FAR 72 - Major Funds, Fund-Level Reporting and Gvmt Funds Flashcards Preview

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Flashcards in FAR 72 - Major Funds, Fund-Level Reporting and Gvmt Funds Deck (19):

According to GASB 34, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments, certain budgetary schedules require supplementary information.

What is the minimum budgetary information required to be reported in those schedules?
A. A schedule of unfavorable variances at the functional level.
B. A schedule showing the final appropriations budget and actual expenditures on a budgetary basis.
C. A schedule showing the original budget, the final appropriations budget, and actual inflows, outflows, and balances on a budgetary basis.
D. A schedule showing the proposed budget, the approved budget, the final amended budget, actual inflows and outflows on a budgetary basis, and variances between budget and actual.

C. The Budgetary Comparison Schedule must report the original budget, the amended/final budget, and actual revenues and expenditures. The revenues and expenditures must be reported using the same basis used to prepare the budget: governmental budgets are frequently prepared on a cash or near-cash basis.


Tree City reported a $1,500 net increase in the fund balance for Governmental Funds. During the year, Tree purchased general capital assets totaling $9,000 and recorded a depreciation expense of $3,000.

What amount should Tree report as the Change in Net Position for governmental activities in Tree's Statement of Activities?

The increase in the fund balance for Governmental Funds is measured on the modified accrual basis, while the Change in Net Position for governmental activities is measure on the full accrual basis. To convert the increase in fund balance to full accrual:

Increase in Fund Balance + $1,500
Add back the Expenditures related to the purchase of capital assets + 9,000
Deduct the depreciation expense not included in Fund Balance - 3,000
Change in Net Position $7,500


Nox City reported a $25,000 net increase in the fund balances for total Governmental Funds. Nox also reported an increase in Net Position for the following funds:

Motor pool Internal Service Fund $ 9,000
Water Enterprise Fund 12,000
Employee pension fund 7,000

The motor pool Internal Service Fund provides service to the General Fund departments. What amount should Nox report as the Change in Net Position for governmental activities?

GASB Stmt. #34 requires that Internal Service Funds be included in the Governmental Activities totals on the Government-Wide Statements since Internal Service Funds supply goods or services only to the government entity.

Therefore, the total fund balance for the Governmental Funds in the fund-based statements ($25,000) must be increased by the Net Position of the motor pool ($9,000) when the preparing the Governmental Activities column of the Government-Wide Statement of Net Position ($25,000 + 9,000 = $34,000).


T/F: A reconciliation of amounts listed on the fund-based statements to amounts listed on the government-wide statements is required to be presented on a separate schedule, but does not have to be presented on the face of the fund-based financial statements.

Must be presented
a) on the face of the fund-based FS
b) on a separate schedule.


On December 31, 2005, Elm Village paid a contractor $4,500,000 for the total cost of a new Village Hall built in 2005 on Village-owned land.
Financing for the capital project was provided by a $3,000,000 general obligation bond issue sold at face value on December 31, 2005, with the remaining $1,500,000 transferred from the General Fund.

What account and amount should be reported in Elm's 2005 financial statements for the General Fund?
A. Other Financing Sources control
B. Expenditures control
C. Other Financing Sources control
D. Other financing uses control

D. This answer is correct because the General Fund should report only the $1,500,000 in the Other Financing Uses Control account as an Operating Transfer. The $3,000,000 in bonds proceeds should be reported in the Capital Projects Fund in the Other Financing Sources Control account.


Excel City has $1,000,000 of 8%, 10 year general obligation bonds outstanding. The bonds were issue on October 1, 20x8 to finance construction of city park improvements. Interest is payable semiannually on October 1 and April 1. The bonds also require an annual principal payment of $100,000 each April 1. What amount of debt service expenditures should the government report in its Debt Service Fund for the year ended December 31, 20x9?

Both Interest Expenditures and Principal Expenditures are recognized in the Debt Service Fund. Debt Service Expenditures are usually not accrued at year-end but are recorded as Expenditures when due and payable. In 20x9 the Debt Service Fund paid a total of $176,000-$ $40,000 interest and $100,000 principal on April 1 (both Expenditures of the fund) and $36,000 interest on October 1.


Excel City received a donation of $400,000. The donor stipulated that the money be permanently invested with the investment proceeds being used to provide funding for the community swimming pools. Which of the following best describes the reporting options for this transaction?
A. The city should record $400,000 as a capital contribution in a Permanent Fund.
B. The city should record $400,000 as revenue in a Permanent Fund.
C. The city should record $400,000 as another financing source in a Permanent Fund.
D. The city should record $400,000 as revenue in the General Fund.

B. Permanent Funds account for the receipt of the endowment principal that is donated to a government and is to be held in trust for the benefit of the government (or of its citizenry as a whole) as revenue.


Which of the following fund types used by a government would most likely have a Non-spendable Fund Balance for its Inventory of Supplies?
A. General.
B. Internal service.
C. Nonexpendable Trust.
D. Capital Projects.

A. This answer is correct because the General Fund normally records the purchase of supplies. The supplies must be reported on the General Fund's balance sheet, even though they do not represent current financial resources. In addition, at year end, a portion of the fund balance must be classified as non-spendable for the inventory amount because that amount of resources is not appropriable for future expenditures.


Grove Township issued $50,000 of bond anticipation notes at face amount in 2005 and placed the proceeds into its Capital Projects Fund.
All legal steps were taken to refinance the notes, but Grove was unable to consummate refinancing.

In the Capital Projects Fund, what account should be credited to record the $50,000 proceeds?
A. Other Financing Sources Control.
B. Revenues Control.
C. Deferred Inflow of Resources.
D. Bond Anticipation Notes Payable.

D. If all legal steps have been taken to refinance the bond anticipation notes and the ability to consummate refinancing criteria (FASB Statement No. 6) have not been met, then the bond anticipation notes should be reported as a Fund Liability in the fund receiving the proceeds. The Capital Projects Fund should credit Bond Anticipation Notes Payable for $50,000.


Should a Special Revenue Fund with a legally adopted budget maintain its accounts on an accrual basis and integrate budgetary accounts into its accounting system?
Maintain on accrual basis
Integrate budgetary accounts

No, yes
A Special Revenue Fund is a Governmental Fund, therefore it maintains its accounts on the modified accrual basis of accounting, not on the accrual basis.

A Special Revenue Fund, like all Governmental Funds, can integrate its budgetary accounts into its accounting system. Integration is essential in general, special revenue, and other annually budgeted Governmental Funds that have numerous types of revenues, expenditures, and transfers.


Sig City used the following funds for financial reporting purposes:

General Fund Capital Projects Fund
Internal Service Fund Special Revenue Fund
Airport Enterprise Fund Debt Service Fund
Pension Trust Fund

How many of Sig's funds use the accrual basis of accounting?

3. Three of the funds use full accrual basis (Internal Service Fund, Airport Enterprise Fund, and Pension Trust Fund) and four of the funds use modified accrual basis (General Fund, Capital Projects Fund, Special Revenue Fund, and Debt Service Fund).


In Soan County's General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances, which of the following has an effect on the excess of revenues over expenditures?
A. Purchase of fixed assets.
B. Payment to a Debt-Service Fund.
C. Special items.
D. Proceeds from the sale of capital assets.

A. Under the modified accrual basis of accounting, the purchase of fixed assets are classified as Capital Expenditures and is one of the expenditure types included in determining the excess (deficiency) of revenues over expenditures. The other three answers are items that appear in different sections of the Statement of Revenues, Expenditures, and Changes in Fund Balance. The payment to a debt service (i.e., a transfer out) is in the Other Financing Sources and Uses section of the statement. Special items include proceeds from the sale of capital assets, which appear below the section for Other Financing Sources and Uses of the statement.


If cash from the General Fund is transferred to a Debt Service Fund, the entry in the Debt Service Fund would be a debit to cash and a credit to:
A. Revenues.
B. Accounts Receivable.
C. Deferred Revenue.
D. Other Financing Sources.

D. This type of interfund activity is a transfer from one fund to another fund without an equivalent return of assets and without a requirement for repayment. They are classified as Other Financing Sources.


Which of the following funds should be reported as part of the local government's governmental activities column in its government-wide statements?
A. Debt Service.
B. Agency.
C. Private-Purpose Trust.
D. Pension Trust.

A. Governmental activities reported in the Government-Wide Financial Statements pertain to the Governmental Fund types: General Fund, Special Revenue Funds, Capital Projects Funds, Debt Service Funds, and Permanent Funds. The other three choices in this question are all Fiduciary Fund Types that are not reported in the Government-Wide Financial Statements since the government acts as a fiduciary and has no ownership interest. Fiduciary Funds are reported in the fund-level financial statements of the Comprehensive Annual Financial Report (CAFR).


T/F: A Debt Service Fund receives $100,000 from the General Fund to cover interest payments maturing during the year and receives another $35,000 in investment earnings, which it uses to repay matured principal. The Debt Service Fund should report $135,000 in Revenue for the period.

$100,000 - Other Financing Sources
$35,000 - Revenue


T/F: A Capital Projects Fund receives funding for a construction project from the following sources: Federal Grants - $500,000; General Obligation Bonds - $2,000,000; Transfers from the General Fund - $1,000,000. The project was started and completed during the year. The Capital Projects Fund should report Other Financing Sources of $2,000,000, a Residual Equity Transfer of $1,000,000, and Revenues of $500,000.

$500,000 = Revenues
$3,000,000 = Other Financing Sources


T/F: The Martinville Library received a $100,000 grant restricted to the purchase of new library books. By the end of the period, only $55,000 of the grant had been spent. Martinville should recognize only $55,000 as revenue during the current period.



T/F: When property taxes are levied, the governmental unit recognizes revenues in the gross amount of the levy.

Less any expected uncollectible amounts
The standard JE is:
Dr. Property Taxes Receivable - Current
Cr. Est. Uncollectible Taxes - Current
Revenues (or Porperty Tax Revenue)


T/F: When the General Fund purchases fixed assets, Fund Balance is debited.

It is recorded as an expenditure.
Although the fixed assets and the LT debt are not recorded in the General Fund, they are recorded "off-books" and are included in the gvmt-wide FS.

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