Government/Nonprofit Final Study Guide

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Compute the debit or credit, if any, to be made to the Budgetary fund balance for a county's General Fund under each of the following assumptions: a. Budgeted revenues and expenditures each are $30,000,000.

Amount: $0 Debt or Credit: N/A

Compute the debit or credit, if any, to be made to the Budgetary fund balance for a county's General Fund under each of the following assumptions: b. Budgeted revenues are $30,000,000, and budgeted expenditures are $31,500,000.

Amount: $1,500,000 Debt or Credit: Debit

In which governmental-type fund should each of these transactions be recorded? 1. The proceeds of a federal grant received to assist in financing the construction of a police training facility

Capital Projects Fund

State in which part of an entity's CAFR (MD&A, fund financial statements, notes to the financial statements, required supplementary information, combining statements and schedules, and the statistical section) you are most likely to find the following information: 5. Details of the year's expenditures for each nonmajor fund

Combining statements and schedules

State whether the following sentences are true or false regarding proprietary type funds and the accounting measurements made within them. 4. When Enterprise Funds are used, expenses are accrued only if they are expected to be paid within 60 days after the end of the year.

False

Prepare journal entries to record these interfund transactions in each affected fund: 4. The General Fund had previously paid $34,000 for consulting services and recorded the entire amount as expenditures. It now bills the Capital Projects Fund $10,000 for that fund's share of the consulting services.

GF: Due from CPF: 10,000 Expenditures - consulting services: 10,000 CPF: Expenditures - consulting services: 10,000 Due to GF: 10,000

In which governmental-type fund should each of these transactions be recorded? 4. The bi-weekly payroll of the police officers, fire fighters, and trash collectors

General Fund

Following are some of Vista Village's events during calendar year 2019. For each event, state (a) the amount the Village would report as expenditures if the event occurred in a governmental-type fund and (b) the amount it would report as expenses if the event occurred in an Enterprise Fund. 2. The amount owed to employees for compensated absences increased from $720,000 to $765,000 during the year. Employees are permitted to receive payment for unused compensated absences when they retire; at year-end, however, none of the employees had retired.

Governmental type fund: $0 Enterprise fund: $45,000

Following are some of Vista Village's events during calendar year 2019. For each event, state (a) the amount the Village would report as expenditures if the event occurred in a governmental-type fund and (b) the amount it would report as expenses if the event occurred in an Enterprise Fund. 3. At December 31, 2019 interest accrued on outstanding long-term debt amounted to $63,000. The interest was due to be paid on May 1, 2020.

Governmental type fund: $0 Enterprise fund: $63,000

In which governmental-type fund should each of these transactions be recorded? 3. Receipts from a special tax on gasoline to be used, pursuant to law, solely to finance the annual costs of fixing potholes

Special Revenue Fund

State whether the following sentences are true or false regarding accounting measurements within governmental-type funds. 2. Repayments of bond principal are recorded as expenditures.

True

State whether the following sentences are true or false regarding accounting measurements within governmental-type funds. 3. Liabilities for compensated absences are not accrued unless they are required to be liquidated with current financial resources.

True

If a donor provides that interest earned on an endowment be used to finance a particular program, how should the interest revenue be classified? Select one: a. As revenues with donor restrictions b. As endowment income c. As revenues without donor restrictions d. As an increase in the fair value of the endowment

a. As revenues with donor restrictions

State which category of funds (governmental-type, proprietary type, or fiduciary type) would be used by a state government for each of the following purposes: To construct a new office building for use by various departments a. Governmental-type b. Proprietary type c. Fiduciary type

a. Governmental-type

How should Phi Hospital, a nonprofit hospital, report an unrealized increase in the fair value of its investments with donor restrictions? Select one: a. Above the performance indicator, such as part of revenues over expenses b. After the hospital's performance indicator c. As a direct addition to total net assets with donor restrictions d. Only in the notes to its statements

b. After the hospital's performance indicator

Which of the following accounts of a governmental entity is credited when a purchase order is approved? a. Fund balance b. Encumbrances c. Budgetary fund balance reserved for encumbrances d. Vouchers payable

c. Budgetary fund balance reserved for encumbrances

A state whose fiscal year ends June 30, 2019, had the following transactions and events. For each item, compute how much total expenditures the state will report in the General Fund Statement of revenues, expenditures, and changes in fund balance for the year ended June 30, 2019. 3. At the beginning of the fiscal year, the state's actuary advised the budget director that a total of $430,000 would have to be paid into a retiree Health Care Trust Fund if the state were to contribute to the fund based on the amount of benefits earned by its active employees during fiscal 2019. However, the state has been financing these benefits on a "pay-as-you-go" basis and no trust fund has been established. Therefore, the adopted budget contained an appropriation for $115,000, the amount of benefits the state expected to pay on behalf of retired employees. During the year, actual payments on behalf of retired employees were $96,000. An additional $12,000 was scheduled to be paid in July 2019 for health care benefits claimed in June 2019.

$108,000

A state whose fiscal year ends June 30, 2019, had the following transactions and events. For each item, compute how much total expenditures the state will report in the General Fund Statement of revenues, expenditures, and changes in fund balance for the year ended June 30, 2019. 2. The state permits its employees to accumulate up to 30 days of vacation leave. The employees are entitled to be paid on termination or retirement for any unused vacation days. At the beginning of the fiscal year, the state's liability for unused vacation pay was $720,000. By the end of the fiscal year, the vacation pay liability had increased to $810,000. The latter amount includes $16,000 owed to employees who retired as of June 30, 2019 with unused vacation pay. That amount will be paid on July 12, 2019.

$16,000

Arlington Town uses an Internal Service Fund to account for its motor pool activities. Based on the following information, calculate the price per trip that the Motor Pool Internal Service Fund needs to charge users during calendar year 2018 to break even: Automobiles: The Motor Pool uses two 6-passenger vans, each costing $45,000 and each estimated to have a 5-year life when they were acquired in 2017. Driver salaries: The Motor Pool has a driver-administrator, who earns $45,000 a year, and a driver, who earns $35,000. The town uses a rate of 30 percent (to cover benefits, including pensions) for planning purposes. Insurance: In 2017, the town purchased a 3-year automobile accident policy at a cost of $6,000. Fuel and maintenance costs: Based on experience, the driver-administrator estimates that total fuel and maintenance costs for the year will be $8,000. Billing units: To simplify its record keeping, the Motor Pool charges a fixed price per trip. Arlington's budget office estimates it will provide 800 trips to the town's departments in 2018.

$165 price per trip

$3,750,000

Prepare journal entries to record these transactions and events. 1. During 2019 Oscar County collected personal income taxes in the amount of $3,200,000 as a result of withholdings by employers and payments of estimated taxes by taxpayers for 2019. 2. At year-end Oscar County's Finance Director estimated that, by April 15, 2020 (when taxpayers are required to file their final tax returns for 2019), taxpayers will make payments of $175,000 with their tax returns and request refunds of $320,000. 3. The Finance Director also estimated that late filers will pay $45,000 of taxes applicable to 2019 when they ultimately file their tax returns. Oscar County's written policy regarding personal income taxes is to consider only payments received with final returns by April 15 as "available."

1. Cash: 3,200,000 Revenues - income taxes: 3,200,000 2. Income taxes receivable: 175,000 Revenues - income taxes: 145,000 Income tax refunds payable: 320,000 3. Income taxes receivable: 45,000 Deferred income tax revenues: 45,000

Nickamigo County is preparing financial statements for the fiscal year ended June 30, 2019. Based on the following facts, prepare journal entries to record the appropriate year-end expenditure accruals in the county's General Fund. 1. For the last week in June 2019, Nickamigo County's employees earned $620,000. They are paid in the first week of July. 2. A claim for $100,000 was filed against a county health clinic for medical malpractice in March 2019. The case is scheduled to go to trial in January 2020. County attorneys believe it is probable the county will lose the case if it goes to trial and thus will try to negotiate a settlement. They believe the claim can be settled for about $40,000, but it may take almost a year to settle the case. 3. The county pays health care benefits on behalf of its retired employees. Nickamigo's actuary advised the county that if the plan were financed in accordance with actuarial standards, it would need to contribute $600,000 for fiscal year 2019 to a trust fund. Instead, the county makes monthly payments for the actual expenditures made on behalf of its retirees. The county paid $125,000 for retiree health care costs between July 1, 2018 and June 30, 2019, and will pay an additional $18,000 on July 10, 2019 for benefit claims made in June 2019.

1. Expenditures - salaries: 620,000 Accrued salaries payable: 620,000 2. No entry 3. Expenditures - retiree health care benefits: 18,000 Accrued liabilities: 18,000

The chief accountant for Eliana City needed to make adjusting entries before preparing the city's financial statements for calendar year 2019. She wrote a brief paragraph to guide her assistant in making the adjusting entries for the General Fund and then gave her assistant data regarding the accounts that might be affected by the adjustments. Use the following information to make the year-end adjusting journal entries, if needed. Identify the expenditure accounts at the object-of-expenditure level. 1. At December 31, the Property taxes receivable account showed a balance of $420,000, all of which was considered to be collectible. She estimated that $315,000 of that amount would be collected in the first 60 days of 2020. 2. The Health Department has a state grant that requires it to incur expenditures before the city can bill for the grant. The Department incurred $45,000 of expenditures under the grant during the last quarter of 2019 and sent a billing to the state, but the billing has not been recorded. 3. During the last week in December, Eliana's employees earned $80,000. They will be paid with the first paycheck in 2020. 4. The city received an invoice for $15,000 from its Electricity Proprietary Fund for December electricity services. The invoice, which has not yet been entered in the records, will be paid in early February. 5. City employees are allowed to accumulate up to 30 days' vacation leave and to get cash for unused leave when they are terminated or retire. The total liability to city employees for earned, but unused, vacation leave increased from $1,210,000 to $1,290,000 during 2019. Two employees retired during the last week of December and will be paid $22,000 for unused leave with their final paychecks in January. 6. Numerous claims have been filed against the city for incidents attributed to several of its departments. Discussions with city attorneys who have been handling the cases indicate that the city could ultimately pay out $1,850,000 in judgments or settlements, an increase of $100,000 over last year's estimate. As of December 31, settlements amounting to $35,000 were reached with two claimants. They will be paid in January. 7. The city operates a Pension Trust Fund to pay employee benefits. The plan has assets sufficient to pay for 75 percent of its pension liabilities. The city actuary recommended that the city contribute $950,000 to the Trust Fund in 2019. However, the city council appropriated only $300,000. That amount was paid to the Trust Fund in October, and the council made no further appropriation for the year. 8. The city Health Department has a state grant that must be used for a specific purpose, but there are no requirements as to when the grant resources may be used. At December 31, 2019, the unspent balance of the grant was $54,000.

1. Revenues - prop taxes: 105,000 Deferred revenues - prop taxes: 105,000 2. Due from state government: 45,000 intergovernmental revenues - grants: 45,000 3. expenditures - salaries: 80,000 accrued liabilities: 80,000 4. expenditures - electricity services: 15,000 due to electricity proprietary fund: 15,000 5. expenditures - compensated absences: 22,000 accrued liabilities: 22,000 6. expenditures - claims and judgments: 35,000 accrued liabilities: 35,000 7. no entry 8. unassigned fund balance: 54,000 restricted fund balance: 54,000

Sammy County is preparing financial statements for the year ended December 31, 2019. Based on the following facts, prepare journal entries to record the appropriate year-end revenue accruals and other adjustments in the county's General Fund. 1. At year-end, Sammy's delinquent property tax receivables were $60,000. The county estimated that $35,000 of those delinquencies would be collected by February 29, 2020, and the balance would trickle in during the rest of 2020. 2. Sales taxes are collected by the state on behalf of the county. On January 20, 2020, the state advised the county that (a) it would send the county a check for $150,000 before February 29, 2020, for taxes collected by merchants for the fourth quarter of 2019; and (b) based on past experience, it anticipated sending an additional check for approximately $45,000 during March or April for taxes received from late filers. Sammy's policy regarding sales taxes is to consider as "available" all taxes received before April 30, provided they were collected by merchants in the period covered by the financial statements. 3. Pursuant to state law, the county receives an annual grant from the state to inspect nursing homes and day care centers within the county. The law provides that the state will reimburse the county for 50 percent of salary and travel costs incurred by the county, but no more than the amount appropriated in the state budget for that purpose. For 2019 the amount appropriated by the state for Sammy County was $240,000. Sammy received an advance payment of $175,000 in January 2019 and was to apply for any additional amount due to the county before January 15, 2020. Sammy determined that it had spent a total of $520,000 (covering both the county's share and the state's share of the costs) on the program. (Assume Sammy previously recorded the $175,000 advance (as an Advance from state government) and the $520,000 of expenditures.)

1. Revenues - property taxes: 25,000 Deferred revenues - prop taxes: 25,000 2. Sales taxes receivable: 195,000 Revenues - sales taxes: 195,000 3. Due from state government: 65,000 Advance from state government: 175,000 Intergovernmental revenues - grants: 240,000

Prepare the journal entries to record the following transactions in an Investment Trust Fund for Seggen County during the calendar year 2019. 1. The cities of Turtle Creek and Pineview contributed $60,000 and $40,000, respectively, to an Investment Trust Fund operated by Seggen County during 2019. 2. Investments totaling $75,000 were purchased. 3. Income from the investments during the year totaled $8,000. 4. The fund paid $1,500 to the county for investment management fees. 5. The investments increased in value by $3,000. 6. Total income of $10,000 was paid to the two cities.

1. cash: 100,000 additions - contributions from turtle creek: 60,000 additions - contributions from pineview: 40,000 2. investments: 75,000 cash: 75,000 3. cash: 8,000 additions - interest: 8,000 4. deductions - investment expenses: 1,500 cash: 1,500 5. investments: 3,000 additions - net increase in fair value of invests: 3,000 6. deductions - distribution to pool participants: 10,000 cash: 10,000

James Page, finance director for the city of Bridgeport, has asked you to help him account for bond proceeds from two bond issuances—one which was issued at a premium and another which was issued at a discount. Prepare journal entries to record the following transactions in the city of Bridgeport's Capital Projects Fund during its 2019 fiscal year. 1. Bridgeport issues $18 million face value of general obligation bonds to build a new outdoor music arena—Harbor Arena. The City received an extra $1.5 million as a bond premium. 2. The bond covenant states that bond premiums must be transferred to a Debt Service Fund. The transfer of cash to the Debt Service Fund is made. 3. Bridgeport issues a $15 million face value of general obligation bond to construct a new road. Unfortunately, interest rates increased prior to the issuance of the bonds, and this resulted in the city receiving only $14.6 million from the bonds.

1. cash: 19,500,000 ofs - long-term debt issued: 18,000,000 ofs - bond issue premium: 1,500,000 2. transfer out to DSF: 1,500,000 cash: 1,500,000 3. cash: 14,600,000 ofu - bond issue discount: 400,000 ofs - long-term debt issued: 15,000,000

The City of West Hutchison is constructing a new road, which it estimates will cost $7.2 million. The city will finance the road with an expenditure-driven state construction grant of $1.2 million and a bond issuance of $6 million. Prepare journal entries to record the following transactions and events for the city's Capital Projects Fund during calendar year 2019. No budgetary entries other than encumbrances should be recorded. 1. The city receives $6.2 million from the bond issuance. The face amount of the bonds is $6 million. 2. The city signs a contract with the lowest bidder, Mary Michel Construction, to build the road at a cost of $7.2 million. 3. The construction is complete and the city receives a bill from Mary Michel Construction for $7.1 million. A provision of the contract is that the city holds 15 percent retainage until the project is inspected and approved. 4. The city pays the amount owed to the contractor less the retainage. 5. The city meets the spending provisions of the expenditure-driven construction grant and receives payment from the state. 6. The city inspector approves the construction project and the contractor is paid the retainage. 7. The city transfers the remaining cash balance to the Debt Service Fund.

1. cash: 6,200,000 ofs - long-term debt issued: 6,000,000 ofs - bond issue premium: 200,000 2. encumbrances - capital project: 7,200,000 budgetary fund balance reserved for encumb: 7,200,000 3. budgetary fund balance reserved for encumbrances: 7,200,000 encumbrances - capital project: 7,200,000 expenditures-construction costs: 7,100,000 retainage payable: 1,065,000 construction contracts payable: 6,035,000 4. construction contracts payable: 6,035,000 cash: 6,035,000 5. cash: 1,200,000 revenues-construction grant: 1,200,000 6. retainage payable: 1,065,000 cash: 1,065,000 7. transfer out to DSF: 300,000 cash: 300,000

The following transactions occurred during 2018: 1. The City of Watersville approved the construction of an enclosed concert arena for a total cost of $75,000,000 in order to attract professional events. On the same day, a contract with a 6 percent retainage clause was signed with V.P. Construction Company for the arena. The arena will be financed by a $75,000,000 general obligation bond issue. Investment revenue of $4,000,000 was also included in the budget. (Assume that the budget is recorded in the accounts and encumbrance accounting is used.) 2. Watersville received $76,000,000 from the sale of bonds, which included a premium of $1,000,000 over the $75,000,000 face value. The $1,000,000 premium was transferred immediately to the appropriate Debt Service Fund. 3. The city invested $74,900,000 in securities. 4. The contract signed with V.P. stipulated that the contract price included the architect fees. The architects were paid their fee of $25,000 by Watersville. (Assume that a vouchers payable account was not used.) 5. The contractor submitted a progress billing of $3,000,000; the billing (less a 6 percent retainage) was approved. 6. Investments that cost $3,000,000 were redeemed for $3,000,000 plus $50,000 interest. 7. V. P. was paid the amount due in transaction 5 less the retainage. 8. Income totaling $3,700,000 was received on the investments. 9. V. P. submitted another progress billing of $8,000,000. The billing, less the retainage, was approved. 10. Investments originally costing $7,800,000 were redeemed to make the payment to V.P. Cash proceeds of $8,100,000 were received. 11. The contractor was paid the amount due in transaction 9 less the retainage. 12. Interest income of $60,000 was accrued. 13. Interest income of $10,000 was received in cash. Use the preceding information to do the following: a. Prepare the journal entries necessary to record these transactions in the Capital Projects fund. Assume that the city operates on a calendar year.

1. estimated revenues: 4,000,000 estimated other financing sources: 75,000,000 appropriations: 75,000,000 budgetary fund balance: 4,000,000 encumbrances-capital project: 75,000,000 budgetary fund balance reserved for encum: 75,000,000 2. cash: 76,000,000 ofs - long-term debt issued: 75,000,000 ofs - bond issue premium: 1,000,000 transfer out to DSF: 1,000,000 cash: 1,000,000 3. investments: 74,900,000 cash: 74,900,000 4. budgetary fund balance reserved for encum: 25,000 encumbrances - capital project: 25,000 expenditures - architect fees: 25,000 cash: 25,000 5. budgetary fund balance reserved for encum: 3,000,000 encumbrances - capital project: 3,000,000 expenditures - construction costs: 3,000,000 construction contracts payable: 2,820,000 retainage payable: 180,000 6. cash: 3,050,000 investments: 3,000,000 revenues-interest: 50,000 7. construction contracts payable: 2,820,000 cash: 2,820,000 8. cash: 3,700,000 revenues - interest: 3,700,000 9. budgetary fund balance reserved for encum: 8,000,000 encumbrances - capital project: 8,000,000 expenditures-construction costs: 8,000,000 construction contracts payable: 7,520,000 retainage payable: 480,000 10. cash: 8,100,000 investments: 7,800,000 revenues-interest: 300,000 11. construction contracts payable: 7,520,000 cash: 7,520,000 12. interest receivable: 60,000 revenues-interest: 60,000 13. cash: 10,000 revenues-interest: 10,000

The city of Brock's Water Enterprise Fund leases water treatment equipment. The life of the noncancellable lease is 10 years, and the expected life of the equipment is 12 years. Using an 8 percent interest rate, the present value of the lease payments is $905,861. The first payment of $125,000 is due when the lease begins, January 5, 2018. An additional payment is due on January 5th for each of the next 9 years. Prepare journal entries to record: 1. The lease of the equipment on January 5, 2018. 2. The first lease payment on January 5, 2018. 3. Amortization expense for fiscal year ending December 31, 2018 4. The second lease payment on January 5, 2019.

1. intangible assets - lease: 905,861 lease payable: 905,861 2. lease payable: 125,000 cash: 125,000 3. amortization expense: 90,586 accumulated amortization - intangible leased asset: 90,586 4. lease payable: 62,531 interest expense: 62,469 cash: 125,000

Saralisa City, which operates on a calendar year basis, obtains 40 percent of its revenues from personal income taxes. Employers are required to withhold taxes from the earnings of city residents and remit them to the city monthly. City residents must also make payments, if necessary, with quarterly tax estimates. No later than April 15 of the following year, residents must file tax returns, remitting any additional taxes due to the city or claiming refunds of overpayments. Saralisa's accounting policies call for recognizing taxes obtained from income earned during a particular calendar year provided the taxes are received during the year or before April 30 of the following year; income taxes received after April 30 are recognized as revenues of the year in which received. Prepare journal entries to record the following transactions and events: 1. When it prepared its 2018 financial statements, Saralisa had deferred recognition of $20,000 of 2018 personal income taxes estimated to be received after April 30, 2019. After April 30, 2019, Saralisa actually receives only $16,000 cash. Saralisa's comptroller believes no additional cash will be received from the 2018 taxes. (Hint: Remember that based on the journal entry to record the deferral, Saralisa's books at the start of 2019 show Income taxes receivable and Deferred income tax revenues of $20,000.) 2. During 2019 Saralisa receives $3,250,000 from personal income taxes withheld by employers during the year and estimates filed by taxpayers during the year. 3. In January 2020, before the financial statements for 2020 are prepared, Saralisa receives $400,000 from employers and taxpayers based on taxpayer earnings during the latter part of 2019. 4. Saralisa's comptroller estimates that the city will receive $55,000 with the 2019 tax returns (due April 15, 2020), as well as requests for refunds totaling $275,000. The comptroller also estimates that $28,000 will trickle in after April 30 with tax returns filed by late filers.

1a. Deferred income tax revenues: 20,000 Income taxes receivable: 20,000 1b. Cash: 16,000 Revenue - income taxes: 16,000 2. Cash: 3,250,000 Revenue - income taxes: 3,250,000 3. Income taxes receivable: 400,000 Revenue - income taxes: 400,000 4a. Revenues - income taxes: 220,000 Income taxes receivable: 55,000 Income tax refunds payable: 275,000 4b. Income taxes receivable: 28,000 Deferred income tax revenues: 28,000

Compute the debit or credit, if any, to be made to the Budgetary fund balance for a county's General Fund under each of the following assumptions: c. Budgeted revenues are $33,000,000, and budgeted expenditures are $32,600,000.

Amount: $400,000 Debt or Credit: Credit

The Village of Albert's Alley recorded the following budgetary journal entry at the beginning of fiscal 2019: Estimated revenue 5,000,000 Appropriations 4,950,000 Budgetary fund balance 50,000 At the end of fiscal 2019, what would be the effect on the ending actual fund balance, assuming the following: d. Actual revenues are $3,000 less than estimated revenues, and actual expenditures are $2,000 less than appropriations.

Amount: $49,000 Increase or Decrease: Increase

The Village of Albert's Alley recorded the following budgetary journal entry at the beginning of fiscal 2019: Estimated revenue 5,000,000 Appropriations 4,950,000 Budgetary fund balance 50,000 At the end of fiscal 2019, what would be the effect on the ending actual fund balance, assuming the following: b. Actual revenues are equal to estimated revenues, and actual expenditures are equal to appropriations.

Amount: $50,000 Increase or Decrease: Increase

The Village of Albert's Alley recorded the following budgetary journal entry at the beginning of fiscal 2019: Estimated revenue 5,000,000 Appropriations 4,950,000 Budgetary fund balance 50,000 At the end of fiscal 2019, what would be the effect on the ending actual fund balance, assuming the following: c. Actual revenues exceed estimated revenues by $4,000, and actual expenditures are equal to appropriations.

Amount: $54,000 Increase or Decrease: Increase

The Village of Albert's Alley recorded the following budgetary journal entry at the beginning of fiscal 2019: Estimated revenue 5,000,000 Appropriations 4,950,000 Budgetary fund balance 50,000 At the end of fiscal 2019, what would be the effect on the ending actual fund balance, assuming the following: a. Actual revenues are equal to estimated revenues, and actual expenditures are $7,000 less than appropriations.

Amount: $57,000 Increase or Decrease: Increase

This information is extracted from or based on the notes to the financial statements issued by New York City. For each item described, identify the fund used by New York City. 2. "This fund . . . accounts for resources used to construct or acquire fixed assets and make capital improvements."

Capital Projects Fund

Using the following codes, indicate which listed fund best fits each description by placing the appropriate code in the space provided. GF General Fund SRF Special Revenue Fund CPF Capital Projects Fund DSF Debt Service Fund EF Enterprise Fund ISF Internal Service Fund Resources are accumulated to pay principal and interest on general long-term debt.

DSF Debt Service Fund

In which governmental-type fund should each of these transactions be recorded? 2. Receipts from a special tax levied, after approval by the citizenry, to pay the principal and interest on general obligation bonds issued to finance construction of an office building

Debt Service Fund

This information is extracted from or based on the notes to the financial statements issued by New York City. For each item described, identify the fund used by New York City. 3. "This fund, required by State legislation . . . into which payments of real estate taxes and other revenues are deposited in advance of debt service payment dates. Debt service on all City . . . bonds is paid from this fund."

Debt Service Fund

Using the following codes, indicate which listed fund best fits each description by placing the appropriate code in the space provided. GF General Fund SRF Special Revenue Fund CPF Capital Projects Fund DSF Debt Service Fund EF Enterprise Fund ISF Internal Service Fund Services are provided to the general public, and the costs of providing the services are financed by user charges.

EF Enterprise Fund

EF, ISF

State whether the following sentences are true or false regarding accounting measurements within governmental-type funds. 1. Capital assets are recognized as assets and depreciated over their estimated useful lives.

False

State whether the following sentences are true or false regarding accounting measurements within governmental-type funds. 4. As a general rule, property taxes are recognized as revenue in the year for which the taxes are levied, regardless of when they are expected to be collected.

False

State whether the following sentences are true or false regarding proprietary type funds and the accounting measurements made within them. 2. An Enterprise Fund may not be used if the entity, such as a provider of mass transit services, receives subsidies from the General Fund.

False

State whether the following sentences are true or false regarding proprietary type funds and the accounting measurements made within them. 3. To ascertain the amount of capital assets acquired by an Enterprise Fund during the year, you should read the statement of revenue, expenses, and changes in net position.

False

State whether the following sentences are true or false regarding the nature and uses of governmental type funds. 1. Capital outlays are never made from the General Fund.

False

State whether the following sentences are true or false regarding the nature and uses of governmental type funds. 3. Special Revenue Funds cannot be used if a portion of the revenues are derived from transfers from the General Fund.

False

State whether the following sentences are true or false regarding the nature and uses of governmental type funds. 4. Capital Projects Funds are used to account for and report on all capital assets, whether they are financed from the proceeds of general obligation bonds or from revenue bonds sold by proprietary funds.

False

State whether the following sentences are true or false regarding the nature and uses of governmental type funds. 5. Debt Service Funds are used to accumulate resources for paying debt service in the current year, but not in future years.

False

State whether these statements are true or false. Fiduciary funds are not reported in the fund financial statements, but instead are aggregated and reported in a single column in the government-wide financial statements.

False

State whether these statements are true or false. In the fund financial statements, Enterprise Funds must be presented using the current financial resources measurements focus and the modified accrual basis of accounting.

False

State whether these statements are true or false. Net position is reported as restricted in proprietary funds only if the restrictions are imposed by the entity's constitution or statue.

False

State whether these statements are true or false. Notes to the financial statements are a form of required supplementary information.

False

State in which part of an entity's CAFR (MD&A, fund financial statements, notes to the financial statements, required supplementary information, combining statements and schedules, and the statistical section) you are most likely to find the following information: 7. Current year's revenues, expenditures, and changes in fund balance for the General Fund

Fund financial statements

For each scenario shown below, state which specific fund is used to account for the activity and which measurement focus and basis of accounting is used within the fund. 1. To construct a new office building for use by various departments

Fund: capital projects fund Measurement Focus: current financial resources Basis of Accounting: modified accrual

For each scenario shown below, state which specific fund is used to account for the activity and which measurement focus and basis of accounting is used within the fund. 4. To collect sales taxes for local governments who "piggy-back" their sales taxes on top of the state sales tax

Fund: custodial fund Measurement Focus: economic resources Basis of Accounting: accrual

For each scenario shown below, state which specific fund is used to account for the activity and which measurement focus and basis of accounting is used within the fund. 2. To pay salaries of personnel who maintain state parks

Fund: general fund Measurement Focus: current financial resources Basis of Accounting: modified accrual

For each scenario shown below, state which specific fund is used to account for the activity and which measurement focus and basis of accounting is used within the fund. 5. To operate a central printing department that prints forms and reports for all state departments

Fund: internal service fund Measurement Focus: economic resources Basis of Accounting: accrual

For each scenario shown below, state which specific fund is used to account for the activity and which measurement focus and basis of accounting is used within the fund. 3. To accumulate resources in a trust fund to pay pension benefits for its employees

Fund: pension trust fund Measurement Focus: economic resources Basis of Accounting: accrual

Using the following codes, indicate which listed fund best fits each description by placing the appropriate code in the space provided. GF General Fund SRF Special Revenue Fund CPF Capital Projects Fund DSF Debt Service Fund EF Enterprise Fund ISF Internal Service Fund Expenditures are made by the city's streets department.

GF General Fund

Using the following codes, indicate which listed fund best fits each description by placing the appropriate code in the space provided. GF General Fund SRF Special Revenue Fund CPF Capital Projects Fund DSF Debt Service Fund EF Enterprise Fund ISF Internal Service Fund Salaries are paid to police officers, fire fighters, and other personnel of the operating departments.

GF General Fund

Prepare journal entries to record these interfund transactions in each affected fund: 1. The General Fund makes a short-term loan of $75,000 to a Special Revenue Fund.

GF: Due from SRF: 75,000 Cash: 75,000 SRF: Cash: 75,000 Due to GF: 75,000

Prepare journal entries to record these interfund transactions in each affected fund: 3. The General Fund receives a bill for $45,000 from the Motor Pool Internal Service Fund for motor vehicle services provided to city agencies in April.

GF: Expenditures - motor vehicle services: 45,000 Due to Motor Pool SF: 45,000 MPSF: Due from GF: 45,000 Revenues - services provided: 45,000

Prepare journal entries to record these interfund transactions in each affected fund: 2. The General Fund sends $100,000 cash to the Debt Service Fund so the latter fund can pay the debt service on general obligation bonds.

GF: Transfer out to DSF: 100,000 Cash: 100,000 DSF: Cash: 100,000 Transfer in from GF: 100,000

This information is extracted from or based on the notes to the financial statements issued by New York City. For each item described, identify the fund used by New York City. 1. "This is the general operating fund of the City. Substantially all tax revenues, Federal and State Aid (except aid for capital projects) and other operating revenues are accounted for in [this fund]."

General Fund

For each of the following transactions, identify the net asset classification (without donor restrictions, with donor restrictions) that is affected in the nonprofit's financial statements for the year ended December 31, 2019. Both net asset classifications may be affected in some transactions. If net assets are not affected by the transaction, select No entry as your answer. 4. Donor C gave a nonprofit several investments having a fair value of $3 million in March 2019. Donor C stipulated that the nonprofit must hold the gift in perpetuity, but it could use the income from the gift for any purpose the trustees considered appropriate. Between March and December, the investments produced income of $100,000.

Gift from Donor C: Net assets with donor restrictions Investment Income: Net assets without donor restrictions

Following are some of Friendly Village's transactions during the calendar year 2019. For each transaction, state (a) the amount the Village would report as expenditures for the year 2019 if the transaction occurred in a governmental-type fund and (b) the amount it would report as expenses for the year if the transaction occurred in an Enterprise Fund. 2. Friendly used the proceeds of long-term bonds to buy a sanitation truck. The truck was delivered on July 1, 2019, and immediately placed into service. The truck cost $100,000 and had an estimated useful life of 10 years.

Governmental type fund: $100,000 Enterprise fund: $5,000

Following are some of Friendly Village's transactions during the calendar year 2019. For each transaction, state (a) the amount the Village would report as expenditures for the year 2019 if the transaction occurred in a governmental-type fund and (b) the amount it would report as expenses for the year if the transaction occurred in an Enterprise Fund. 3. Friendly had agreed to pay off the $100,000 used to buy the sanitation truck (see previous transaction) over a 5-year period, starting December 31, 2019. On that date, Friendly paid the first installment on the debt, $10,000 in principal and $3,000 in interest.

Governmental type fund: $13,000 Enterprise fund: $3,000

Following are some of Vista Village's events during calendar year 2019. For each event, state (a) the amount the Village would report as expenditures if the event occurred in a governmental-type fund and (b) the amount it would report as expenses if the event occurred in an Enterprise Fund. 1. An invoice in the amount of $26,000 for electricity services for the month of December was received and paid in January, 2020.

Governmental type fund: $26,000 Enterprise fund: $26,000

Following are some of Friendly Village's transactions during the calendar year 2019. For each transaction, state (a) the amount the Village would report as expenditures for the year 2019 if the transaction occurred in a governmental-type fund and (b) the amount it would report as expenses for the year if the transaction occurred in an Enterprise Fund. 1. Friendly paid $600,000 in salaries during the year. In addition, during the last pay period, Friendly's employees earned $5,000 by December 31, but that amount was not paid until the first week of January, 2020.

Governmental type fund: $605,000 Enterprise fund: $605,000

Using the following codes, indicate which listed fund best fits each description by placing the appropriate code in the space provided. GF General Fund SRF Special Revenue Fund CPF Capital Projects Fund DSF Debt Service Fund EF Enterprise Fund ISF Internal Service Fund Goods or services are furnished to other segments of the government on a user charge basis.

ISF Internal Service Fund

The following interfund transactions occurred in Becca City's General Fund during the year ended December 31, 2019. For each transaction, describe its nature (e.g., is it an interfund transfer, an interfund loan), prepare the journal entry in the General Fund, and prepare the journal entry in the other affected fund. 2. Loaned $30,000 to the Parks Special Revenue Fund in May 2019 (the Special Revenue Fund was to repay the loan in September 2019).

Interfund Loan GF: Due from Parks Special Revenue: 30,000 Cash: 30,000 Parks Special Revenue Fund: Cash: 30,000 Due to General Fund: 30,000

The following interfund transactions occurred in Becca City's General Fund during the year ended December 31, 2019. For each transaction, describe its nature (e.g., is it an interfund transfer, an interfund loan), prepare the journal entry in the General Fund, and prepare the journal entry in the other affected fund. 3. Gave $50,000 to the City's Mass Transit Authority as a subsidy because transit fares were insufficient to pay the authority's operating expenses.

Interfund Transfer GF: Transfer out to Mass Transit Authority: 50,000 Cash: 50,000 Mass Transit Authority: Cash: 50,000 Transfer in from General Fund: 50,000

The following interfund transactions occurred in Becca City's General Fund during the year ended December 31, 2019. For each transaction, describe its nature (e.g., is it an interfund transfer, an interfund loan), prepare the journal entry in the General Fund, and prepare the journal entry in the other affected fund. 1. Received an invoice for $15,000 from the City's Electric Utility Fund for electricity service in October.

Interfund services provided and used General Fund: Expenditures - electric services: 15,000 Due to Electric Utility Fund: 15,000 Electric Utility Fund: Due from General Fund: 15,000 Revenues - electric services: 15,000

For each of the following transactions, identify the net asset classification (without donor restrictions, with donor restrictions) that is affected in the nonprofit's financial statements for the year ended December 31, 2019. Both net asset classifications may be affected in some transactions. If net assets are not affected by the transaction, select No entry as your answer. 1. Donor A gave the nonprofit a cash gift of $50,000 in June 2019, telling the nonprofit the gift could not be used until 2020. (Identify the affected net asset classification(s) in the journal entries made both in June 2019 and at the start of 2020.)

June 2019: Net assets with donor restrictions Start of 2020: Net assets with donor restrictions, reclassified to Net assets without donor restrictions

State in which part of an entity's CAFR (MD&A, fund financial statements, notes to the financial statements, required supplementary information, combining statements and schedules, and the statistical section) you are most likely to find the following information: 3. Discussion of why the current year's tax revenues were greater than (or less than) the previous year's tax revenues

MD&A

Net assets with donor restrictions

For each of the following transactions, identify the net asset classification (without donor restrictions, with donor restrictions) that is affected in the nonprofit's financial statements for the year ended December 31, 2019. Both net asset classifications may be affected in some transactions. If net assets are not affected by the transaction, select No entry as your answer. 3. In response to a special fundraising campaign, whereby contributions could be used only for construction of a new warehouse, a large number of individuals promised to make cash contributions totaling $2 million in 2019. The nonprofit believes it will actually collect 80 percent of the promised cash.

Net assets with donor restrictions

For each of the following transactions, identify the net asset classification (without donor restrictions, with donor restrictions) that is affected in the nonprofit's financial statements for the year ended December 31, 2019. Both net asset classifications may be affected in some transactions. If net assets are not affected by the transaction, select No entry as your answer. 6. Donor D advises a university that he has established an irrevocable charitable remainder trust, administered by his attorney, whereby his wife will receive income from the trust as long as she lives. At her death, the remaining trust assets will be distributed to the university as a permanent endowment. The university's actuary estimates the fair value of the university's beneficial interest to be $400,000.

Net assets with donor restrictions

Net assets with donor restrictions, reclassified to Net assets without donor restrictions

Net assets without donor restrictions

For each of the following transactions, identify the net asset classification (without donor restrictions, with donor restrictions) that is affected in the nonprofit's financial statements for the year ended December 31, 2019. Both net asset classifications may be affected in some transactions. If net assets are not affected by the transaction, select No entry as your answer. 5. Donor C donates to a local museum a work of art having a fair value of $5,000, with the understanding that the museum will sell it at auction and use the funds for its general activities.

Net assets without donor restrictions

A citizen sued a city because he was accidentally shot by a police officer. The city acknowledges responsibility for the accident, and based on ongoing negotiations, the city's attorney believes the citizen's claim will probably be settled for about $750,000. The accident occurred on March 14, 2019; the government's fiscal year ends June 30, 2019; and the city's attorney believes it might take more than a year to reach a settlement. Prepare the journal entry, if any, the city should make regarding this event when it closes its General Fund books for fiscal year 2019. If the event doesn't require a journal entry, select "No entry" as your drop-down answers and leave the Debit and Credit answers blank (zero).

No entry

For each of the following transactions, identify the net asset classification (without donor restrictions, with donor restrictions) that is affected in the nonprofit's financial statements for the year ended December 31, 2019. Both net asset classifications may be affected in some transactions. If net assets are not affected by the transaction, select No entry as your answer. 3. Donor B sent a letter to a nonprofit, saying she would donate $20,000 in cash to the nonprofit, to be used for any purpose the nonprofit's trustees desired, provided the nonprofit raised an equal amount of cash from other donors.

No entry

State in which part of an entity's CAFR (MD&A, fund financial statements, notes to the financial statements, required supplementary information, combining statements and schedules, and the statistical section) you are most likely to find the following information: 1. Description of the government's accounting policies

Notes to the financial statements

State in which part of an entity's CAFR (MD&A, fund financial statements, notes to the financial statements, required supplementary information, combining statements and schedules, and the statistical section) you are most likely to find the following information: 6. Rationale for including component units as part of the reporting entity

Notes to the financial statements

This information is extracted from or based on the notes to the financial statements issued by New York City. For each item described, identify the fund used by New York City. 4. These funds account for assets held on behalf of the City's employees to pay pension benefits.

Pension Trust Fund

For each of the following transactions, identify the net asset classification (without donor restrictions, with donor restrictions) that is affected in the nonprofit's financial statements for the year ended December 31, 2019. Both net asset classifications may be affected in some transactions. If net assets are not affected by the transaction, select No entry as your answer. 2. Attorney Howard Gorman volunteered his services to Taconic Singers, a nonprofit. He spent 12 hours preparing contracts for the services of professional singers and 8 hours serving as an usher before performances. Gorman normally gets $200 an hour for legal services, and Taconic normally pays $8 an hour when it hires ushers.

Professional services: Net assets without donor restrictions Usher services: no entry

State in which part of an entity's CAFR (MD&A, fund financial statements, notes to the financial statements, required supplementary information, combining statements and schedules, and the statistical section) you are most likely to find the following information: 4. Comparison of the budgeted revenues and expenditures for the General Fund with the actual revenues and expenditures on the budgetary basis of accounting

Required Supplementary Information

Using the following codes, indicate which listed fund best fits each description by placing the appropriate code in the space provided. GF General Fund SRF Special Revenue Fund CPF Capital Projects Fund DSF Debt Service Fund EF Enterprise Fund ISF Internal Service Fund Specific revenue sources are dedicated to a particular purpose other than capital projects or debt service.

SRF Special Revenue Fund

State in which part of an entity's CAFR (MD&A, fund financial statements, notes to the financial statements, required supplementary information, combining statements and schedules, and the statistical section) you are most likely to find the following information: 2. Ten-year trend in General Fund revenues ad expenditures

Statistical Section

The City of Nickston uses the purchases method to account for the acquisition of supplies by its General Fund. At the end of fiscal 2018, the supplies inventory was valued at $63,000. At the end of fiscal 2019, the supplies inventory was valued at $71,000. Prepare the journal entry that needs to be made at the end of fiscal 2019 to adjust the amount of the supplies inventory.

Supplies inventory: 8,000 Nonspendable fund balance: 8,000

Thomas County pays all the debt service on its long-term general obligation bonds on April 1 and October 1 of each year. Accrued interest on these bonds for the stub period October 1-December 31, 2018, was $75,000. During its fiscal year ended December 31, 2019, Thomas paid $350,000 interest on its long-term general obligation bonds. Accrued interest for the stub period October 1-December 31, 2019, was $88,000. Prepare journal entries needed to adjust Thomas County's 2019 fund financial statements so government-wide statements can be prepared.

To record beginning-of-year interest liability: net position: 75,000 accrued interest payable: 75,000 To record increase in accrued interest: interest expense: 13,000 accrued interest payable: 13,000

Rufo Beach levies a sales tax of 3 percent by "piggy-backing" its tax on top of the state's sales tax. The state mails most of the sales tax collections promptly to Rufo Beach, but a portion of the tax collected during the last quarter of Rufo's calendar year arrives so late that Rufo does not consider it available to pay bills. As a result, Rufo reported $125,000 of deferred sales tax revenues in its December 31, 2018 governmental fund balance sheet and $140,000 of deferred sales tax revenues in its December 31, 2019 governmental fund balance sheet. Prepare worksheet adjusting journal entries needed to prepare government-wide financial statements for Rufo's year ended December 31, 2019.

To reverse revenues applicable to 2018: revenues - sales taxes: 125,000 net position: 125,000 To recognize additional sales tax revenue: deferred sales tax revenues: 140,000 revenues - sales taxes: 140,000

State whether the following sentences are true or false regarding proprietary type funds and the accounting measurements made within them. 1. Enterprise Funds are used when a governmental entity sells products or services primarily to external parties (such as the general public) for a fee or user charge.

True

State whether the following sentences are true or false regarding proprietary type funds and the accounting measurements made within them. 5. When Enterprise Funds are used, revenues are recognized in the period they are earned, even if cash has not been received.

True

State whether the following sentences are true or false regarding the nature and uses of governmental type funds. 2. Special Revenue Funds are used if the law restricts one or more specific sources of revenue, rather than general tax revenues, for specific purposes.

True

State whether these statements are true or false. A state government that receives a grant from the federal government to construct a firehouse should report the resource inflow as revenues in the Capital Projects fund.

True

State whether these statements are true or false. In the fund financial statements, a government may elect to report any governmental or Enterprise Fund as major if the government considers financial information on that fund particularly important to statement users.

True

State whether these statements are true or false. In the fund financial statements, the General Fund should always be reported as a major fund

True

State whether these statements are true or false. When the financial data of a component unit are "blended" with the financial data of a primary government, the blended data are presented in both the fund financial statements and the government-wide statements

True

In accordance with its established billing rates, Alpha Hospital provided services amounting to $14 million during the year ended December 31, 2018. The hospital's best estimate of transaction price included contractual adjustments of $3 million and charity patient care of $1 million. What amount should Alpha report as patient service revenue in its year 2018 operating statement? Select one: a. $10 million b. $14 million c. $11 million d. $13 million

a. $10 million

On January 10, 2018, Delta Hospital received a bequest in the form of equity securities. Delta was required to hold the securities in perpetuity, but it could spend the income. The securities had cost the donor $2.7 million, but their fair value was $3.4 million when Delta received them. The fair value of the securities fluctuated during the year, and Delta's comptroller calculated that the average fair value during the year was $3.1 million. When Delta prepared its financial statements as of December 31, 2018, the fair value of the securities was $3.3 million. At what amount should Delta report the securities in its financial statements at December 31, 2018? Select one: a. $3.3 million b. $2.7 million c. $3.4 million d. $3.1 million

a. $3.3 million

Gamma Hospital provided services amounting to $10 million at its established billing rates in the year ended December 31, 2018. Included in the $10 million were services of $8 million to Medicare patients. Medicare paid Gamma at 60 percent of Gamma's established rates. Also included in the $10 million were $2 million of services to self-pay patients who did not meet Gamma's criteria for charity care when admitted. Gamma collected $1.5 million from the self-pay patients during the year and estimated that 40 percent of the uncollected amount would not be collected. What amount should Gamma report as patient service revenue in its year 2018 financial statements? Select one: a. $6.6 million b. $6.3 million c. $10 million d. $6.8 million

a. $6.6 million

Which of the following is an example of required supplementary information? Select one: a. 10-year schedule of total pension liability, pension plan fiduciary net position, net pension liability, fiduciary net position as a percentage of total pension liability, covered employee payroll, and net pension liability as a percentage of covered payroll b. comparison of current year and previous year General Fund revenues, expenditures, and changes in fund balances c. combining schedules of nonmajor governmental funds and nonmajor proprietary funds d. 10-year schedule of General Fund revenues, expenditures and changes in fund balances

a. 10-year schedule of total pension liability, pension plan fiduciary net position, net pension liability, fiduciary net position as a percentage of total pension liability, covered employee payroll, and net pension liability as a percentage of covered payroll

Pursuant to law, a city imposes a hotel occupancy tax for the sole purpose of beautifying the downtown area. The city corporation counsel advises the finance commissioner that the taxes must be used solely as stipulated in the law. During the year the city collects hotel occupancy taxes of $800,000, deposits that amount in a Downtown Redevelopment Special Revenue Fund, and spends $450,000 of it. How should the remaining $350,000 of net assets be classified in the Special Revenue Fund's balance sheet? Select one: a. As Restricted fund balance b. As Assigned fund balance c. As Unassigned fund balance d. As Reserved fund balance

a. As Restricted fund balance

A village issues $3,000,000 of general obligation bonds to build a new firehouse. How should the debt be reported? Select one: a. As a liability in the government-wide statement of net position b. As a liability in the fund balance sheet c. As proceeds of debt in the government-wide statement of activities d. As a liability in both the fund balance sheet and the government-wide statement of net position

a. As a liability in the government-wide statement of net position

The trustees of a nonprofit decide to designate a portion of its resources for use in a specific research program. How should the designation be reported in the nonprofit's financial statements? Select one: a. As net assets without donor restrictions; the board designation may be shown on the face of the statement of financial position. b. As net assets with restrictions, designated for research, in a note c. Board designations should not be reported in nonprofit financial statements. d. As net assets with restrictions, either on the face of the statements or in a note

a. As net assets without donor restrictions; the board designation may be shown on the face of the statement of financial position.

The trustees of a nonprofit decide to designate a portion of its resources for use in a specific research program. How should the designation be reported in the nonprofit's financial statements? Select one: a. As net assets without donor restrictions; the board designation may be shown on the face of the statement of financial position. b. As net assets with restrictions, either on the face of the statements or in a note c. Board designations should not be reported in nonprofit financial statements. d. As net assets with restrictions, designated for research, in a note

a. As net assets without donor restrictions; the board designation may be shown on the face of the statement of financial position.

Which of the following type of entities follows FASAB standards when preparing financial statements? a. Federal government. b. Nonprofit entities. c. Business enterprises. d. State and local governments.

a. Federal government.

In fund financial statements, where are the revenues and expenditures (expenses) of governmental, proprietary, and fiduciary funds reported? Select one: a. Governmental, proprietary, and fiduciary funds should be reported in separate sets of financial statements. b. Governmental funds should be reported in one set of statements, and proprietary and fiduciary funds should be reported together in another set of statements. c. All major funds should be reported together in one set of statements, regardless of category, and all nonmajor funds should be reported in another set of statements. d. Governmental and proprietary funds should be reported in separate sets of financial statements, and fiduciary funds should be reported only in the government-wide statements.

a. Governmental, proprietary, and fiduciary funds should be reported in separate sets of financial statements.

State which category of funds (governmental-type, proprietary type, or fiduciary type) would be used by a state government for each of the following purposes: To pay salaries of personnel who maintain state parks a. Governmental-type b. Proprietary type c. Fiduciary type

a. Governmental-type

Which of the following must be included when an entity issues general purpose financial reports separately from a CAFR? Select one: a. Notes to the financial statements b. Introductory section c. Statistical section d. Combining statement of blended component units

a. Notes to the financial statements

In which set of financial statements are fiduciary-type funds reported? Select one: a. Only in the fund financial statements b. Only in the government-wide financial statements c. In both fund and government-wide financial statements d. In neither fund nor government-wide financial statements

a. Only in the fund financial statements

The Prevent Cancer Organization incurred several expenses during 2019. Which of the following would not be classified as a program expense? Select one: a. Postage for announcements of the 2019 Kickoff Dinner b. Pamphlets mailed to the general public regarding the "danger signals of cancer" c. Salaries of personnel who perform cancer research d. Pamphlets on the relationship of smoking to cancer

a. Postage for announcements of the 2019 Kickoff Dinner

Which of the following is an example of a "benefit or burden" relationship for purposes of determining whether a primary government is financially accountable for another organization? Select one: a. Primary government is obligated in some manner for the other organization's debt. b. Primary government is authorized to audit the other organization. c. Primary government is required to approve the other organization's debt issuances. d. Primary government is authorized to remove members of the other organization's governing board.

a. Primary government is obligated in some manner for the other organization's debt.

Which of the following best expresses the accounting standard regarding accounting for purchases and inventories in the General Fund? Select one: a. Purchases may be recorded as expenditures either when acquired or consumed; if accounted for as expenditures when acquired, year-end inventories must be reported if the amount is significant. b. Purchases may be recorded as expenditures either when acquired or consumed; if accounted for as expenditures when acquired, year-end inventories are ignored. c. They must be accounted for in a manner similar to that of commercial enterprises. d. All purchases must be accounted for as expenditures upon acquisition.

a. Purchases may be recorded as expenditures either when acquired or consumed; if accounted for as expenditures when acquired, year-end inventories must be reported if the amount is significant.

Omicron Hospital, a nonprofit entity, received $6 million in premium revenue under a capitation contract with Zeta HMO to provide services to subscribing participants. Its internal records showed that Omicron spent $5.6 million in caring for Zeta's subscribers. How should Omicron report the transactions with Zeta in its financial statements? Select one: a. Report $6 million as premium revenue b. Report $6 million as patient service revenue c. Report $400,000 as patient service revenue d. Report $400,000 as premium revenue

a. Report $6 million as premium revenue

The city of Watson reported $8,000 of deferred property tax revenues in its General Fund at the end of its 2018 fiscal year. The 2018 deferred property tax revenues were collected during the last 10 months of the 2019 fiscal year. What worksheet journal entry should be made to prepare the city of Watson's 2019 government-wide financial statements? a. Revenues—property taxes. . . . . . . . . . 8,000 Net position . . . . . . . . . . . . . . . . . . . 8,000 b. Revenues—property taxes. . . . . . . . . . . . . . . 8,000 Deferred revenues—property taxes . . . . . . . . . .8,000 c. Deferred revenues—property taxes . . . . . . 8,000 Revenues—property taxes . . . . . . . . .8,000 d. No entry is required

a. Revenues—property taxes. . . . . . . . . . 8,000 Net position . . . . . . . . . . . . . . . . . . . 8,000

Sarasota, Florida operates under a Commissioner-Manager form of government. Its financial statements for the year ended September 30, 2016 refer to an entity called the Downtown Improvement District (DID). Based on the following information, state (1) whether DID should be reported as a component unit of Sarasota and (2) if, so, whether it should be blended or discretely reported. DID was created by City ordinance. The physical boundaries include all non-residential parcels of property within the downtown core of the City of Sarasota. The City refers to DID as a "dependent taxing authority" because DID has the power to levy up to two mills of property taxes—with the approval of the City Commissioners—for the purpose of purchasing supplemental services such as maintenance, security, sanitation, promotions, infrastructure, and capital improvements. The City Commission appoints DID's entire governing board. Based on the information provided, select the correct statement. a. The DID qualifies as a discretely presented component unit. b. The DID qualifies as a blended component unit. c. The DID does not meet the criteria to be considered a component unit.

a. The DID qualifies as a discretely presented component unit.

Oneida County, New York sponsors the Mohawk Valley Community College (MVCC). Based on the following information from the County's financial statements for the year ended December 31, 2015, state (1) whether MVCC should be reported as a component unit of Oneida County and (2) if so, whether it should be blended or discretely reported. Give reasons for your answers. MVCC is administered by a Board of Trustees consisting of ten voting members. Five are appointed by the Oneida County Executive and confirmed by the Oneida Legislature, four by the Governor of the state, and one student is elected by the student body. MVCC's budget is subject to the approval of the County Executive and the County Legislature, and the County provides substantial funding for MVCC's operations. Based on the information provided, select the correct statement. a. The MVCC qualifies as a discretely presented component unit. b. The MVCC qualifies as a blended component unit. c. The MVCC does not meet the criteria to be considered a component unit.

a. The MVCC qualifies as a discretely presented component unit.

When the city's budget is approved, the total amount appropriated is greater than the estimated revenues. What are the financial implications of that budget? a. The city anticipates a budget deficit for the year. b. The city anticipates a budget surplus for the year. c. The city anticipates a need to increase its tax rates. d. The city anticipates a need to revise the budget.

a. The city anticipates a budget deficit for the year.

When the city's budget is approved, the total amount appropriated is greater than the estimated revenues. What are the financial implications of that budget? a. The city anticipates a budget deficit for the year. b. The city anticipates a need to increase its tax rates. c. The city anticipates a budget surplus for the year. d. The city anticipates a need to revise the budget.

a. The city anticipates a budget deficit for the year.

At the statement of financial position date, the fair value of an investment is greater than the amount at which the investment was initially recorded. What adjustment, if any, is needed? Select one: a. The increase should be recorded as a gain in the same net asset class in which the investment is reported. b. The increase should be recorded as a gain in net assets without donor restrictions. c. No adjustment is needed. d. The increase should be recorded as a gain in net assets with donor restrictions.

a. The increase should be recorded as a gain in the same net asset class in which the investment is reported.

A nonprofit held a fundraising campaign at year-end 2018. It received pledges of $45,000, but it did not receive any cash until the following year. It estimates that 80% of the pledges are collectible. What should the nonprofit report in 2018 based on these pledges? Select one: a. The nonprofit should report net contributions receivable of $36,000 and contributions revenue of $36,000. b. The nonprofit should not report any revenue in the year it conducted its fundraising campaign. c. The nonprofit should report contributions receivable of $40,000 and contributions revenues of $40,000. d. The nonprofit should disclose the pledges in a note to its financial statements.

a. The nonprofit should report net contributions receivable of $36,000 and contributions revenue of $36,000.

If a nonprofit reports net assets with donor restrictions, it is likely: Select one: a. The restrictions have been placed by donors b. The restrictions could have been placed either by donors or by the nonprofit's board of directors. c. The restrictions could have been placed either by donors or through contractual provisions such as bond indentures. d. The restrictions are temporary.

a. The restrictions have been placed by donors

Which of these items should be reported as "other financing uses" in a governmental funds statement of revenues, expenditures, and changes in fund balances? Select one: a. Transfers out b. Repayment of long-term debt principal c. Capital outlays d. Repayment of long-term debt principal, plus interest

a. Transfers out

In the appropriations ledger, the amount available for spending at any moment is the total appropriation minus: a. expenditures plus outstanding encumbrances. b. outstanding encumbrances. c. total invoices paid. d. purchase orders placed but supplies not yet received.

a. expenditures plus outstanding encumbrances.

What are Proprietary type funds usually financed by? a. primarily by user fees or charges that cover both operating and capital costs b. primarily by tax revenues, intergovernmental grants, and general fees c. primarily by private grants and organizations

a. primarily by user fees or charges that cover both operating and capital costs

When do you use Governmental-type funds? a. to account for most day-to-day public services of general-purpose governments (states, counties, and cities) b. to account for activities that operate in a manner similar to private-sector businesses c. To account for resources that government holds in a trust of custodial capacity for others (individual, other governments, or private organizations)

a. to account for most day-to-day public services of general-purpose governments (states, counties, and cities)

Simon County realized $2,500 in cash when it auctioned off three vehicles previously used by its inspectors. It deposited the proceeds in its General Fund. According to its capital asset records, Simon County had originally purchased these automobiles for $70,000. Accumulated depreciation on the automobiles as of the date of the auction was $66,000. Prepare the journal entry needed to adjust Simon's 2019 governmental fund financial statements so government-wide statements can be prepared.

accumulated depreciation - equipment: 66,000 ofs - sale of assets: 2,500 loss on sale of assets: 1,500 capital assets - equipment: 70,000

From the following, select the two conditions that together will cause an entity to be reported as a component unit of a primary government: Select one or more: a. The primary government's director of finance serves as a member of the entity's governing body. b. The primary government can appoint a voting majority of the entity's governing body. c. The primary government is required by law to finance the entity's deficits. d. The primary government is required by law to purchase its electricity from the entity, which also supplies electricity to the residents of the community. e. The primary government is authorized by law to bill the entity for the cost of police and fire protection.

b and c

In addition to the financial statements and notes, which two of the following items must be prepared to meet the minimum requirements for external financial reporting? Select one or more: a. Statistical data b. Management's discussion and analysis c. Combining statements for nonmajor funds d. Required supplementary information e. Schedules showing object-of-expenditure data for major departments or programs

b and d

b and d must be prepared

A city government started its fiscal year with a fund balance of $18,000. At the end of the year, its accounts showed the following items: estimated revenues—$600,000; appropriations—$580,000; actual revenues—$570,000; actual expenditures—$576,000. How much was the city's fund balance after it closed its accounts? a. $24,000 b. $12,000 c. $38,000 d. $32,000

b. $12,000

A village levies property taxes in the amount of $4,290,000 for the fiscal year ended June 30, 2019. It collects $4,200,000 during the year. Regarding the remaining $90,000 of delinquent receivables, it expects to collect $60,000 in July and August of 2019 and another $20,000 after August 2019 but before March 2020. It expects to write off $10,000 as uncollectible. How much should the village recognize as property tax revenue in its government-wide statement of activities for the fiscal year ended June 30, 2019? Select one: a. $4,290,000 b. $4,280,000 c. $4,260,000 d. $4,200,000

b. $4,280,000

Computer expert J. Leveille donated 60 hours of time to the Boston Museum, a nonprofit. He spent 40 hours designing a web site for the museum and 20 hours selling merchandise at the museum store. Mr. Leveille normally earns $150 an hour when he designs web sites, and the museum normally pays $10 to its salespeople. How much should the museum report as contribution revenue for Mr. Leveille's services? Select one: a. $200 b. $6,000 c. $6,200 d. $0

b. $6,000

Based on the information in the previous scenario, how much should the village report as Deferred revenues—property taxes in its 2019 General Fund financial statements? Select one: a. $30,000 b. $8,000 c. $18,000 d. $0

b. $8,000

Which of the following transactions creates an expenditure on the General Fund statement of revenues, expenditures, and changes in fund balance? Select one: a. A loan to the Sewage Enterprise Fund b. A purchase of water from the Water Enterprise Fund c. A transfer of resources to the Debt Service Fund so the Debt Service Fund can pay debt service on general obligation debt d. A transfer of resources to the Capital Projects Fund to help pay for a major capital project

b. A purchase of water from the Water Enterprise Fund

Which of the following events results in a debit to the Encumbrances account? a. The budget is approved. b. A purchase order is placed. c. Supplies are received. d. An invoice is paid.

b. A purchase order is placed.

Which of the following situations would be defined as a special item? Select one: a. The amount of a revenue item or an expenditure item increased by at least 10 percent over the previous year. b. A significant transaction within the control of management that is either unusual in nature or infrequent in occurrence. c. A significant event outside the control of management causes the expenses or expenditures of a fund to exceed its revenues. d. A vibrant economy causes an entity's tax revenues to rise by an extraordinary amount over the budgetary estimate.

b. A significant transaction within the control of management that is either unusual in nature or infrequent in occurrence.

Which of the following is the most likely description of the resources reported by Kappa Hospital on its balance sheet as assets limited as to use? Select one: a. A donation that must be held in perpetuity in an Endowment Fund b. An amount designated by Kappa's governing board for plant expansion c. An investment of unrestricted resources that is not readily marketable d. A donation that can be used only for cancer research

b. An amount designated by Kappa's governing board for plant expansion

How should the proceeds of debt be reported in a governmental fund's statement of revenues, expenditures, and changes in fund balances? Select one: a. As a revenue b. As an "other financing source" c. As a special item d. As an addition to the fund balance at the beginning of the period

b. As an "other financing source"

If a donor provides that interest earned on an endowment be used to finance a particular program, how should the interest revenue be classified? Select one: a. As endowment income b. As revenues with donor restrictions c. As revenues without donor restrictions d. As an increase in the fair value of the endowment

b. As revenues with donor restrictions

Which of the following would not be reported as part of net position in the government-wide statement of net position? Select one: a. Restricted net position b. Committed net position c. Unrestricted net position d. Net investment in capital assets e. All of the above are a part of government-wide net position.

b. Committed net position

When supplies are ordered by a state or local government, the entry on the books of the General Fund should include a debit to which of the following? a. Fund balance b. Encumbrances—supplies c. Expenditures—supplies d. Appropriations—supplies

b. Encumbrances—supplies

A city-owned electric utility, which serves primarily the city's residents, sends a bill to the city for electricity provided to the police, sanitation and other operating departments. Which pair of funds is needed to record this transaction? a. Enterprise Fund and Special Revenue Fund b. Enterprise Fund and General Fund c. Internal Service Fund and General Fund d. Internal Service Fund and Special Revenue Fund

b. Enterprise Fund and General Fund

Which of the following is not classified as a basic financial statement? Select one: a. Governmental funds balance sheet b. Governmental funds combining statement of nonmajor funds c. Governmental funds statement of revenues, expenditures, and changes in fund balances d. Government-wide statement of net position

b. Governmental funds combining statement of nonmajor funds

Successful entities prepare budgets. Which of the following entities is generally required by law to prepare a budget? a. Commercial business enterprises. b. Governments. c. Nonprofit entities. d. All of the above are required by law to prepare a budget.

b. Governments.

Which of the following statements is true regarding Internal Service Fund reporting in the government-wide financial statements? Select one: a. Internal Service Funds are reported in a separate column. b. Internal Service Fund assets and liabilities are aggregated with the assets and liabilities of governmental or business-type activities depending on which activity is the major consumer of Internal Service Fund services. c. Internal Service Fund assets and liabilities are combined with the Enterprise Fund activities and reported as part of business-type activities. d. None of the above.

b. Internal Service Fund assets and liabilities are aggregated with the assets and liabilities of governmental or business-type activities depending on which activity is the major consumer of Internal Service Fund services.

Which of the following sentences best describes the purpose of notes to the financial statements? Select one: a. Notes are an integral part of financial statements and help the user understand the government's financial condition. b. Notes are an integral part of financial statements and are essential to a user's understanding of a government's financial position and resource inflows and outflows. c. Notes are an integral part of financial statements because they describe the government's accounting policies. d. Notes to the financial statements are essential to a user's understanding of the distinction between fund financial statements and government-wide financial statements.

b. Notes are an integral part of financial statements and are essential to a user's understanding of a government's financial position and resource inflows and outflows.

A citizen donated $1 million to a city upon her death. Her will provided that these resources be maintained in a trust and earnings spent to provide free tickets to local baseball games for schoolchildren living in a three-county area. What fund is used to account for these activities? Select one: a. Permanent Fund b. Private-Purpose Trust Fund c. General Fund d. Custodial Fund e. None of the above

b. Private-Purpose Trust Fund

State which category of funds (governmental-type, proprietary type, or fiduciary type) would be used by a state government for each of the following purposes: To operate a central printing department that prints forms and reports for all state departments a. Governmental-type b. Proprietary type c. Fiduciary type

b. Proprietary type

A contractor built a garage for a nonprofit at no charge. Had the contractor charged the nonprofit for the garage, it would have billed the nonprofit $10,000. The nonprofit should: Select one: a. Record the garage at its fair value of $10,000 but not depreciate it. b. Record the garage at its fair value of $10,000 and depreciate the asset over its useful life. c. Thank the contractor and record no asset on its books. d. Seek other estimates of the fair value of the garage once it was completed.

b. Record the garage at its fair value of $10,000 and depreciate the asset over its useful life.

A contractor built a garage for a nonprofit at no charge. Had the contractor charged the nonprofit for the garage, it would have billed the nonprofit $10,000. The nonprofit should: Select one: a. Thank the contractor and record no asset on its books. b. Record the garage at its fair value of $10,000 and depreciate the asset over its useful life. c. Seek other estimates of the fair value of the garage once it was completed. d. Record the garage at its fair value of $10,000 but not depreciate it.

b. Record the garage at its fair value of $10,000 and depreciate the asset over its useful life.

Abbott and Costello Labs donated drugs to Epsilon Hospital, a nonprofit entity, in January 2018. If Epsilon had purchased the drugs, it would have paid $600,000. During the year, Epsilon used all the drugs in providing services to patients. How should Epsilon report the donation in its financial statements for the year ended December 31, 2018? Select one: a. Report nothing b. Report $600,000 as other revenues (or gains) c. Report $600,000 as a reduction of operating expenses d. Report the donation in a note to its financial statements

b. Report $600,000 as other revenues (or gains)

Which of the following type of entities prepares both entity-wide and fund financial statements? a. Nonprofit entities. b. State and local governments. c. Federal government. d. Business enterprises.

b. State and local governments.

Which of the following is generally the major source of revenues for governments? a. Voluntary donations b. Taxes c. Revenue from exchange transactions d. Revenue from investments

b. Taxes

A city created The City Building Authority (CBA) as a separate legal entity—a public benefit corporation. CBA is governed by a five-person board appointed for 6-year terms by the mayor, subject to city council approval. The authority sells tax-exempt bonds and uses the proceeds only to finance the construction or acquisition of general capital assets and only for the city. The bonds are secured by a lease agreement with the city and will be retired through lease payments from the city. Is CBA a component unit of the city? If so, how should the city report its financial activities? (Adapted from GASB Statement 14, par. 134) Based on the information provided, select the correct statement. a. The CBA qualifies as a discretely presented component unit. b. The CBA qualifies as a blended component unit. c. The CBA does not meet the criteria to be considered a component unit.

b. The CBA qualifies as a blended component unit.

A nonprofit held a fundraising campaign at year-end 2018. It received pledges of $45,000, but it did not receive any cash until the following year. It estimates that 80% of the pledges are collectible. What should the nonprofit report in 2018 based on these pledges? Select one: a. The nonprofit should not report any revenue in the year it conducted its fundraising campaign. b. The nonprofit should report net contributions receivable of $36,000 and contributions revenue of $36,000. c. The nonprofit should report contributions receivable of $40,000 and contributions revenues of $40,000. d. The nonprofit should disclose the pledges in a note to its financial statements.

b. The nonprofit should report net contributions receivable of $36,000 and contributions revenue of $36,000.

Which of the following is a general rule established by the FASB regarding contributions received by a nonprofit in the form of investments? Select one: a. They must be recorded either in a restricted fund or in an unrestricted fund. b. They must be reported either as support without donor restrictions or support with donor restrictions. c. They must be reported in an endowment fund. d. They must be recorded at the amount paid by the donor for the investment.

b. They must be reported either as support without donor restrictions or support with donor restrictions.

A hospital has NOT insured itself for malpractice claims with a third-party insurer. Which of the following statements best expresses the general rule regarding the reporting of liabilities for malpractice claims on the face of the balance sheet? Select one: a. They should be reported only to the extent that judgments and settlements are due and payable. b. They should be reported if it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. c. Outstanding claims should be described in the notes to the statements; adjudicated and settled claims should be reported if they have not been paid d. They should be reported if it is highly likely that the disputes ultimately will be resolved in favor of the claimants.

b. They should be reported if it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated.

What are Governmental-type funds usually financed by? a. primarily by user fees or charges that cover both operating and capital costs b. primarily by tax revenues, intergovernmental grants, and general fees c. primarily by private grants and organizations

b. primarily by tax revenues, intergovernmental grants, and general fees

Under the modified accrual basis of accounting, GASB standards specifically require accrual of salaries due but unpaid at year-end because a. salaries must be paid to maintain the entity's credit rating. b. salaries are liabilities that, having been incurred, are normally paid in a timely manner and in full from current financial resources. c. the amount is measurable and resources to pay the salaries are available. d. accruing salaries is an exception to the modified accrual basis of accounting.

b. salaries are liabilities that, having been incurred, are normally paid in a timely manner and in full from current financial resources.

When do you use Proprietary type funds? a. to account for most day-to-day public services of general-purpose governments (states, counties, and cities) b. to account for activities that operate in a manner similar to private-sector businesses c. To account for resources that government holds in a trust of custodial capacity for others (individual, other governments, or private organizations)

b. to account for activities that operate in a manner similar to private-sector businesses

What financial statements are required for the Governmental funds?

balance sheet statement of revenues, expenditures, and changes in fund balance

These two events occurred in the same city toward the end of calendar year 2019: • City employees earned $85,000 during the last week of December 2019, but were not paid until early January 2020. • A city sanitation vehicle accidentally sideswiped a parked car in December 2019. The city acknowledges that it was at fault, and its attorneys believe it will need to pay $10,000 to settle the claim. However, the city is slow in settling claims, so it probably won't pay the claim until early 2021. Based on these two events, how much should the city report as expenditures in its financial statements for the year ended December 31, 2019? Select one: a. $95,000 b. $0 c. $85,000 d. $10,000

c. $85,000

A village levied property taxes of $910,000 for calendar year 2019 on January 1, 2019 and immediately set up an allowance of $10,000 for uncollectible taxes. The village collected $870,000 in cash during 2019. It expected to collect $22,000 of the unpaid taxes during the first 60 days of 2020 and an additional $8,000 during the rest of 2020. How much should the village recognize as property tax revenues in its 2019 General Fund financial statements? Select one: a. $910,000 b. $900,000 c. $892,000 d. $870,000

c. $892,000

If the City of Castletown sells a surplus ambulance, the entry to record this sale on the books of the General Fund should include which of the following? Select one: a. A credit to the Vehicles and Equipment fixed asset account b. A credit to Encumbrances—capital equipment c. A credit to Other financing sources—proceeds from sale of fixed assets d. A debit to Encumbrances—capital equipment

c. A credit to Other financing sources—proceeds from sale of fixed assets

Which of the following types of governments is always considered to be a primary government for financial reporting purposes? Select one: a. A school district with a separately elected governing body b. A state university whose board members are appointed by the governor without the approval of the state legislature c. A town d. A legally separate public authority or public benefit corporation

c. A town

Financial statements for a Pension Trust Fund Select one: a. Are not included in a sponsoring government's annual financial report. b. Are included with proprietary funds in the sponsoring government's annual financial report. c. Are included with fiduciary funds in a sponsoring government's annual financial report. d. Are included in a separate column in the sponsoring government's government-wide financial statements.

c. Are included with fiduciary funds in a sponsoring government's annual financial report.

How should depreciation on buildings be reported in a nonprofit's financial statements? Select one: a. Nonprofits have the option of reporting or not reporting depreciation on buildings. b. As a reclassification from net assets with donor restrictions to net assets without donor restrictions c. As an expense—a decrease in net assets without donor restrictions d. As an expense—a decrease in net assets with donor restrictions

c. As an expense—a decrease in net assets without donor restrictions

How should depreciation on buildings be reported in a nonprofit's financial statements? Select one: a. Nonprofits have the option of reporting or not reporting depreciation on buildings. b. As an expense—a decrease in net assets with donor restrictions c. As an expense—a decrease in net assets without donor restrictions d. As a reclassification from net assets with donor restrictions to net assets without donor restrictions

c. As an expense—a decrease in net assets without donor restrictions

At the beginning of its 2019 fiscal year, Sawyer City has general capital assets of $1,200,000 and accumulated depreciation on these assets of $400,000. What worksheet journal entry does Sawyer City need to make to prepare its fiscal year ending 2019 government-wide financial statements? a. Capital assets. . . . . . . . . . . . 1,200,000 Expenditures—capital outlay. . . . . . . .1,200,000 b. Capital assets. . . . . . . . . . . . . . . . 1,200,000 Accumulated depreciation. . . . . . . . . . . . 400,000 Expenditures—capital outlay. . . . . . . . . . . .800,000 c. Capital assets. . . .. . . . . . . . 1,200,000 Accumulated depreciation . . . . . . . . . . . . .400,000 Net position . . . . . . . . . . . . . . . . . . . . . . . . .800,000 d. Accumulated depreciation . . .. . . . . . 400,000 Net position. . . . . . . . . . . . . . . . . . . . 800,000 Capital assets . . . . . . . . . . . . . . . . .1,200,000

c. Capital assets. . . .. . . . . . . . 1,200,000 Accumulated depreciation . . . . . . . . . . . . .400,000 Net position . . . . . . . . . . . . . . . . . . . . . . . . .800,000

How should fund information be reported in governmental and enterprise fund financial statements? Select one: a. Only the major funds should be reported, with separate columns for each fund. b. All funds should be combined and reported in a single column. c. Each major fund should be reported in a separate column, and nonmajor funds should be combined and reported in a separate column. d. All funds should be reported, with separate columns for each fund.

c. Each major fund should be reported in a separate column, and nonmajor funds should be combined and reported in a separate column.

State which category of funds (governmental-type, proprietary type, or fiduciary type) would be used by a state government for each of the following purposes: To accumulate resources in a trust fund to pay pension benefits for its employees a. Governmental-type b. Proprietary type c. Fiduciary type

c. Fiduciary type

State which category of funds (governmental-type, proprietary type, or fiduciary type) would be used by a state government for each of the following purposes: To collect sales taxes for local governments who "piggy-back" their sales taxes on top of state sales tax a. Governmental-type b. Proprietary type c. Fiduciary type

c. Fiduciary type

In government-wide financial statements, for which activities are the economic resources measurement focus and accrual basis of accounting used? Select one: a. Only for governmental activities b. Only for business-type activities c. For both governmental and business-type activities d. For neither governmental nor business-type activities

c. For both governmental and business-type activities

In government-wide financial statements, for which activities is depreciation reported? Select one: a. Only for governmental activities b. Only for business-type activities c. For both governmental and business-type activities d. For neither governmental nor business-type activities

c. For both governmental and business-type activities

Significant differences exist between fund financial statements and government-wide financial statements. Which of the following is not one of these differences? Select one: a. Certain fund financial statements may be prepared using the current financial resources measurement focus, but government-wide financial statements are prepared using the economic resources measurement focus. b. Fund financial statements focus on reporting major governmental and enterprise funds, but government-wide financial statements focus on reporting the government as a whole. c. Fund financial statements do not include a statement of cash flows, but a statement of cash flows is required for the government-wide financial statements. d. Fiduciary funds are included in fund financial statements, but not included in governmentwide financial statements. e. Discretely presented component units are reported in government-wide financial statements, but not in fund financial statements.

c. Fund financial statements do not include a statement of cash flows, but a statement of cash flows is required for the government-wide financial statements.

A government may choose to use the modified approach to account for its infrastructure assets in its proprietary fund and government-wide financial statements. Which of the following is not true regarding financial reporting for governments that use the modified approach? Select one: a. Governments that use the modified approach do not report depreciation expense. b. Governments that use the modified approach must immediately expense costs incurred to preserve infrastructure assets. c. Governments that use modified approach must immediately expense costs incurred for additions or improvements to infrastructure assets. d. All of the above. e. None of the above.

c. Governments that use modified approach must immediately expense costs incurred for additions or improvements to infrastructure assets.

The city of Steveville is preparing its annual financial statement. A new employee, Victoria Watson, is responsible for preparing the basic financial statements for the city's three Internal Service Funds. Where should Victoria report the Internal Service Fund activity in the combined financial statements? Select one: a. Any major Internal Service Funds should be reported in separate columns in the proprietary fund financial statements and nonmajor Internal Service Funds should be reported in a column with nonmajor Enterprise Funds. b. Internal Service Funds should be reported in their own separate set of financial statements that shows a column for each major Internal Service Fund with the remainder of Internal Service Funds aggregated in a single column. c. Internal Service Funds should be aggregated in a single column to the right of Enterprise Funds in the proprietary fund financial statements. d. Internal Service Funds are not reported in the fund financial statements, but rather only reported as part of government-wide reporting.

c. Internal Service Funds should be aggregated in a single column to the right of Enterprise Funds in the proprietary fund financial statements.

Which of the following type of entities prepares financial statements using both the modified accrual basis of accounting and the accrual basis of accounting? a. Nonprofit entities. b. Business enterprises. c. State and local governments. d. Federal government.

c. State and local governments.

At the statement of financial position date, the fair value of an investment is greater than the amount at which the investment was initially recorded. What adjustment, if any, is needed? Select one: a. No adjustment is needed. b. The increase should be recorded as a gain in net assets with donor restrictions. c. The increase should be recorded as a gain in the same net asset class in which the investment is reported. d. The increase should be recorded as a gain in net assets without donor restrictions.

c. The increase should be recorded as a gain in the same net asset class in which the investment is reported.

Which of the following transactions or events best describes when a grant recipient may recognize revenues from intergovernmental grants in governmental-type funds? Select one: a. The recipient enters into a contract with the grant provider. b. The recipient spends all the resources made available in the grant. c. The recipient complies with all grant eligibility requirements, and the resources are "available." d. The recipient receives cash from the grant provider.

c. The recipient complies with all grant eligibility requirements, and the resources are "available."

If a nonprofit reports net assets with donor restrictions, it is likely: Select one: a. The restrictions could have been placed either by donors or by the nonprofit's board of directors. b. The restrictions could have been placed either by donors or through contractual provisions such as bond indentures. c. The restrictions have been placed by donors d. The restrictions are temporary.

c. The restrictions have been placed by donors

From a financial reporting perspective, which sentence best describes the nature of the statistical section? Select one: a. The statistical section is an integral part of the financial statements. b. The statistical section is a part of the basic financial statements. c. The statistical section is a component of the CAFR. d. The statistical section has the same standing as required supplementary information in terms of GAAP financial reporting.

c. The statistical section is a component of the CAFR.

If the General Fund makes a transfer to the Debt Service Fund, how should the transfer be reported in the fund and government-wide financial statements? Select one: a. The transfers in and out should be reported in both the fund statement of revenues, expenditures, and changes in fund balance and the government-wide statement of activities. b. The transfers in and out should be reported in neither the fund statement of revenues, expenditures, and changes in fund balance nor the government-wide statement of activities. c. The transfers in and out should be reported in the fund statement of revenues, expenditures, and changes in fund balance but not in the government-wide statement of activities. d. The transfers in and out should be reported in the government-wide statement of activities but not in the fund statement of revenues, expenditures, and changes in fund balance.

c. The transfers in and out should be reported in the fund statement of revenues, expenditures, and changes in fund balance but not in the government-wide statement of activities.

What are the requirements for Management's Discussion and Analysis (MD&A) regarding events, decisions, or conditions occurring after the balance sheet date? Select one: a. There are no requirements regarding events, decisions, or conditions occurring after the balance sheet date. b. Comments should not be made regarding events, decisions, or conditions occurring after the balance sheet date. c. There should be a description of facts, decisions, or conditions known to management as of the date of the auditor's report that are expected to have a significant effect on financial position or results of operations. d. The MD&A should disclose any long-term borrowing made between the end of the fiscal year and the date of the auditor's report.

c. There should be a description of facts, decisions, or conditions known to management as of the date of the auditor's report that are expected to have a significant effect on financial position or results of operations.

Which of the following is a general rule established by the FASB regarding contributions received by a nonprofit in the form of investments? Select one: a. They must be recorded at the amount paid by the donor for the investment. b. They must be recorded either in a restricted fund or in an unrestricted fund. c. They must be reported either as support without donor restrictions or support with donor restrictions. d. They must be reported in an endowment fund.

c. They must be reported either as support without donor restrictions or support with donor restrictions.

When do you use Fiduciary-type funds? a. to account for most day-to-day public services of general-purpose governments (states, counties, and cities) b. to account for activities that operate in a manner similar to private-sector businesses c. To account for resources that government holds in a trust of custodial capacity for others (individual, other governments, or private organizations)

c. To account for resources that the government holds in a trust of custodial capacity for others (individual, other governments, or private organizations)

A city "piggy-backs" its 3 percent sales tax on top of the state sales tax. During calendar year 2019 the state remits $800,000 to the city for sales taxes collected for the city. On January 25, 2020, the state sends the city $300,000 for sales taxes collected in the fourth quarter of 2019. On March 1, the state sends the city $45,000 for sales taxes applicable to 2019, but sent in by late filers. Historically, the state has sent the city about $30,000 every June for sales taxes applicable to previous years that either trickles in from additional late filers or that results from tax audits. The city has a stated policy of treating sales taxes as "available" if received by March 30 of the year after the applicable sales tax year. Based on the foregoing information only, how much should the city recognize as sales tax revenues in its financial statements for the year ended December 31, 2019? Select one: a. $800,000 b. $1,100,000 c. $1,175,000 d. $1,145,000

d. $1,145,000

Nuevo York County maintains the Metro Bus Enterprise Fund to account for the activities of its municipal bus service. The following information is reported in the fund's statement of net position at year-end: Land—$400,000; Buses and bus garage—$2,500,000; Accumulated depreciation, buses and garage—$1,100,000; Current portion of bonds payable—$250,000; Noncurrent portion of bonds payable—$1,400,000. The bonds were issued to finance acquisition of the buses and the garage. How much should the fund report as "Net investment in capital assets" in the statement of net position? Select one: a. $1,800,000 b. $1,250,000 c. $400,000 d. $150,000

d. $150,000

Beta Hospital provided services to patients who were covered by the Kelly Health Plan. Beta's arrangement with Kelly called for interim billing rates at 25 percent less than the established rates, as well as a retrospective rate adjustment. Based on its established billing rates, Beta provided services amounting to $4,000,000 to patients covered by Kelly during the year ended December 31, 2018. At year-end, Beta estimated that it would need to refund $150,000 to Kelly in accordance with the cost standards set forth in the retrospective rate arrangement. What amount should Beta report as patient service revenue in its year 2018 financial statements? Select one: a. $3,000,000 b. $4,000,000 c. $3,850,000 d. $2,850,000

d. $2,850,000

As a result of its annual fundraising program, a nonprofit receives pledges in the amount of $300,000 during December 2018, the last month of its reporting period. Based on its previous history regarding pledges, the nonprofit believes that about $250,000 will be collected in the first 60 days of 2019; $35,000 will trickle in during the rest of 2019; and $15,000 will not be collected at all. How much should the nonprofit report as net contributions receivable on its 2018 financial statements? Select one: a. $250,000 b. $300,000 c. $0 d. $285,000

d. $285,000

A city places a purchase order for supplies for $50,000. The purchase order allows the supplier to ship additional supplies up to 5 percent of the quantity ordered. The city receives the supplies and an invoice for $51,500, and the invoice is approved for payment. With what amount should the city credit the Encumbrances account? a. $0 b. $51,500 c. $1,500 d. $50,000

d. $50,000

d. $6,000

A state provides pension benefits to retired employees who have worked at least five years for the state. Based on employee salaries during 2019, the state actuary calculated that the employees earned pension benefits totaling $14 million. The state appropriated $10 million to the General Fund for payment to its Pension Trust Fund. However, the state encountered financial problems during 2019. It sent its pension system a check for $8 million in October 2019, saying that it would pay no more for the year. The Pension Trust Fund actually paid pension benefits of $3 million during 2019. How much should the General Fund recognize as pension expenditures for 2019? Select one: a. $3 million b. $14 million c. $10 million d. $8 million

d. $8 million

Which of the following sets of accounts are most likely to appear in the General Fund balance sheet? Select one: a. Cash, Allowance for uncollectible taxes, and Compensated absences payable due in more than one year b. Cash, Property taxes receivable, and Capital assets c. Vouchers payable, Long-term bonds payable, and Unassigned fund balance d. Accrued salaries and other payables, Due to other funds, and Deferred revenues—property taxes

d. Accrued salaries and other payables, Due to other funds, and Deferred revenues—property taxes

What account in a Private-Purpose Trust Fund is credited for the proceeds on the sale of an investment that exceeds its book value? Select one: a. Cash b. Accounts payable c. Investments d. Additions

d. Additions

The resources used to finance Capital Projects Funds may come from which of the following sources? a. Private donations b. General obligation debt c. Intergovernmental revenues d. All of the above

d. All of the above

Which of the following are necessary to include in the worksheet used to convert governmental fund financial statements to the government-wide financial statements? Select one: a. Opening balances showing the combined governmental fund total for each account. b. Capital asset and long-term debt adjustments. c. Revenue and expense adjustments. d. All of the above. e. Only b. and c

d. All of the above.

Which of the following involves a routine movement of cash from the General Fund to a Debt Service Fund in order to provide resources for the Debt Service Fund to pay interest and principal on a bond issue? Select one: a. An interfund loan b. An interfund service provided and used c. An interfund reimbursement d. An interfund transfer

d. An interfund transfer

GAAP requires all nonprofits to report their functional expenses in a single location by natural classification: Select one: a. In the notes to their financial statements b. On the face of their statements of activities c. In a separate financial statement d. Any one of the above

d. Any one of the above

The process of blending is accomplished by reporting a component unit's funds in which manner? Select one: a. In the notes to the primary government's financial statements b. In a separate column to the left of the primary government's funds c. As if they were fiduciary funds of the primary government d. As if they were the funds of the primary government

d. As if they were the funds of the primary government

Which items are compared in a budgetary comparison schedule for the General Fund? Select one: a. Last year's final budget; current year's original budget; current year's final budget b. Last year's final budget; current year's final budget; current year's actual inflows and outflows on the budgetary basis of accounting c. Current year's original budget; current year's final budget; current year's actual inflows and outflows on the modified accrual basis of accounting d. Current year's original budget; current year's final budget; current year's actual inflows and outflows on the budgetary basis of accounting

d. Current year's original budget; current year's final budget; current year's actual inflows and outflows on the budgetary basis of accounting

Which of the following fund categories uses the current financial resources measurement focus and the modified accrual basis of accounting? a. Governmental - No Proprietary - Yes b. Governmental - No Proprietary - No c. Governmental - Yes Proprietary - Yes d. Governmental - Yes Proprietary - No

d. Governmental - Yes Proprietary - No

Historical experience shows that a hospital sometimes receives malpractice claims in the year after the incidents occur. Which of the following statements best expresses the general rule for reporting liabilities for such claims, if risk of loss has not been transferred to a third-party insurer? Select one: a. No mention is required to be made of these claims anywhere in the financial statements. b. The hospital should have purchased extended insurance. c. A note should be prepared discussing the likelihood that claims will be received after the balance sheet date, but no estimate needs to be made of the possibility of loss. d. Liabilities should be recognized in the statements if it is probable that claims will be asserted for incidents occurring before the balance sheet date and the losses can be reasonably estimated.

d. Liabilities should be recognized in the statements if it is probable that claims will be asserted for incidents occurring before the balance sheet date and the losses can be reasonably estimated.

Which of the following is classified as an object-of-expenditure? a. Parks department b. General Fund c. Culture program d. Materials and supplies

d. Materials and supplies

The city of Lynndale had $50,000 in compensated absence long-term liabilities related to governmental fund activities at the end of its 2018 fiscal year. What worksheet journal entry should be made to prepare the city of Lynndale's 2019 fiscal year government-wide financial statements? Select one: a. Compensation absences expense . . . . . . . . . . . . . . . 50,000 Compensated absences payable . . . . . . . . . . . . .50,000 b. Compensation absences expense . . . . . . . . . . . . . . . . 50,000 Compensated absences expenditures. . . . . . . .50,000 c. Net position. . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 Compensation absences expense. . . . . . . . . . . 50,000 d. Net position. . . . . . . . . . . . . . . . . . . . . . 50,000 Compensated absences payable . . . . . . . . . . . . . 50,000

d. Net position. . . . . . . . . . . . . . . . . . . . . . 50,000 Compensated absences payable . . . . . . . . . . . . . 50,000

Which of the following types of entities follow FASB standards when preparing financial statements? a. Business enterprises and the federal government. b. Federal government and state and local governments. c. State and local governments and nonprofit entities. d. Nonprofit entities and business enterprises.

d. Nonprofit entities and business enterprises.

The Prevent Cancer Organization incurred several expenses during 2019. Which of the following would not be classified as a program expense? Select one: a. Pamphlets mailed to the general public regarding the "danger signals of cancer" b. Pamphlets on the relationship of smoking to cancer c. Salaries of personnel who perform cancer research d. Postage for announcements of the 2019 Kickoff Dinner

d. Postage for announcements of the 2019 Kickoff Dinner

Entries similar to those for the General Fund may also appear in the records of which of the following funds? a. Custodial Fund b. Enterprise Fund c. Pension Trust Fund d. Special Revenue Fund

d. Special Revenue Fund

Why do government and nonprofit entities use fund accounting? a. To allow managers more flexibility when budgeting. b. To better match revenues and expenses. c. To help limit errors when posting general journal entries to the general ledger. d. To help ensure restricted resources are spent for their intended purpose.

d. To help ensure restricted resources are spent for their intended purpose.

Under the modified accrual basis of accounting, when are revenues considered to be available? a. When measurable with reasonable accuracy b. When cash is received c. When earned d. When collectible in the current period or soon enough thereafter to pay current period bills

d. When collectible in the current period or soon enough thereafter to pay current period bills

Which of the following types of adjustments to the government fund financial statements are necessary to prepare the governmental activities portion of the government-wide financial statements? Select one: a. Capital assets and related depreciation must be recorded. b. Proceeds from issuing long-term debt must be recorded as liabilities. c. Expenses must be recognized when incurred so noncurrent liabilities from current transactions and events must be reported. d. Revenues must be recognized on the accrual basis of accounting so the governmental fund "measurable and available" rule is discarded. e. All of the above.

e. All of the above.

Which of the following type of entities commonly uses fund accounting for internal reporting purposes? a. State and local governments. b. Business enterprises. c. Nonprofit entities. d. Both a and b. e. Both a and c.

e. Both a and c.

The fee for the collection of property taxes by a Custodial Fund will usually result in revenue in which of the following funds? Select one: a. General Fund and Custodial Fund b. Custodial Fund c. Capital Projects Fund d. Special Revenue Fund and Custodial Fund e. None of the above

e. None of the above

Governmental GAAP requires Internal Service Funds to be used in which of the following situations? Select one: a. An activity issues debt that is secured solely by a pledge of net revenues from fees or charges of the activity. b. Laws or regulations require the activity to recover its costs of providing services including capital costs with user fees and charges. c. An activity establishes user fees and charges based on pricing policies designed to recover all costs, including capital costs. d. All of the above. e. None of the above.

e. None of the above.

What two common funds are Proprietary type funds?

enterprise funds internal service funds

The village of Welch's general government employees participate in the village's defined contribution plan. During 2019, the village made $800,000 in cash contributions to its employees' individual defined contribution pension retirement accounts. Based on benefit terms, the village of Welch needs to contribute an additional $100,000 during 2019, which had not been contributed by year end. Make the journal entries to (1) record the cash contributions and (2) record any required year-end accrual. (Assume all entries are made in the village of Welch's General Fund.)

expenditures - pension: 800,000 cash: 800,000 expenditures - pension: 100,000 pension liability: 100,000

What financial statements are required for Fiduciary funds?

statement of fiduciary net position statements in changes of fiduciary net position

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