2330 Final Exam (8-14)

A government reported the following transfers in its governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances: (1) a transfer from the General Fund to a special revenue fund in the amount of $500,000; (2) a transfer from the General Fund to an enterprise fund in the amount of $400,000; (3) a transfer from the General Fund to a permanent fund in the amount of $100,000. The amount that would be shown as a transfer out in the governmental activities column in the Statement of Activities would be:

$ 400,000.

A private college had tuition and fees for the year ended June 30, 2017 in the amount of $45,000,000. Scholarships, for which no services were required, amounted to $4,800,000. Graduate assistantships, for which services were required, amounted to $2,300,000. The amount to be reported by the college for net tuition and fee revenue would be:

$40,200,000. $45,000,000 of tuition and fees − $4,800,000 of scholarships = $40,200,000.

The City of Eugene reported property tax revenues in 2017 in the amount of $10 million. The deferred inflow - property taxes reported in the General Fund's balance sheet was $ 475,000 on December 31, 2016 and was $ 400,000 on December 31, 2017. During 2017, $9,000,000 was collected. What amount should the city report for Property Tax Revenue in its year ended December 31, 2017 government-wide Statement of Activities?

$ 9,925,000 Property tax revenue $10,000,000 − deferred inflow from 2016 of $475,000 + deferred inflow from 2017 of $400,000 = $9,925,000.

With respect to public colleges, which of the following is not correct?

Cash received under Pell Grants is treated as held for the student in an agency relationship with offsetting asset and liability balances.

Which of the following adjustments would be made when moving from the governmental funds balance sheet to the governmental activities column in the government-wide Statement of Net Position?

Add balances of internal service fund assets and liabilities. Add beginning capital assets, net of depreciation.

At what point in the budgetary authority process may a federal agency or its subunits begin to place orders for goods and services?

Allotment

An unconditional pledge of support is properly recorded as Temporarily Restricted Revenue at the time of the pledge. Changes in the present value of the receivable resulting from the passage of time is reported as:

Contribution revenue.

Which of the following statements is correct with respect to contributions restrictions?

Contributions may be restricted as to purpose, time, or for plant acquisition.

The entry to record the expiration of program restrictions includes which of the following?

Debit Reclassification from Temporarily Restricted Net Assets.

Which of the following is true regarding the preparation of government-wide statements?

Balances from enterprise funds' statements are entered in the business-type activities sections of the government-wide statements without adjustment. Interfund activities and balances, within governmental activities are eliminated.

Which of the following is not true regarding infrastructure assets?

Because they have such long useful lives, infrastructure assets are never depreciated.

Which of the following items does not increase the net pension liability and pension expense for a government offering a defined benefit pension plan?

Benefit payments to retired employees.

On December 1, 2016, a college received a pledge to support a program in the following two years. Which of the following is true with respect to this pledge?

Both If the college is a private institution, the contribution revenue will be recognized within the temporarily restricted category provided the pledge is unconditional and If the college is a public institution, no contribution revenue will recognized in 2016 since the time restriction is deemed to be an unsatisfied eligibility requirement are true.

Which of the following is true regarding the Statement of Cash Flows for a public college?

Both The direct method must be used and The statement is in the same format required for state and local governmental enterprise funds are true.

At the inception of a capital lease agreement for a piece of equipment used in governmental operations.

Both a liability is incurred and reported in the government-wide financial statements; and an expenditure is recorded in the governmental fund.

Which of the following statements is correct with respect to The Statement of Custodial Activity?

Both the statements "The statement is required only if the government agency collects nonexchange funds to be turned over to the Treasury" and "Because the collecting entity cannot use the funds for its own activities, the activities are analogous to an agency fund of a state or local government." are correct.

A skilled carpenter installed a roof on a new administrative building for a private not-for-profit free of charge. The not-for-profit would have had to pay $1,800 for this service if not donated. What entry should the not-for-profit make?

Capital Expenditures 1,800 Contribution revenue 1800

Which of the following is true regarding the reporting of general capital assets by state and local governments?

Capital assets are reported in the government-wide Statement of Net Position.

When a governmental unit is primarily or secondarily liable for the debt, debt proceeds for special assessment obligations levied for the construction phase of a capital improvement project should be reported in which of the following fund types?

Capital projects.

The three classes of net assets reported for a private not-for-profit organization include all of the following except:

Capital restricted net assets.

Which of the following is true concerning infrastructure assets?

Capitalization of infrastructure is required.

A college borrows money to construct a new biology building. Where will the interest paid on this debt appear in the Statement of Cash Flows, assuming:

Cash flows from operating activities Cash flows from capital related financing activities

Which of the following is true regarding the Statement of Cash Flows for a private college?

Cash purchases of capital assets are reported as outflows in the investing activities section.

Ch 9. A government signed a five-year capital lease on January 1, 2017 to obtain some equipment. The lease provided that the government would make a down payment of $20,000 and four $20,000 payments each year after that, beginning January 1, 2016. The government has a fiscal year ending December 31. Upon inception of the lease, the government, in its governmental fund accounting records would:

Debit expenditures for the present value of the payments (including the $20,000 down payment), credit cash for $20,000, and credit other financing sources for the difference between the $20,000 and the present value of the future payments.

Which of the following is responsible for preparing the federal government's consolidated financial statements?

Department of Treasury

Which of the following statements is not correct?

Discretely presented component units are also separately displayed in the fund basis statements, but not the government-wide statements.

Which of the following is not prohibited of organizations receiving tax-exempt status under IRS Section 501(c)(3)?

Earning a profit (increase in net assets).

A donor made a gift of cash to a private not-for-profit organization in 2017 with an expressed purpose restriction. All the funds were expended in 2017. The organization must:

Either record the gift as a temporarily restricted revenue, reclassify the funds to unrestricted, and then report the expense as unrestricted; or record the gift and expense as unrestricted.

Which of the following is true of a Statement of Cash Flows for a private college or university?

Either the direct or indirect method is acceptable.

When preparing government-wide statements, which of the following is not true?

Entries are necessary to eliminate fiduciary funds.

Which of the following is not true regarding the Statement of Activities for nongovernmental, not-for-profit organizations?

Expenses are reported as unrestricted, temporarily restricted or permanently restricted.

Which of the following is not true regarding accounting and financial reporting for private not-for-profit hospitals?

Expenses may be classified as unrestricted or temporarily restricted depending on donor intent.

The purpose of the FASAB is to develop and issue federal accounting standards. Which of the following is not accurate?

FASAB has developed a conceptual framework to guide the Board in the development of new standards. The Concept Statements are authoritative and must be followed when reporting the financial results for federal government entities.

Chapter 11 Private colleges and universities are (primarily) subject to financial reporting standards issued by?

FASB

Private not-for-profits must follow all applicable ____ standards in recording transactions.

FASB

Private universities follow the authoritative standards of _____ and use the _____ basis of accounting.

FASB, Accrual. Private colleges follow standards established by the FASB, including those specifically for not-for-profit entities. Private colleges use the accrual basis of accounting and the economic resources measurement focus.

Investments by private not-for-profit organizations in equity securities should be carried at:

Fair Market Value.

What organization oversees the promulgation of accounting standards for US government agencies?

Federal Accounting Standards Advisory Board.

The Health Care Guide makes a distinction between a health care organization and a voluntary welfare organization. Which of the following is accurate?

If essentially all revenues from services provided to patients or clients they are a health care organization subject to the Health Care Guide.

A government incurred expenditures for its infrastructure as follows: $20 million for general repairs; $22 million to extend the life of existing infrastructure; $21 million for improvements and additions. If depreciation is to be charged, the amount would be $23 million. Which of the following would be true?

If the government chose to use the modified approach to record infrastructure, the amount to be charged as expense would be $42 million. If the government chose not to use the modified approach to record infrastructure, the amount to be charged to expense would be $43 million.

Which of the following is not true regarding the Statement of Revenues, Expenses, and Changes in Net Position for a public college?

Revenues are required to be presented in the categories of Permanently Restricted, Temporarily Restricted and Unrestricted, while all expenses are classified as Unrestricted.

Which of the following situations would be unlikely to result in the recognition of an asset impairment?

Ridership on city buses declines.

Which of the following is true of Service Efforts and Accomplishments reporting?

SEA reporting provides more complete information about a government entity's performance than can be provided by the basic financial statements. SEA reporting utilizes both financial and non-financial performance measures.

Assume a government is determined to be a special-purpose government engaged in business-type activities only. Which of the following financial statements would be required?

Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, Statement of Cash Flows.

Public colleges and universities that choose to report as special-purpose entities engaged only in business-type activities would have which of the following financial statements?

Statement of Net Position, Statement of Revenues, Expenses, and Changes in Net Position, Statement of Cash Flows.

Which of the following statements appearing in the federal government's consolidated financial report are prepared on the accrual basis of accounting?

Statement of Operations and Changes in Net Position.

A governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances reported of $30 million, including capital outlay expenditures of $9 million. Capital assets for that government cost $90 million, including land of $10 million. Depreciable assets are amortized over 20 years, on average. The reconciliation from governmental changes in fund balances to governmental activities changes in would reflect a(an):

Increase of $5 million. $9,000,000 of capital outlay expenditures would be an addition and $4,000,000 of depreciation expense would be a subtraction which result in a $5,000,000 increase. Depreciation expense: ($90,000,000 − $10,000,000)/20 years = $4,000,000.

Which of the following federal entities would be required to prepare a Statement of Custodial Activity?

Internal Revenue Service

Which of the following federal entities would be required to prepare a Statement of Custodial Activity?

Internal Revenue Service.

Which of the following is true regarding the government-wide Statement of Net Position?

Neither of the above. Assets and liabilities are reported in order of liquidity or GASB standards permit but does not require reporting a classified statement with subtotals for current assets and liabilities. Governmental funds are not reported in the state-wide statements. Balances from an enterprise fund's Statement of Net Position and Statement of Revenues, Expenses, and Changes in Fund Net Position are entered directly to the business-type activities sections of the government-wide statements.

Which of the following would be included in the Equity section of the government-wide Statement of Net Position?

Net investment in capital assets.

Which of the following is a required statement for a private college?

None of the above is a required statement. The required statements for a private, not-for-profit college or university are: Statement of Financial Position/Balance Sheet, Income Statement, Statement of Activities, Statement of Cash flows and notes to the financial statements.

Special-purpose governments that are engaged in both governmental and business-type activities or in more than one governmental activity are required to include all of the following in its financial statements except?

None of the above, these are all required. Special-purpose governments that are engaged in both governmental and business-type activities or in more than one governmental activity are required to prepare both fund-basis and government-wide statements, including MD&A, Government-wide statements, Fund-basis financial statements, Notes to the financial statements, RSI.

Which of the following steps in the budgetary authority process occurs when a federal agency issues a purchase order?

Obligations... are recorded when a federal agency places orders for goods and services related to its activities.

A donor gave $ 1,200,000 to a private not-for-profit organization to be held in endowment. In addition, the governing board permanently designated $ 500,000 to the endowment. In the Statement of Financial Position, how should these amounts be classified?

Permanently Restricted: $1,200,000; Unrestricted: $500,000.

Chapter 12 According to the AICPA Audit and Accounting Guide: Health Care Organizations, which of the following items should be included in the determination of the performance indicator?

Premium revenue.

Which of the following would not need to be addressed/adjusted in compiling the government-wide statements?

Principal repayment on proprietary fund bonds.

Which of the following is/are true with respect to health care organizations?

Private sector not-for-profits health care entities must disclose expenses by functional classifications, if not provided in the Statement of Operations.

The AICPA Audit and Accounting Guide: Health Care Organizations applies to:

Private sector, not-for-profit hospitals. Public sector, government-owned hospitals.

A college receives $ 500,000 of Pell Grants to be applied to current year student accounts for tuition and fees. What account should be credited upon receipt of the $ 500,000, assuming:

Private-Liability: Due to student accounts Public-Non-operating revenue

The institution's governing board decided to create an endowment from contributed funds, this is called a(n) ________ and the funds are unrestricted.

Quasi-endowment

When accounting for pension benefits, the net pension obligation for employees of proprietary activities is:

Reported in the government-wide statements. Reported in the proprietary fund-basis statements.

Which of the following statements is correct with respect to general long-term debt.

Required disclosures for the government-wide statements include the Schedule of Changes in Long-term Debt and Schedule of Debt Service Requirements are required disclosures in the government-wide statements.

A government's Statement of Revenues, Expenditures, and Changes in Fund Balances reported proceeds of bonds in the amount of $2,000,000. It also reported expenditures for bond principal in the amount of $500,000. The last interest payment was on the last day of the fiscal year. The reconciliation from the governmental funds changes in fund balances to the governmental activities change in Net Position would reflect a(an):

Proceeds of $2,000,000 − expenditure for bond principal payment of $500,000 = $1,500,000.

The projected returns exceed actual returns on pension plan assets for a government offering a defined benefit pension plan. How would the resulting increase in the net pension liability be recognized in the financial statements in the year this difference is recognized?

The increase in net pension liability would be deferred and amortized over five years.

Which of the following is not a condition for recording donated services?

The individual providing the service provides an invoice detailing the hours contributed but waives the requirement for payment.

Which of the following statements is NOT accurate with respect to the recording of expenses for a not-for-profit?

The FASB requires expenses to be reported by function or program in the Statement of Activities.

Which of the following is true for a city government participating in a state sponsored pension plan for its law enforcement employees?

The General Fund will report pension expenditure for the annual required contribution to the State Retirement System. The Government-wide Statement of Net Position will report a liability to the extent the city's share of the total pension liability exceeds the net fiduciary position of the state plan.

Which of the following is true regarding the Statement of Financial Position for nongovernmental, not-for-profit organizations?

The Statement must display totals for net assets separated between the categories of unrestricted, temporarily restricted, and permanently restricted.

Which of the following are true of the budgetary accounts of the federal government?

The accounts provide a record by which federal expenditures may be traced to the budgetary authority granted by Congress.

Which of the following is true regarding the Balance Sheet of a federal agency?

The balance sheet is prepared using the economic resource measurement focus and accrual accounting. Typically the first item listed among assets is "Fund Balance with Treasury".

St. David's is a not-for-profit business-oriented hospital. What is the journal entry for the following transaction: Cash was received for pledges made in the prior year in the amount of $85,000. That amount has been recorded as temporarily restricted net assets, based on time restrictions.

The journal entry would be a debit to Cash and a credit to Contributions receivable for $85,000 and then a debit to Reclassification from Temporarily Restricted Net Assets−Expiration of Time Restrictions and a credit to Reclassification to Unrestricted Net Assets−Expiration of Time restrictions for $85,000.

Investment income related to Assets Whose Use Is Limited amounted to $15,000 for St, Mary's Hospital, is a not-for-profit business oriented hospital. The hospital's board designated the money for future capital improvements. What is the journal entry to record this event?

The journal entry would be a debit to Cash−Assets Whose Use is Limited for $15,000 and a credit to Nonoperating Income−Unrestricted−Assets Whose Use is Limited for Capital Improvements−Investment Income for $15,000.

Which of the following lease criteria would not qualify a lease as a capital lease?

The lease contains an option to purchase the leased property at its fair market value.

If the government is primarily or secondarily liable for the payment of debt principal and interest for a special assessment project:

The project is accounted for within governmental type funds as if it were a governmental project.

Which of the following factors, if present, would indicate that a transaction is not a contribution?

The resource provider received value in exchange.

The Center for Performing Arts had the following expenses: $5,000 of performances expense, $2,800 of Fund-raising expense, $3,000 of Instructional Classes expense, and $1,700 of general and administrative expense. What is the program expense ratio (rounded)?

Total expenses = $ 5,000 + 2,800 + 3,000 + 1,700 = 12,500 Program expenses = $ 5,000 + 3,000 = 8,000. Program expense ratio = 8,000/12,500 = .64

How should the following revenues be reported by a private college? $15,000 for the improvement of a study lounge, $5,600 in unrestricted contributions, $600 unrestricted investment income on endowment investments, $11,600 sales of services by auxiliary enterprises.

U17,800 R15,000 Unrestricted: $5,600 of unrestricted contributions + $600 of unrestricted investment income + 11,600 sales by auxiliary enterprises = $17,800. Restricted: $15,000 for improvement of study lounge.

Which account of a federal agency is most similar to "Transfer In" of a state and local government?

Unexpended Appropriation.

Chapter 14 Which of the following accounts are used to display the difference between assets and liabilities in a federal agency Balance Sheet?

Unexpended Appropriations and Cumulative Results of Operations.

Which of the following accounts are used to display the difference between assets and liabilities in a federal agency Balance Sheet?

Unexpended Appropriations and Cumulative Results of Operations.

Which of the following is not true of a Statement of Activities prepared for a private not-for-profit organization?

Unrealized gains (losses) on investments are shown only as increases (decreases) in unrestricted net assets.

A tax-exempt organization is required to pay income taxes on:

Unrelated business income.

Public colleges are required to report residual equity in the following categories:

Unrestricted, Restricted, and Net Investment in Capital Assets.

Which of the following are the net asset classes required by the FASB for private not-for-profit organizations?

Unrestricted, temporarily restricted and Permanently restricted.

Private not-for-profit health care organizations include what categories in the equity section of the Statement of Changes in Net Assets?

Unrestricted, temporarily restricted, and permanently restricted.

Under FASB Statement 116, reclassifications of net assets are not made:

for permanently restricted net assets.

The Statement of Functional Expenses:

is required of voluntary health and welfare organizations.

The following treatment is correct with regards to payments that are partially exchange transactions and partially contributions:

the two parts should be separately accounted for.

A federal agency prepared the following schedule showing the status of federal appropriations at the end of the first quarter: 700,000 Unapportioned authority 40,000 Apportionments 65,000 Allotments 15,000 Obligations for undelivered orders. 940,000 Total appropriations What is the total amount of purchase orders placed in the first quarter of the year?

$120,000 of Expended Appropriations + $15,000 of Obligations for undelivered orders = $135,000

A governmental fund's Statement of Revenues, Expenditures, and Changes in Fund Balances reported expenditures for capital outlay in the amount of $5,000,000. Capital assets for that government cost $110,000,000, including $20,000,000 in land. Depreciable assets are amortized over 20 years, on average. The reconciliation from the governmental funds changes in fund balances to the governmental activities change in Net Position would reflect a(an):

$5,000,000 of capital outlay expenditures would be an addition and $4,500,000 of depreciation expense would be a subtraction which result in a $500,000 increase. Depreciation expense: ($110,000,000 − $20,000,000)/20 years = $4,500,000.

Which of the following categories is/are considered program revenue(s) in the Statement of Activities of a local government?

A grant from the state to construct utility plant.

The term "opinion unit" refers to which of the following:

A level of reporting of a government that requires a separate materiality level.

On December 1, 2016, Sebastian University received cash of $30,000 and a pledge for another $60,000 to be paid in 2017. The amounts are to establish a permanent endowment to provide scholarships for music majors. How should this event be recorded on December 31, 2016, assuming Sebastian is a public university?

A public university must follow GASB standards. GASB standards do not recognize pledges to permanent endowments as revenue until received. The journal entry would be a debit to Restricted Cash and a credit to Nonoperating - Additions to permanent endowment for $30,000, the amount received.

Which of the following is true regarding the Statement of Cash Flows for a public college?

A reconciliation is required, reconciling operating income in the Statement of Revenues, Expenses, and Changes in Net Position to the cash flows provided (used) by operating activities.

Which of the following would not be an example of a voluntary health and welfare organization?

A state community college.

When summer school classes at a university cover parts of two fiscal years, the revenues and expenses are:

Apportioned to the two fiscal years.

How does a for-profit organization record contributions made to a private not-for-profit organization?

As an expense when originally pledged.

Fees waived by an educational institution in return for services to be provided by students are reported:

As an expense.

A special assessment tax is:

Assessed only against certain property owners who are deemed to benefit from the service or project being paid for by the proceeds of the special assessment levy.

Lisa informed her church that she had named the church in her will and later provided a written copy of the will to the church. At what point should the church record the contribution?

At the date the probate court declares the will valid following her death.

Which of the following is part of the treatment of multi-year pledges as required by FASB Statement No. 116?

At the end of each accounting period, the difference between the balance in the receivable account and the new present value is recorded as contribution revenue and the receivable is increased.

Which of the following is not true of Tax-exempt Entities having 501(c) (3) status?

Churches with tax-exempt status must file an information return (Form 990, 990EZ or 990-N) with the IRS annually.

Which of the following statements is not correct with respect to conditional and unconditional pledges?

Conditional pledges are recorded as unearned revenue.

Generally speaking, not-for-profit organizations record and measure transactions and events in the same manner as commercial enterprises. They do, however, differ from commercial enterprises in two important ways. Which of the following is one of those differences?

Donors frequently impose restrictions on the use of donated resources.

What is the principal advantage of having 501(c) (3) status to an organization that receives substantial support from outside contributors?

Donors to the organization may deduct their contributions as charitable donations.

Chapter 8 Which of the following is not a reconciliation required by GASB?

From enterprise fund balance sheet to the Government-wide Statement of Net Assets.

Which of the following is not an example of a donor imposed restriction?

Funds are not to be used until the following year. Funds must be used on certain programs. Funds are to be endowed. All of the above are examples of donor imposed restrictions.

Public colleges and universities are (primarily) subject to financial reporting standards issued by:

GASB.

Ch. 10 With respect to a not-for-profit that holds contributions for others, which of the following is true?

Generally, if the not-for-profit organization agrees to transfer the assets to a specified beneficiary, the organization is deemed to be an agent and a liability is recorded.

Chapter 13 What organization oversees the promulgation of Government Auditing Standards?

Government Accountability Office.

Which of the following is responsible for auditing the federal government's consolidated financial statements?

Government Accountability Office.

Which of the following health care organizations must follow standards established by the Governmental Accounting Standards Board (GASB)?

Government owed hospitals.

Which of the following is not a difference between private sector auditing and governmental auditing?

Governmental audits do not have to follow AICPA (i.e. GAAS) standards.

Which of the following statements regarding employer reporting of pension trust funds is not correct?

Governmental funds report net pension liabilities of governmental fund employees as a fund liability.

Special purpose governments engaged only in fiduciary-type activities are required to prepare all of the following except:

Statement of Cash Flows.

Which of the following is not true regarding the Statement of Revenues, Expenses, and Changes in Net Position for a public college?

State appropriations and Pell Grants are reported as operating revenue.

Which of the following is true regarding the Single Audit Act and its amendments?

Major programs selected for audit must equal 50 percent or more of federal expenditures, unless the organization is deemed to be low risk.

Which of the following is not a distinguishing characteristic of a private not-for-profit organization according to FASB Statement No. 116?

Operate for the direct benefit of members.

Which of the following is true regarding the financial statements for special-purpose entities?

Special-purpose entities that are engaged only in one governmental activity may combine government-wide and governmental fund statements. Special-purpose entities that are engaged in fiduciary activities only prepare the statements required for fiduciary funds (Statement of Fiduciary Net Position, Statement of Changes in Fiduciary Net Position).

Which of the following statements is true of a special-purpose government?

Special-purpose governments that are engaged in a single governmental-type activity may combine the fund and government-wide financial statements.

Where is the net pension liability shown in a Comprehensive Annual Financial Report for employees of enterprise fund activities?

The enterprise fund Statement of Fund Net Position. The government-wide Statement of Net Position.

The AICPA Audit and Accounting Guide: Health Care Organizations provides reporting requirements for all of the following organizations except:

Voluntary health and welfare organizations.

Which of the following is true regarding fiduciary funds?

When a government provides employees a defined benefit pension plan, the government is required to present a ten year Schedule of Changes in Net Pension Liability and Related Ratios as required supplementary information.

A benefactor promises to donate $25,000 to his church toward the purchase of a new piano if the church is able to raise matching funds of $25,000 from other contributors. At what point should the church record revenue?

When the matching funds are raised.

Which of the following is true regarding pension (and other employee benefit) trust funds?

While the accrual basis of accounting is used, the terms "additions" and "deductions" are used in the Statement of Changes in Fiduciary Net Position in lieu of "revenues" and "expenses".

Assume a federal agency places orders for contracted services supporting a federal program. The journal entries at the agency level to record this event will include:

a debit to the account Allotments

Assume a spending bill has been passed by Congress and signed by the President. The journal entries at the agency level to record this event will include:

a debit to the account Fund Balance with Treasury