Acct 4421 Midterm Review
In what fund would the activities of a water utility department, which offers its services to the general public on a user charge basis be recorded?
An enterprise fund.
Revenues that are legally restricted for expenditure on specified operating purposes that should be accounted for in special revenue funds include
Gasoline taxes to finance road repairs.
For what funds do budgetary comparisons need to be presented in connection with the basic financial statements?
General Fund and major special revenue funds for which a budget is legally adopted.
Which of the following accounts is a budgetary account of a governmental fund?
Appropriations.
In 2023, Sunset City signed a contract in the amount of $8,000,000 for the construction of a new city hall. Expenditures were $4,000,000 in 2023 and $2,050,000 in 2024, which included a change to the original construction design in the amount of $50,000. What amount should be added to capital assets in the governmental activities accounts in 2024?
$2,050,000
On March 2, 2022, 20-year, 3 percent, general obligation serial bonds were issued at the face amount of $3,000,000. Interest of 3 percent per annum is due semiannually on March 1 and September 1. The first payment of $150,000 for redemption of principal is due on March 1, 2023. Fiscal year-end occurs on December 31. What is the interest expenditure in the governmental funds for the fiscal year ending December 31, 2022?
$45,000
The City of Brown Creek constructed a new storage facility using the city's own public works employees. Construction costs were incurred in the amount of $900,000, plus $25,000 in interest on short-term notes used to finance construction. What amount should be capitalized in the government-wide statements?
$900,000
When the budget for the General Fund is recorded, the required journal entry will include which of the following?
A credit to Appropriations.
When equipment is ordered by a department of the government, the purchase order should be recorded in the General Fund as a debit to:
Encumbrances
Equipment that had been acquired several years ago by a special revenue fund at a cost of $40,000 was sold for $15,000 cash. Accumulated depreciation of $30,000 existed at the time of the sale. The journal entry to be made in the governmental activities journal will include all of the following except:
A credit to Other Financing Sources for $5,000.
Equipment that had been acquired several years ago by a special revenue fund at a cost of $40,000 was sold for $15,000 cash. Accumulated depreciation of $30,000 existed at the time of the sale. The journal entry to be made in the special revenue fund will include:
A debit to Cash for $15,000.
The journal entry to record budgeted revenues will include which of the following?
A debit to Estimated Revenues.
When Capitol City makes its annual lease payment on an unpaid lease obligation, the journal entry for the debt service fund accounts will include:
A debit to Expenditures - Principal of Lease Obiligation
The General Fund of the Town of Mashpee transfers $115,000 to the debt service fund for a $100,000 bond principal and $15,000 interest payment. Subsequent payment of the principal and interest would include:
A debit to Expenditures—Bond Interest in the debt service fund.
The General Fund used water provided by the city-owned water department (an enterprise fund of the city). The governmental activities journal entry to record the transaction will include:
A debit to Expenses.
When Capitol City makes its annual lease payment on an unpaid lease obligation, the journal entry for the governmental activities accounts will include:
A debit to lease Obligation Payable
Which of the following is not a characteristic of a fund as defined by GASB standards?
A reporting entity.
When a government transfers the rights and obligations of an asset to another legally separate governmental or private sector entity, the transaction is referred to as:
A service concession arrangement
Which of the following would be considered a general capital asset?
A vehicle purchased from General Fund revenues.
The Financial Accounting Standards Board has the responsibility for setting accounting and financial reporting standards for which of the following?
All not-for-profit organizations that are nongovernmental and business entities.
Which of the following statements is not true for debt service funds?
All tax-supported bond principal is shown as a liability of the debt service fund.
In fiscal year 2023 the "Expenditures—2022" account represents
Amount of expenditures for goods ordered in 2022 that were received in 2023 and chargeable to appropriations of 2022.
Which of the following is true regarding capital projects funds?
Encumbrances accounting is generally employed.
If state law requires that local governments prepare General Fund and special revenue fund budgets on a basis that differs from the basis of accounting required by GAAP, then the budgetary comparison schedule or statements should
Be included with the actual figures presented on the budget basis and then reconciled to the GAAP basis.
Which of the following statements is true regarding bond anticipation notes?
Bond anticipation notes can be reported as short-term liabilities in the governmental fund financial statements.
How should a lease for a general capital asset be recorded in the governmental activities accounts at the inception of the lease?
Both Debit to a lease asset account and Credit to Lease Obligations Payable are correct.
Which of the following standard-setting bodies requires a management's discussion and analysis as a part of the financial report?
Both GASB and FASAB.
Which of the following is true regarding other financing sources and other financing uses?
Both must be reported separately from revenues and expenditures in the statement of revenues, expenditures, and changes in fund balances.
The county determined it needed to prepare a budget amendment to reflect a decrease in charges for services of $100,000 and an increase in public safety expenditures of $150,000. What will be the effect of these two adjustments on the Budgetary Fund Balance account?
Budgetary Fund Balance will be debited $250,000.
Which of the following statements is true regarding the required disclosure of budgetary information?
Budgetary comparisons may be presented as a statement or as required supplementary information (RSI).
When a snowplow is purchased by a government, it should be recorded in the governmental activities general journal as a(an):
Capital Asset
Which of the following is not a required disclosure about each major class of capital assets?
Capital acquisitions and sales or other dispositions during the year showing the date and method of acquisition or disposition.
In which of the following would it not be appropriate to record depreciation of capital assets?
Capital projects fund
Typically, proceeds from general obligation bonds will be recorded in the:
Capital projects fund
Under which basis of accounting for a government should revenues be recognized in the period when they are measurable and available? A)YesNo B)NoNo C)NoYes D)YesYes
Choice C
Which of the following bases of accounting should be used in preparing fund financial statements? Governmental fundsProprietary fundsFiduciary funds A)Modified accrual Accrual Modified accrual B)Modified accrual Modified accrual Modified accrual C)Modified accrual Accrual Accrual D)Accrual Accrual Accrual
Choice C
Which of the following groups is considered a primary user of a state or local government's general-purpose external financial statements?
Citizens
When supplies ordered for use in an activity accounted for in the General Fund are received at an actual price that is more than the estimated price on the purchase order, the Encumbrance account is:
Credited for the estimated price on the purchase order.
Supplies recorded in the General Fund under the purchases method will initially include a
Debit to Expenditures
Supplies recorded in the General Fund under the consumption method will initially include a
Debit to Inventory of Supplies.
Premiums received on tax-supported bonds are generally transferred to what fund?
Debt Service
Which of the following statements is true?
Debt limit represents the total amount of indebtedness of specified kinds that is allowed by law to be outstanding at any one time.
Which of the following accounts is not closed at the end of the reporting period?
Deferred inflows of resources.
Under the modified accrual basis of accounting used by the General Fund, financial resources are considered available if the revenue or other financing source is expected to be collected
During the current fiscal period or soon enough after year-end to pay current period obligations.
What is the process by which a legal valuation is placed on taxable property called?
Property assessment
Capital assets used by an enterprise fund should be accounted for in the
Enterprise fund and depreciation on the capital assets should be recorded.
Which of the following assets would not be found in the balance sheet of a debt service fund?
Equipment
Which of the following should not be reported on the balance sheet of the General Fund?
Equipment.
The cost to purchase a good or service is the definition of an
Expenditure
When equipment that is to be used by the General Fund is received, how should it be recorded?
Expenditure
Which of the following terms refers to an actual cost rather than an estimate?
Expenditure.
The receipt of equipment that had previously been ordered should be recorded in the General Fund as a debit to:
Expenditures
Which of the following is not one of the seven elements defined by the GASB concept statements?
Expenses
Which of the following transactions is classified as an exchange transaction?
Fees charged by a municipal airport.
Which of the following would always be classified as a general revenue?
Fuel taxes earmarked for maintenance of roads and bridges.
Essex Village's capital expenditures during the year ended December 31 included: Equipment for village mayor's office$ 40,000 Village vehicles60,000 What amounts should have been recorded in the General Fund and the governmental activities journal for the increase in the equipment account during the year ended December 31?
General Fund: $0; Governmental activities: $100,000
The Town of Orleans purchased a truck for the parks department. If the operations of the parks department are financed by general revenues, which of the following is correct concerning where the capital asset would be recorded?
General Fund: No; Governmental Activities: Yes
The voters of the city passed an ordinance to increase their sales tax by ¼ percent. The proceeds of the sales tax are to be used for culture and recreation. In the governmental activities journal, how would the ¼ percent sales tax revenue be recorded?
General Revenue—Sales Tax.
Which of the following is not a category of program revenue reported on the statement of activities at the government-wide level?
General program revenues.
A liability is recorded in governmental funds when:
Goods or services are received, and the invoice is vouchered.
In accounting for state and local governments the modified accrual basis is required for
Governmental Funds
The liability for general obligation bonds should be recorded in the:
Governmental activities journal.
A debt service fund is a:
Governmental fund.
Which of the following would not be reported as charges for services on the statement of activities?
Grant for summer programs.
The federal government prepares a performance and accountability report. The purpose(s) of the performance and accountability report include which of the following?
Help users assess financial performance and management performance.
GASB standards require that general capital assets be recorded in the government-wide statements at:
Historical Cost
The sale of revenue bonds by a water utility fund would be recorded:
In an enterprise fund as a liability.
Which of the following is generally not an expense allocated to a government function or program?
Interest on general long-term liabilities.
Which of the following funds would be used to account for an activity that provides centralized purchasing and sales of goods or services to other departments or agencies of the government on a cost-reimbursement basis?
Internal Service Fund
Which of the following funds would record depreciation of capital assets?
Internal Service Fund
A comprehensive annual financial report (CAFR) prepared in conformity with the GASB recommendations should include which of the following sections?
Introductory, financial, and statistical.
Which of the following assets would appropriately be reported on the governmental funds balance sheet?
Inventories.
Which of the following is a fiduciary fund?
Investment trust fund.
The General Fund sent $750,000 to a debt service fund to cover principal and interest costs. This transaction would be recorded in the governmental activities journal as
It would not be recorded since the transaction involves two governmental funds.
Use the following information to determine whether the Development Special Revenue and the Debt Service Funds should be reported as major funds based on asset amounts provided. Development Special Revenue Fund Assets $740,000 Debt Service Fund Assets$150,000 Total Governmental Fund Assets $7,500,000 Total Governmental Fund and Enterprise Fund Assets $8,750,000
Neither the Development Special Revenue Fund nor the Debt Service Fund should be reported as major.
On May 1, the City of Spencer was notified of approval of a $300,000 federal operating grant, payable on a reimbursement basis as the city expends resources for the intended purpose of the grant. As of May 1, no expenditures had been made for grant purposes. The journal entry to record approval of this grant will include:
No journal entry will be made until authorized expenditures occur.
On what do the government-wide financial statements primarily report?
Operational accountability.
Special assessments levied for debt service of bonds issued for a special assessment capital project will be accounted for by a debt service fund under which of the following situations? A YesYes B YesNo C NoYes D NoNo
Option B
The expenditure classification "City Attorney" is an example of which of the following types of classification?
Organization unit.
The account "Interfund Transfers In" would be classified in a General Fund statement of revenues, expenditures, and changes in fund balance as a(an):
Other Financing source
Transfers from the General Fund to the capital projects fund to provide partial financing of a capital project would be reported by the capital projects fund as a(an):
Other financing source.
Expenditures and expenses are classified as which of the following elements under GASB concepts statements?
Outflows of resources.
The town received a $5,000,000 endowment, the terms of which indicate that earnings on the endowment are to be used by health and welfare to provide vaccines to all citizens that are interested. Where would the $5,000,000 be recorded?
Permanent Fund
Which of the following funds is a governmental fund-type?
Permanent fund.
Which of the following is not classified as a support activity reported by not-for-profit entities?
Program Expenses
A government experienced significant loss of certain roadways and bridges as a result of major flooding. Which of the following estimation approaches would be most useful in estimating the amount of asset impairment that has occurred?
Restorative cost approach
Which of the following should not be recorded in a government's governmental activities accounts?
Revenue bonds issued by an enterprise fund.
Which of the following would be reported on the operating statement of a governmental fund?
Revenue deferred from prior periods.
Which of the following is not an element defined by GASB Concepts Statement No. 4?
Revenues
According to the GASB definition, which of the following represents an inflow of resources?
Revenues.
Which of the following funds should be used if resources provided by a federal grant must be set aside and used for counseling youthful offenders?
Special revenue fund.
The section of the comprehensive annual financial report that presents tables and charts showing social and economic data in addition to financial trends, fiscal capacity, and operating information of the government is the
Statistical section.
Which of the following sections is not considered a part of a federal agency's performance and accountability report?
Statistical section.
A major governmental fund is one that has one or more elements (e.g., assets, liabilities, revenues, or expenditures) that is at least:
Ten percent of the corresponding element(s) of total governmental funds and 5 percent of the corresponding element(s) of total governmental and enterprise funds combined.
To offset engineering and design costs incurred prior to the issuance of a long-term bond issue, a capital projects fund borrowed the sum of $75,000 on a short-term basis from First National Bank. This transaction should be recorded in:
The capital projects fund.
A city recorded an asset impairment to a public works facility. Which of the following is correct concerning the recording of the amount of the asset impairment?
The governmental activities accounts would record a debit to Expenses—Public Works.
Capital assets used by governmental funds should be reported in:
The governmental activities column of the government-wide statements.
The city amended its budget to increase expected grant revenues by $500,000 and increase expected culture and recreation expenditures by $500,000. Which of the following statements concerning the budget amendment journal entry is correct?
There will be no net adjustment to Budgetary Fund Balance.
For which of the following types of nonexchange transactions are revenues recognized when all the eligibility requirements are met?
Voluntary nonexchange transactions.
One of the minimum requirements for general purpose external financial reporting by governments is
management's discussion and analysis (MD&A).
