FAR 68 - Format and Content of Comp Annual Financial Report 1 - Measurement/Budgetary Accounting Flashcards Preview

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Flashcards in FAR 68 - Format and Content of Comp Annual Financial Report 1 - Measurement/Budgetary Accounting Deck (14):
1

Oro County's Expenditures control account at December 31, 2005 had a balance of $9,000,000.
When Oro's books were closed, this $9,000,000 Expenditures control balance should have
A. Been debited.
B. Been credited.
C. Remained open.
D. Appeared as a contra account.

B. The Expenditures control account is a temporary account that must be closed at the end of the fiscal year. The Expenditures control account is debited as resources are expended during the year. When the books are closed at the end of the year, this account should be CREDITED for $9,000,000 so that the balance in the account is zero.

2

Dayne County's general fund had the following disbursements during the year:

Payment of principal on long-term debt $100,000
Payments to vendors 500,000
Purchase of a computer 300,000

What amount should Dayne County report as expenditures in its governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances?

$900,000
On the Statement of Revenues, Expenditures, and Changes in Fund Balances, which reports transactions using the modified accrual basis of accounting, repayment of principal on long-term debt, payments to vendors, and purchases of fixed assets are all reported as expenditures.

3

The orientation of accounting and reporting for all proprietary funds of governmental units is
A. Income determination.
B. Project.
C. Flow of funds.
D. Program.

A. Proprietary funds account for activities of the governmental unit that are similar to activities conducted by commercial enterprises. The orientation of accounting and reporting for proprietary funds is similar to that used in private businesses. The accrual basis of accounting is used, and the measurement focus is on income determination, financial position, and cash flow (GASB Codification 1300.102).

4

Which of the following funds of a governmental unit uses the modified accrual basis of accounting?
A. Internal service funds
B. Enterprise funds
C. Special revenue funds
D. Nonexpendable trust funds

C. All governmental funds, including special revenue funds, use the modified accrual basis of accounting.

5

Todd City formally integrates budgetary accounts into its general fund. Todd uses an internal service fund to account for the operations of its data processing center, which provides services to Todd's other governmental units.
During the year ending December 31, 2005, Todd's special revenue fund received a state grant to buy a bus and an additional grant for bus operation in 2005. In 2005, only 90% of the capital grant was used for the bus purchase, but 100% of the operating grant was disbursed.
In reporting the state grants for the bus purchase and operation, what should Todd include as grant revenues for the year ending December 31, 2005?
90% of the capital grant
100% of the capital grant
Operating grant

yes, no, yes
Todd City should recognize the grants as revenues in the accounting period when they are susceptible to accrual. For grants, the expenditure of resources is a prime factor in determining eligibility for accrual. All of the operating grant has been spent; therefore, 100% should be recognized as revenue.
Since only 90% of the capital grant has been spent, only 90% can be recognized as revenue.

6

Which of the following funds of a governmental unit recognizes revenues in the accounting period in which they become available and measurable?
General fund
Enterprise fund

Yes, no
The general fund uses the modified accrual basis of accounting. Under this basis, revenues are recognized in the accounting period when they become available and measurable.

An enterprise fund uses the accrual basis of accounting. Under this basis, revenues are recognized in the period in which they are earned and measurable.

7

For governmental fund types, which item is considered the primary measurement focus?
A. Income determination
B. Flows and balances of financial resources
C. Capital maintenance
D. Cash flows and balances

B. The primary measurement focus for governmental fund types is on the flows and balances of financial resources (GASB Codification 1300.102).

8

T/F: Revenues in the Enterprise Fund are recognized when they are measurable and available.

False.
An enterprise fund uses the accrual basis of accounting. Under this basis, revenues are recognized in the period in which they are earned and measurable.

9

T/F: Governmental entities record property tax revenue when the bills are sent out.

True

10

T/F: Blakeville Township paid $150,000 for a three year building insurance policy at the beginning of the current year. Under the purchases method, Blakeville's general fund will report the full $150,000 as expenditures in the current year.

True

11

T/F: The focus of modified accrual basis accounting is on the flow of financial resources.

True

12

Harbor City's Appropriations Control Account at December 31, 2005 had a balance of $7,000,000.

When the budgetary accounts were closed at year-end, this $7,000,000 Appropriations Control balance should have:
A. Been debited.
B. Been credited.
C. Remained open.
D. Appeared as a contra account.

A. The Appropriations Control account should have been credited for $7,000,000 when the budget was adopted, and it should have been debited for $7,000,000 when the budgetary accounts were closed at the end of the year.

Note: The Appropriations Control account, a budgetary account, would be credited for the amount of the authorized spending limit.

13

T/F: The Milton Town Council voted to increase the town's appropriation for cultural events during the year. The entry to record the increase in the accounting records included a debit to Budgetary Fund Balance.

True

14

T/F: Sommerton County projected revenues of $3,000,000 for the upcoming fiscal year. The County Commissioners authorized $2,300,000 in expenditures and agreed to transfer $500,000 from the General Fund to the Debt Service Fund to cover interest and principal payments for the year. The entry to record the budget includes a credit to Budgetary Fund Balance for $700,000.

False.
a debit

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