ACC 4043 Ch. 4 (smartbook)
The city of Valley Ridge has a special fund with a total fund balance at year-end of $180,000. State law requires that 80% of the balance be used for public works services. The other 20% of the funds were supplemented by the city and have no restrictions. How should the Fund Balance be reported?
$144,000 as Restricted Fund Balance and $36,000 as Assigned Fund Balance
At year end, the City of Valley Ridge has a total of $90,000 of outstanding property taxes due. It is estimated that $40,000 of the total will be collected within 30 days of year end, another $20,000 within 60 days of year end, and another $18,000 within 90 days of year end. The required year-end entry includes a debit to Revenues Control for ______.
$30,000
In August of 2019, the City of Valley Ridge received a state awarded grant of $750,000 to update four of the city's schools. Funds are released as work is completed, as a reimbursement. During 2019, expenditures of $440,000 were made by the City and $380,000 were paid. The amount of State Reimburse Grant Revenue recorded by the City of Valley Ridge for 2019 equals ______. Multiple choice question.
$440,000
In the middle of the fiscal year, the City of Valley Ridge determined that budgeted revenues should be increased by $40,000 and budgeted appropriations should be increased by $30,000. The entry to adjust the budget include credits to ______.
-Budgetary Fund Balance -Appropriations Control
Which of the following statements are correct?
-Budgetary accounts do not appear in the general purpose financial statements. -Budgetary accounts facilitate the preparation of the Budgetary Comparison Schedule.
The city of Valley Ridge records all purchase orders as encumbrances. Assume a purchase order was issued for $85,000 worth of goods and the invoice that arrived with the goods was for $86,000. Which of the following statements are correct?
-Encumbrances Control will be credited for $85,000 -Accounts Payable will be credited for $86,000.
Which of the following other revenue items are recognized on the cash basis?
-Fines and forfeits -Charges for services -Licenses and permit fees
Which of the following statements are correct?
-Most interfund transactions are eliminated in the government-wide statements. -Failure to report interfund transactions results in two funds being misstated.
The City of Valley Ridge has a special fund with a total fund balance at year end of $150,000. Of that amount, $15,000 of the resources may be used for any purpose and the rest must be used for road repairs and maintenance. The city must report $135,000 as a(n) _____ Fund Balance and $15,000 as a(n) _____ Fund Balance.
-Restricted -Assigned
The City of Valley Ridge has unrecorded interest and penalties on delinquent taxes of $17,500 but only expects to collect $14,230 of the total. Which of the following statements are correct?
-Revenues Control should be credited for $14,230 -Interest and Penalties Receivable on Taxes should be debited for $17,500
Which of the following statements are correct?
-Special revenue funds are not used for resources for payments on long-term debt. -Fund accounting segregates financial resources with constraints or limitations.
Which of the following statements are correct?
-The Budgetary Comparison Schedule is affected by government policy on how outstanding encumbrances are handled. -Outstanding encumbrances may or may not carry forward to the following year.
Which of the following statements are correct?
-The difference between the purchases and consumption method is the amount of expenditures reported. -Expenditures under the consumption method equals supplies used.
The City of Valley Ridge sold a piece of land for $56,000. Which of the following statements are true?
-This transaction qualifies as a special item. -The reduction in land is reported on the government-wide financial statements.
During the closing process, ______.
-any entries made to record or amend the budget are reversed -operating statement accounts are transferred to the Fund Balance
GASB standards require that special revenue funds be used only if a substantial portion of the resources are provided by one or more restricted or _____, but not _____, revenue sources.
-committed -assigned
The entry to record re-establishment of prior year encumbrances requires a (debit/credit) _____ to Budgetary Fund Balance - Reserve for Encumbrances and a (debit/credit) _____ to Encumbrances Control (Prior Year).
-credit -debit
The city of Valley Ridge ordered $40,000 supplies at the end of 2018 that were recorded as Encumbrances. An additional $70,000 worth of supplies were ordered and recorded as Encumbrances during the first week of January 2019. On January 18th, all items were received along with an invoice in the amount of $108,500. Recording the receipt of the supplies requires a ______.
-credit to Accounts Payable for $108,500 -credit to Encumbrances Control for $110,000
The city of Valley Ridge paid $155,000 to repay a $150,000 tax anticipation note and $5,000 of interest. Items in the journal entry to record this transaction include a ______.
-credit to Cash for $155,000 -debit to Expenditure Control for $5,000
The entry to record the budget includes a (debit/credit) _____ to Estimated Revenues Control and a (debit/credit) _____ to Appropriations Control.
-debit -credit
Fund accounting is used to ______.
-demonstrate compliance with constraints and limitations -segregate resources with constraints or limitations on their use
Interfund reimbursements represent repayments to the funds that initially recorded _____ or _____ by the funds responsible.
-expenditures or expenditure -expenses or expense
Expenditures ______.
-for debt services are not accrued -may be used for capital outlay
According to the modified accrual basis of accounting, revenues are recognized when they are both _____ and _____ to finance the expenditures of the current period.
-measurable - available
Interfund services provided and used are sometimes called _____ - _____ transactions.
-quasi -external
The two categories of interfund transactions are _____ and _____.
-reciprocal -nonreciprocal
Interfund loans are ______.
-recorded based on the terms of the loan -to be repaid in the future
According to GASB standards, special revenue funds ______.
-require that resources be provided by restricted or committed sources -should be discontinued in some cases when revenue sources change
Special revenue funds cannot be used to provide separate reporting of resources ______.
-reserved for capital projects -for debt services
The General Fund and special revenue funds report using the current financial resources measurement focus and include _____, _____, and fund balance.
-revenues or revenue -expenditures
Government-type funds record ______.
-short-term payables -short-term receivables
Transactions or events that are either unusual or infrequent but within the control of management are called _____ _____
-special -items
When delinquent taxes are deemed to be uncollectible, ______.
-the tax bills are retained in the files for possible future payment -the tax bills are no longer subject to general ledger control
The City of Valley Ridge expects that $40,000 of 2019 property taxes will be collected in March, 2020. The $40,000 should be recorded as a(n) revenue in ______.
2020
GASB standards require that taxes expected to be collected later than ______ days after year-end be deferred and recognized as revenue in the following year.
60
The city of Valley Ridge uses an internal service fund to centralize purchasing and distribution services among departments. The General Fund received $50,000 of supplies on May 15, which were paid for on June 1. Which of the following statements is correct?
Cash should be credited on June 1.
The city of Valley Ridge uses an internal service fund to centralize purchasing and distribution services among departments. The General Fund received $50,000 of supplies on May 15, which were paid for on June 1. Which of the following statements is correct?
Due to Other Funds (Supplies Fund) should be credited on May 15.
In the middle of the fiscal year, the City of Valley Ridge determined that budgeted revenues should be increased by $40,000 and budgeted appropriations should be increased by $30,000. The entry to adjust the budget includes a debit to ______.
Estimated Revenue Control
True or false: At 2019 year-end, a government has $25,000 of outstanding encumbrances. The 2019 Budgetary Comparison Scheduled will include the $25,000 whether or not the encumbrances lapse at year-end.
False
True or false: GASB requires governments to record budgets, but not encumbrances.
False
True or false: Transfers for debt service and other nonroutine transactions are recorded as Expenditures.
False
Which of the following other revenue items is NOT recognized on the cash basis?
Sales tax due from another government
When current property taxes are paid, an entry is made to debit Cash and credit ______.
Taxes Receivable
True or false: Expenditures are generally recognized when the related liability is incurred.
True
Which of the following Fund Balance categories is only used in the General Fund?
Unassigned
Revenue earned for penalties and interest on delinquent taxes should be ______.
accrued net of estimated uncollectible amounts
Interest and penalties on delinquent taxes ______ treated as revenue.
are
At year-end, outstanding purchase orders for supplies will be in the _______ fund balance category.
assigned
When recording the budget, the Budgetary Fund Balance account will normally ______.
be credited
An entry that debits Revenue Control and credits Fund Balance is used to ______.
close operating accounts
In accounting for supplies, _____ the method is preferable since it requires no adjustment to supplies expense when preparing government-wide statements
consumption
Supplies inventory is debited when supplies are acquired under the _____ method.
consumption
The expenditure equals the amount of supplies used during the year when a government uses the _____ method.
consumption
When the General Fund makes a budgeted transfer to a debt service fund for the payment of principal and interest, the journal entry includes a ______.
credit to Due to Other Funds (Debt Service Fund)
When payroll is recorded, Wages Payable is ______ pay.
credited for the net
When the city of Valley Ridge records payroll, Expenditures Control is ______.
debited for the employer share of payroll taxes
At 2019 year end, a city has $50,000 if outstanding property taxes that are not expected to be collected until 90 days after year end. This $50,000 will be classified as a ______ on the balance sheet.
deferred inflow of resources
Motor fuel taxes are considered a(n) tax revenue.
derived
In modified accrual accounting, the term is used instead of expense.
expenditure
In August of 2019, the City of Valley Ridge received a state awarded grant of $750,000 to update four of the city's schools. Funds are released as work is completed, as a reimbursement. During 2019, expenditures of $440,000 were made by the City and $380,000 were paid. Per GASB standards, the city recognized grant revenue when ______.
expenditures were incurred
True or false: Long-term interfund loans are recorded in the accounts Due from Other Funds and Due to Other Funds.
false
Interfund transfers are classified as either other _____ sources or uses.
financing
When recording the current property tax levy, taxes receivable should be debited for the ______.
full amount of the levy
After the entry to close the operating account is posted, the _____ _____ account represents the net resources of the General Fund that are available for future appropriation.
fund balance
The essence of the closing process is the reclassification of the operating statement accounts for the year to the _____ _____ account.
fund balance
Within the governmental funds, the excess of assets over liabilities is termed _____ _____.
fund balance
All financial resources not accounted for and reported in another fund are accounted for in the ______ fund. Multiple choice question.
general
Under modified accrual accounting, revenues from derived tax revenues are recognized ______.
in the same year the underlying transaction takes place
Transactions between the General Fund and a Debt Service Fund are referred to as _____ transactions.
interfund
Borrowing and repaying the principal and interest on a tax anticipation note ______.
involves the recognition of an expenditure only
Under the modified accrual basis of accounting, revenue is recognized when ______.
it is measurable and available
Reciprocal interfund transactions include interfund ______.
loans services provided and used
A government has outstanding purchase orders at the end of the year that will be honored at the beginning of the following year. As such, the encumbrances for those purchase orders ______
must be re-established at the beginning of the new year
If a fund has no supplies or prepaid items at the end of the year, the ______ fund balance category will have a zero balance.
nonspendable
Resources provided under trust agreements that are restricted so that only earnings may be expended for public benefit purposes are accounted for in _____ funds
permanent
Revenue for property taxes is recognized at the time the ______.
receivable is recorded
Under the purchases method, expenditures are debited when supplies are ______.
received
Estimated Uncollectible Taxes are ______.
recorded at the time of tax levy
Short-term tax anticipation loans are ______.
reflected as fund liabilities for modified accrual basis accounting funds
A $10,000 expenditure that should have been charged to a special revenue fund was recorded in the General Fund. The correction of this error will be treated as an interfund ______.
reimbursement
Two funds will record entries involving Cash and either expense or expenditure in the case of interfund ______. Multiple choice question.
reimbursements
Nonreciprocal interfund transactions include interfund ______.
reimbursements transfers
When delinquent taxes are written off, the tax bills are ______
retained in the files, but are no longer subject to general ledger control
One fund records a revenue and the other fund records an expense in the case of interfund ______.
services provided and used
Specific revenue sources that are restricted or committed to expenditure for a specific purpose other than debt service or capital projects are accounted for and reported in _____ _____funds.
special revenue
When it is desirable to provide separate reporting of resources that are restricted or committed to expenditure for a specified purpose other than debt service or capital projects, a(n) _____ _____ fund may be used.
special revenue
Expenditures is debited and Supplies Inventory is credited when supplies are used under ______.
the consumption method only
Tax anticipation loans are recorded as fund liabilities because ______.
the loans are short-term
At year end, the balance of the Supplies Inventory and Nonspendable Fund Balance is adjusted to reflect the amount of unused supplies on hand when using ______.
the purchases method only
Penalties and interest on delinquent taxes should be accrued when ______.
they become delinquent and when the taxpayer pays
Flows of cash or other assets without a requirement for repayment are interfund ______.
transfers
A $10,000 expenditure that should have been charged to a special revenue fund was recorded in the General Fund. The correction of this ______ impact the Expenditure Control account of the General Fund.
will