Gov SB Ch 8
The City of Valley Ridge's governmental Funds Balance Sheet shows liability account, Due to Other Funds in the amount of $110,000. Of this amount, $60,000 is due to internal service funds and $50,000 is due to the Water Utility Enterprise Fund. How does the Due to Other Funds account affect the government-wide financial statements? -The entire $110,000 will be eliminated. -The $60,000 will be eliminated and the $50,000 will be reported as internal balances in the government-wide Statement of Net Position. -The entire $110,000 will be reported as internal balances in the government-wide Statement of Net Position. -The $50,000 will be eliminated and the $60,000 will be reported as internal balances in the government-wide Statement of Net Position.
The $60,000 will be eliminated and the $50,000 will be reported as internal balances in the government-wide Statement of Net Position.
True or false: The Investment in General Fixed Assets account has no significance and does not appear in any financial statements.
True
If an internal service fund has positive operating income, ______. -no worksheet entry is required -a worksheet entry is made that credits Net Position (beginning of year) -a worksheet entry is made that debits Net Position (beginning of year)
a worksheet entry is made that debits Net Position (beginning of year)
The City of Valley Ridge sold 5-year serial bonds with a principal amount of $750,000 for $787,500 on September 1, 2020. Annual interest of 7% will be paid on August 31, 2021 along with the first principal payment. The worksheet on December 31, 2020 to record the amortization of the bond premium will result in a(n) ______. decrease in interest expense of $2,500 increase in interest expense of $2,500 decrease in interest expense of $7,500 increase in interest expense of $7,500
decrease in interest expense of $2,500 37,500/5 x 4/12 = 2500
On the Statement of Net Position, component units are ______ displayed in a separate column combined with governmental activities combined with business-type activities not reported
displayed in a separate column
Governments are ______ to capitalize collections. encouraged required not permitted
encouraged
On the Statement of Net Position, business type activities include activities of ______ funds. internal service capital projects special revenue enterprise
enterprise
The Statement of Activities reports the net ______ for each major government function. expense revenue profit
expense
The objective of the Statement of Activities is to allow statement users to determine the net ____ of each major government function.
expense
When governments use the modified approach for reporting infrastructure, costs to extend the life of the assets are ______. capitalized expensed
expensed
True or false: A government recorded an expenditure for interest on bonds paid in 2021. The interest accrued in 2020 must be removed in an entry that includes a debit to Accrued Interest Payable.
false
True or false: Internal service funds are always reported in the business activities column of the government-wide Statement of Net Position.
false
True or false: Worksheet entries are posted to the general ledger prior to closing.
false
Internal service funds are typically reported in the governmental activities section of the government-wide statements but _____ activities are not included at all.
fiduciary
Which of the following type of entries are NOT found in the worksheet? Interfund transfers and balances eliminations Revenue adjustments Fiduciary fund eliminations Expense adjustments
fiduciary fund eliminations
A total of ______ steps are necessary to incorporate internal service funds into the governmental activities category. three four two five
four
Long-term liabilities associated with governmental funds are referred to as _____ long-term debt.
general
GASB requires that government-wide financial statements include _____ _____ assets, which are fixed assets other than those used by proprietary or fiduciary funds.
general capital
Select all that apply Infrastructure assets must be _________. included in note disclosures included in the Statement of Net Position depreciated in the same manner as for other depreciable fixed assets
included in note disclosures included in the Statement of Net Position
Roads, bridges, dams, and lighting systems are all examples of ______ assets.
infrastructure
GASB standards permit offsetting interfund receivables and payables between governmental and business-type funds by displaying them in a single row titled ______ ______.
internal balances
When a capital asset is sold or disposed of during the year a gain or loss ______ reflected in the Statement of Activities. is not is
is
When a capital asset is determined to be permanently impaired, a loss ______ recorded in the fund-based statements. is not is
is not
The modified approach for reporting infrastructure ______. -is only available to governments that meet several conditions -is the preferred method of reporting for all governments -may only be used at the federal government level
is only available to governments that meet several conditions
When a component unit uses the modified accrual basis of accounting, ______. -it must be converted to the accrual basis for presentation in the government-wide statements -the balances of assets, liabilities, and net position may be entered directly into the component unit column in the Statement of Net Position -it is excluded from the government-wide statements
it must be converted to the accrual basis for presentation in the government-wide statements
GASB requires that reconciliations between fund statements and government-wide financial statements be presented ______. -on the face of the government-wide financial statements or immediately after them -on the face of the governmental fund financial statements or immediately after them -in separate schedules only either after the governmental fund or government-wide financial statements -on the face of either the governmental fund or government-wide financial statements
on the face of the governmental fund financial statements or immediately after them
Expenditures to extend the life of infrastructure assets are ______. -always expensed -only expensed under the modified approach -never expensed -only expensed under the depreciation approach
only expensed under the modified approach
Account groups are used ______. -for capital assets purchased for proprietary and fiduciary funds -for all capital assets purchased for any type of government fund -only for capital assets and long-term debt arising from governmental activities
only for capital assets and long-term debt arising from governmental activities
The City of Valley Ridge sold 5-year serial bonds on September 1, 2020. A worksheet entry is required that debits ______ ______ ______ - Proceeds of Bonds and credits Bonds Payable.
other financing sources
If an internal service fund has positive operating income, the expenditures reported in the General Fund ______ the true cost of running the government. overstate understate
overstate
No worksheet entries are required for debt issued by ____ funds, because those funds already report long-term liabilities and interest expense on the accrual basis.
proprietary
General capital assets are capital assets that are not associated with _____ or ______ activities.
proprietary, fiduciary
The City of Valley Ridge's Water Utility Enterprise Fund transferred $150,000 to the new Police Station Capital Projects Fund in 2020. In preparing the government-wide financial statements, the transfer is ______. -included in program revenues -reported in the government-wide Statement of Activities -eliminated with a worksheet entry that debits Other Financing Sources and credits Other Financing Uses
reported in the government-wide Statement of Activities
The City of Valley Ridge's Water Utility Enterprise Fund transferred $150,000 to the new Police Station Capital Projects Fund in 2020. When preparing the government-wide Statement of Activities, this transfer is ______. reported separately as an extraordinary item not reported on the statement reported separately as a transfer
reported separately as a transfer
On a government-wide Statement of Net Position, permanent fund principal is included in ______ net position. restricted unrestricted net investment in capital assets
restricted
An entry that debits Deferred Inflows - Property Taxes and credits Revenues - Property Taxes would be made to ______ deferred revenues that are not considered available during the current year. reverse record
reverse
Transactions between the government and external parties ______ be reflected in the government-wide Statement of Activities. should not should
should
Worksheet entries to convert to the accrual basis are generally required for ______. -government-mandated and voluntary non-exchange transactions only -both deferred taxes and exchange transactions -taxes deferred under the available criteria only
taxes deferred under the available criteria only
General capital assets acquired through a proprietary fund are reported in ______. -the Statement of Net Position of the fund -government-wide financial statements -both the Statement of Net Position of the fund and government-wide financial statements
the Statement of Net Position of the fund
Impairment is deemed to exist if the amount of the decline in service utility is large and the decline is ______. unexpected either expected or unexpected expected
unexpected
When preparing the government-wide Statement of Net Position, the "plug" figure is found in ______ net position.
unrestricted
Under the modified accrual basis of accounting, revenue is recognized ______ -when the underlying transaction occurs -if expected to be collected within 60 days of year-end -when available and measurable -only when received
when measurable and available
Whenever revenue is recognized in a different time period under the modified accrual basis than under the accrual basis, worksheet entries ______ be required. will not will
will
The City of Valley Ridge recorded expenditures for capital outlays for $1,760,000 during 2017, of which $10,000 was interest capitalized during construction of the building. The worksheet entry will include a credit to Expenditures for $1,760,000 and debit to Buildings for ______. $1,770,000 $1,760,000 $1,750,000
$1,750,000
Select all that apply Which of the following items are included in government-wide statements but not fund-basis statements? -Short term payable and receivables -General long-term debt -General capital asset balances -Changes in general capital assets
-General long-term debt -General capital asset balances -Changes in general capital assets
Select all that apply In 2020 the City of Valley Ridge sold a piece of land with a cost of $90,000 for $110,000. Which of the following statements are correct? -The sale of the land is treated as a special item on the government-wide statements. -The governmental fund statement shows an other financing source of $110,000. -The land should not be included in the worksheet entry to record the beginning balance of capital assets. -Both the governmental fund statement and the government-wide statement report a gain on sale of $20,000.
-The sale of the land is treated as a special item on the government-wide statements. -The governmental fund statement shows an other financing source of $110,000.
Select all that apply General capital assets ______. -may be acquired by proprietary but not fiduciary funds -are commonly acquired by a General or capital project fund -must be reported by General Fixed Asset Account Group -are not reported in fund financial statements
-are commonly acquired by a General or capital project fund -are not reported in fund financial statements
Worksheet entries ______.
-are not posted to the general ledger -adjust governmental fund records to the economic resource focus -are used to adjust governmental funds to the accrual basis of accounting
Select all that apply General long-term debt is ______ -not reported in the government-wide statements -backed by the full faith and credit of the governmental unit -sometimes called general obligations bonds -payable out of enterprise funds
-backed by the full faith and credit of the governmental unit -sometimes called general obligations bonds
Select all that apply GASB requires reconciliations from the ______. -fund financial statements to the government-wide financial statements -proprietary fund financial statements to the government-wide business activities column -governmental fund Balance Sheet to the Statement of Net Position -governmental fund Statement of Revenues, Expenditures and Changes in Fund Balance to the governmental fund Balance Sheet
-fund financial statements to the government-wide financial statements -governmental fund Balance Sheet to the Statement of Net Position
Select all that apply. Internal service funds are ______. -generally included with the governmental activities in government-wide statements -sometimes reported in the business activities column on the government-wide Statement of Net Position -included in the governmental fund balances used as the starting point for the government-wide conversion
-generally included with the governmental activities in government-wide statements -sometimes reported in the business activities column on the government-wide Statement of Net Position
Select all that apply The first worksheet entry for capital assets ______. -may include a condensed credit for total accumulated depreciation -only records the beginning asset balances when new assets are acquired -credits Net Position for the difference between the assets and accumulated depreciation
-may include a condensed credit for total accumulated depreciation -credits Net Position for the difference between the assets and accumulated depreciation
Select all that apply Under the modified accrual basis ______. -most expenditures are recorded when current obligations exist -obligations for pension and compensated absences are accrued at year-end -interest on long-term debt is typically recorded when due
-most expenditures are recorded when current obligations exist -interest on long-term debt is typically recorded when due
Select all that apply Regarding capital assets, GASB requires ______. -note disclosure be separated between governmental and business-type activities assets estimated useful lives be derived from general guidelines of professional or industry organizations -note disclosure by major class of assets
-note disclosure be separated between governmental and business-type activities assets -note disclosure by major class of assets
Select all that apply General long-term debt includes ______ -principal of unmatured bonds -the total due on capital lease agreements -claims and judgments -compensated absences
-principal of unmatured bonds -claims and judgments -compensated absences
Select all that apply Worksheet adjustments are required to ______. -record depreciation expense -capitalize interest incurred during construction -eliminate charges to expenditures for capital assets
-record depreciation expense -eliminate charges to expenditures for capital assets
Select all that apply Entries in the worksheet ______. -record interfund transfers and balances -record expenses not recognized under modified accrual -adjust revenues to the accrual basis
-record expenses not recognized under modified accrual -adjust revenues to the accrual basis
Select all that apply The government-wide Statement of Activities ______. -reports both special and extraordinary items separately -classifies motor fuel taxes as general revenues -subtracts property taxes when determining the net expense of a government function -eliminates transfers between all types of funds
-reports both special and extraordinary items separately -classifies motor fuel taxes as general revenues
Select all that apply Net Position is generally the offset to worksheet entries that affect ______. -current year asset purchases and debt issues -revenues and expenses recognized in the current year -revenues and expenses recognized in a prior year -beginning asset and liability balances
-revenues and expenses recognized in a prior year -beginning asset and liability balances
Select all that apply Regarding capital assets, GASB requires ______. -significant disclosures in the financial statement notes -summary information be presented in the Management's Discussion and Analysis -use of the straight-line method of depreciation
-significant disclosures in the financial statement notes -summary information be presented in the Management's Discussion and Analysis
Select all that apply When a government has discretely presented component units, ______. -those that are fiduciary in nature are not included in government-wide statements -they are displayed in a separate column in the Statement of Net Position -revenues and expenses are always entered directly into component unit rows of the Statement of Activities
-those that are fiduciary in nature are not included in government-wide statements -they are displayed in a separate column in the Statement of Net Position
Property taxes deferred under the _______ may need to be recognized under the accrual basis (and prior year's accrual reversed)
60 day rule
Transactions between the government and external parties should be reflected in the government-wide Statement of ______. Revenues, Expenses and Changes in Net Position Activities
Activities
When accounting for general long-term debt, the _____ to Be _____ account has no significance and does not appear in any financial statements.
Amount to Be Provided
Select all that apply The City of Valley Ridge sold 5-year serial bonds with a principal amount of $750,000 for $787,500 on September 1, 2020. Annual interest of 7% will be paid on August 31, 2021 along with the first of 5 equal principal payments. Which of the following will be included in the worksheet entries for the year ended December 31, 2020? -Credit Bonds Payable for $750,000 -Credit Expenditures - Bond Principal $150,000 -Debit Other Financing Sources - Proceeds of Bonds for $775,000 -Credit Premium on Bonds Payable for $37,500
Credit Bonds Payable for $750,000 Credit Premium on Bonds Payable for $37,500
Which of the following would NOT be deducted from total Capital Assets to calculate the Net Investment in Capital Assets Net Position on the government-wide Statement of Net Position? -Advances from Enterprise Fund -Bonds payable + premium -Funds restricted for road repair -Accumulated depreciation
Funds restricted for road repair
All of these debt disclosures and schedules are required except for the Schedule of ______. Direct and Overlapping Debt Legal Debt Limit Changes in Long-Term Debt Debt Service Requirements
Legal Debt Limit
In the worksheet entry to record the beginning capital assets, the difference between the assets and the accumulated depreciation on the assets is credited to the ____ ____ account.
Net Position
The offset to worksheet entries affecting beginning asset and liability balances is generally _______ _______.
Net Position
The City of Valley Ridge sold 5-year serial bonds with a principal amount of $750,000 for $787,500 on September 1, 2020. Annual interest of 7% was paid on August 31, 2021 along with the first principal payment. Interest was properly accrued as part of the 2020 worksheet entries. As a result of the accrual, a 2021 worksheet entry will be made that debits ______. -Interest Expense and credits Net Position -Accrued Interest Payable and credits Interest Expense -Interest Expense and credits Accrued Interest Payable -Net Position and credits Interest Expense
Net Position and credits Interest Expense
Expenditures to add or improve infrastructure assets are ______. -never capitalized -only capitalized under the depreciation approach -always capitalized -only capitalized under the modified approach
always capitalized
For debt issued by proprietary funds, worksheet entries ______ required. may or may not be are not are
are not
On a government-wide Statement of Net Position, interfund receivables and payables ______. -between the government and business-type funds are not eliminated -are always eliminated, regardless of type of fund -between funds appearing within the governmental activities column are not eliminated -are never eliminated, regardless of type of fund
between the government and business-type funds are not eliminated
Four steps are necessary to incorporate internal service funds into the governmental activities category. The first step is to ______. -bring in the balance sheet accounts -address current period changes in the fund's assets and liabilities -bring in the revenue and expense accounts
bring in the balance sheet accounts
Select all that apply Examples of potential impairment events include ______. -changes in regulations -technological changes -a decrease in the demand for a particular service -physical damage through fire or flood
changes in regulations technological changes physical damage through fire or flood
One of the conditions for a donated or purchased item to qualify as a(n) ______ is that it must be protected, kept unencumbered, cared for, and preserved.
collection
The City of Valley Ridge had memorandum records indicating accumulated compensated absences payable at the first of the year of $95,000 and an additional accrual of $14,000 is needed in 2020. The worksheet entry to record the beginning of the year balance is ______. -credit Compensated Absences Payable for $95,000 and debit Compensated Absences Expense for $95,000 -debit Compensated Absences Payable for $95,000 and credit Net Position for $95,000 -debit Compensated Absences Expense for $95,000 and credit Compensated Absences Payable for $95,000 -credit Compensated Absences Payable for $95,000 and debit Net Position for $95,000
credit Compensated Absences Payable for $95,000 and debit Net Position for $95,000
The City of Valley Ridge sold 5-year serial bonds with a principal amount of $750,000 for $787,500 on September 1, 2020. Annual interest of 7% will be paid on August 31, 2021 along with the first principal payment. The worksheet entry on December 31, 2020 to amortize the bond premium will include a (debit/credit) _____ to Premium on Bonds Payable and a (debit/credit) _____ to Interest Expense in the amount of $_____.
debit credit 2,500
The difference between the amount of debt outstanding and the debt limit is called the _____ _____.
debt margin
