported in the Governmental Activities column in the government-wide financial statements.
Premiums received on tax-supported bonds are generally transferred to what fund?
Debt service.
Which of the following is true regarding capital projects funds?
Encumbrances accounting is employed.
Which of the following items is not required to be included in the segment information that must be reported for a municipality's enterprise funds?
Enterprise fund tax revenues.
Customers' meter deposits, which cannot be spent for normal operating purposes, would be classified as restricted cash in the balance sheet of which fund type?
Enterprise fund.
The Central City Golf Course, an enterprise fund, purchased a new stove for use in the course's snack shop. The debit for the entry to record the purchase should be to:
Equipment.
Which of the following assets would not be found in the balance sheet of a debt service fund?
Equipment.
The City of Crescent Hill operates a central motor pool as an internal service fund for the benefit of the city's other funds and departments. In the current year, this fund billed the Parks Department $30,000 for vehicle rentals. If the Parks Department is a governmental fund, which account should the Parks Department use to record these billings?
Expenditures.
On the due date for bond interest, the debt service fund journal entry (or entries) will include a debit to:
Expenditures—Bond Interest.
Which of the following statements regarding capital assets is not true?
Fiduciary funds do not account for property, plant, and equipment within the fund financial statements.
Which of the following debt service fund accounts would not be closed at the end of each fiscal year?
Fund Balance.
Which of the following accounts would appropriately be included on an enterprise fund balance sheet?
Fund Balance: No; Net Position—Unrestricted: Yes.
A general capital asset constructed several years ago by a capital projects fund was sold by the General Fund. Entries are necessary in the:
General Fund and governmental activities.
Four new computers, for which the cost exceeded the city's capitalization threshold, were purchased for use in the city clerk's office using General Fund resources. Which of the following entries would be required to completely record this transaction?
General Fund: DR Expenditures 8,000 CR Vouchers Payable 8000 Governmental Activities DR Equipment 8,000 CR Vouchers Payable 8000
The Town of Golden purchased a squad car for the police department. If the operations of the police department are financed by general revenues, which of the following is correct concerning where the capital asset would be recorded?
General Fund: No; Governmental Activities: Yes
The liability for general obligation bonds should be recorded in the:
Governmental activities journal.
A debt service fund is a:
Governmental fund.
GASB standards require that general capital assets be recorded in the government-wide statements at:
Historical cost.
The sale of revenue bonds by a water utility fund would be recorded:
In an enterprise fund as a liability.
Which of the following statements is correct concerning interest expenditures incurred during the period of construction of capital projects?
Interest expenditures may not be capitalized as part of the cost of general capital assets reported in governmental activities.
When a new internal service fund is established with a transfer of funds (not to be repaid), which account would be credited in the internal service fund?
Interfund Transfer In.
In which of the following funds is it appropriate to record depreciation of capital assets?
Internal service fund.
Which of the following funds of a government uses the same basis of accounting as a proprietary fund?
Investment trust fund.
When bonds are sold at a premium for a capital project, the premium amount generally:
Is transferred to the debt service fund.
Which of the following activities or services would most likely not be accounted for by an internal service fund?
Municipal swimming pool.
Which of the following properly portrays the components of net position for proprietary funds?
Net investment in capital assets, Restricted, Unrestricted.
Which of the following basic financial statements contains a column for the total of all debt service funds?
No basic financial statement contains a column for the total of all debt service funds.
Which of the following statements is correct regarding depreciation?
No depreciation can be recorded in any governmental fund, but depreciation expense must be recorded in the governmental activities accounts.
GASB standards require that general capital assets be recorded in the fund statements at:
None of the options are correct.
Transfers from the General Fund to the capital projects fund to provide partial financing of a capital project would be reported by the capital projects fund as a(an):
Other financing source.
Debt service funds are used to account for which of the following?
Payment of principal and interest on general long-term debt.
The comprehensive annual financial report (CAFR) of a government should contain a statement of revenues, expenses, and changes in fund net position for:
Proprietary but not governmental funds.
When the debt service fund makes a payment of principal and interest on an outstanding long-term debt, the governmental activities accounts:
Reflect both principal and interest payments.
A government experienced significant loss of certain roadways and bridges as a result of major flooding. Which of the following estimation approaches would be most useful in estimating the amount of asset impairment that has occurred?
Restorative cost approach.
Which of the following may properly be reported as a component of net position in the proprietary fund statement of net position?
Restricted net position.
Under GASB standards, an internal service fund should prepare all of the following financial statements except a:
Statement of revenues, expenditures, and changes in fund balance.
Which of the following debt service funds would normally have the largest balance in its Fund Balance account?
Term bond debt service fund.
In late April, the Acme Construction Co. submitted a $1,200,000 progress billing on a construction contract. On May 2, the bill was approved for payment, subject to a ten percent retention, as provided by the contract. Construction expenditures should be debited when:
The bill is approved for payment.
To offset engineering and design costs incurred prior to the issuance of a long-term bond issue, a capital projects fund borrowed the sum of $75,000 on a short-term basis from First National Bank. This transaction should be recorded in:
The capital projects fund.
Which of the following is a difference between enterprise funds and internal service funds?
The customers who primarily benefit from the fund's service.
Which of the following is not true regarding proprietary funds?
The difference between assets plus deferred outflows of resources and liabilities plus deferred inflows of resources of proprietary funds is called "net assets."
Under utility regulatory accounting principles (RAP), the account "Utility Plant Acquisition Adjustment" reflects:
The difference between the amount paid for utility plant and the amount originally paid by the utility that first placed the plant into public service, less accumulated depreciation.
Which of the following is not a requirement that must be met to elect the "modified approach" to reporting certain eligible infrastructure assets?
The government gets the permission of the Government Accounting Standards Board.
Which of the following is a true statement regarding in-substance defeasance of bonds?
The government must place cash or other assets in an irrevocable trust sufficient to pay all future interest and principal payments for the debt being defeased.
A city recorded an asset impairment to a public works facility. Which of the following is correct concerning the recording of the amount of the asset impairment?
The governmental activities accounts would record a debit to Expenses—Public Works.
The liability for special assessment bonds that carry a secondary pledge of a city's general credit should be reported in the balance sheet(s) of:
The governmental activities accounts.
Capital assets used by governmental funds should be reported in:
The governmental activities column of the government-wide statements.
Internal service funds should be used only if:
The reporting government provides services primarily to other departments of the same government.
Under a service concession arrangement:
The transferring government continues to report the transferred asset as a capital asset and any related contractual obligations as liabilities.
How should financial information for internal service funds be reported in the government-wide financial statements?
Usually as part of governmental activities, unless the internal service fund predominantly serves one or more enterprise funds.
Which of the following account balances would only be reported if a city-owned utility followed regulatory accounting principles?
Utility Plant Acquisition Adjustments.
Special assessments levied for debt service of bonds issued for a special assessment capital project will be accounted for by a debt service fund under which of the following situations? Government is secondarily obligated for the debt Government is not secondarily obligated for the debt
Yes No