FAR 74 - Typical Items and Specific Types of Transactions and Events 1 Flashcards Preview

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Flashcards in FAR 74 - Typical Items and Specific Types of Transactions and Events 1 Deck (14):
1

The General Fund makes a short-term loan to an Enterprise Fund. The General Fund should record the loan as a(n):
A. Operating Transfer.
B. Due from Enterprise Fund.
C. Advance to Enterprise Fund.
D. Accounts Receivable.

B. Short-term inter-fund loans are recorded in accounts titled "Due from" (receivable) and "Due to" (payable).

General Fund journal entry: dr. Due from Enterprise Fund, cr. Cash, and Enterprise Fund, dr. Cash, cr. Due to General Fund

2

Gem City's Internal Service Fund received a residual equity transfer of $50,000 cash from the General Fund.

This $50,000 transfer should be reported in Gem's Internal Service Fund as a credit to:
A. Revenues.
B. Other Financing Sources.
C. Accounts Payable.
D. Transfers.

D. A residual equity transfer of $50,000 to the Internal Service Fund should be recorded as a debit to Cash and a credit to Transfers.
Transfers are reported on a separate line in the Statement of Revenues and Expenses for the fund, immediately after the line item: Operating Income/Loss before Transfers and Additions.

Internal Service Fund journal entry: dr. Cash, cr. Transfer-in, and General Fund journal entry: dr. Transfer out, cr. Cash

3

If a local government reports eligible infrastructure assets using the modified approach,
A. Maintenance and repair expenditures for the assets are capitalized.
B. The assets are not being preserved at or above the established and disclosed condition level.
C. No depreciation expense is required to be recognized.
D. Complete condition assessments must be performed every year.

C. Under the modified approach, infrastructure assets that are part of a network or subsystem of a network need not be depreciated if the government uses an asset management system that documents that the assets are being preserved approximately at (or above) a condition level established and disclosed by the government.

4

In 2011, Blake City completed the construction of a new convention center. In 2011, the Blake City Capital Project Fund recorded a receivable for a $1,000,000 state grant and a $500,000 transfer from the General Fund. What amount should be reported as revenue by the Capital Projects Fund?

$1,000,000
Under GASB Statement No. 33, the state grant is a Voluntary Non-Exchange Transaction for which revenues are recognized when the eligibility requirements are met. At that point, the revenue and the receivable are recorded. Other Financing Sources include proceeds from bonds and interfund transfers, neither of which are Revenues. Answer C is correct.

5

The billings for water services provided to other governmental units are recorded in the Enterprise Fund as:
A. Intergovernmental transfers.
B. Estimated Revenues.
C. Reimbursements.
D. Operating Revenues.

D. Services provided by one governmental unit to other units within the government in exchange for a fee are referred to as "quasi-external transactions." They result in recognizing revenues and expenditures or expenses by the funds involved. The Water Utility Enterprise Fund will recognize revenues for the water services billed to other units in the government. The units receiving water services will recognize expenditures (in the case of Governmental Fund types) or expenses (in the case of Proprietary and Fiduciary Funds).

Enterprise Fund journal entry: dr. Accounts Receivable, cr. Revenue

6

The City of Curtain had the following interfund transactions during the month of May:
Billing by the internal service fund to a department financed by the general fund, for services rendered in the amount of $5,000.
Transfer of $200,000 from the general fund to establish a new enterprise fund.
Routine transfer of $50,000 from the general fund to the debt service fund.

What was the total reciprocal interfund activity for Curtain during May?

$5,000
There for five types of interfund transactions: (1) loans, (2) reciprocal quasi-external transactions, (3) reimbursements, (4) residual transfers, and (5) operating transfers. A reciprocal transaction occurs from doing business with one another, such as the billing of services by an internal service fund to other funds/departments in the government.

7

On March 2, 2005, Finch City issued 10-year general obligation bonds at face amount, with interest payable March 1 and September 1.
The proceeds were to be used to finance the construction of a civic center over the period April 1, 2005, to March 31, 2006.
During the fiscal year ended June 30, 2005, no resources had been provided to the Debt Service Fund for the payment of principal and interest.

The liability for the general obligation bonds should be recorded in the:
A. General Fund.
B. Capital Projects Fund.
C. Government-wide financial statements.
D. Debt Service Fund.

C. The government-wide financial statements are used to account for all un-matured long-term indebtedness of the government, except for that debt belonging to Proprietary and similar Trust Funds. The liability for the general obligation bonds should be recorded in this account group.

8

T/F: When one fund pays an expenditure on behalf of another fund and subsequently receives repayment, the expenditure is reduced in the fund which makes the repayment and increased in the fund receiving the repayment.

False.
Expenditure Reimbursements - When one fund pays an expenditure on behalf of another fund and subsequently receives repayment, the expenditure is reduced in the fund that receives the repayment and increased in the und making the repayment.
(last part is opposite of what question states)

9

T/F: Residual Equity Transfers are non-recurring, relatively infrequent, transfers of monies between funds.

True

10

T/F: Quasi-External (Interfund Sales and Purchase) Transactions give rise to a revenue entry in the fund supplying the services and an expenditure or expense in the fund using the services.

True

11

Excel City's Water Utility Enterprise Fund issues $10,000,000 in 20-year serial revenue bonds to finance a major expansion of one of its water treatment plants. $500,000 in bonds mature each year. As a result of this transaction, the year-end long-term liability in the governmental activities section of the government-wide financial statements accounts will reflect:

$0
The Water Utility Enterprise Fund uses full accrual accounting and will account for and report on the bonds in the Enterprise Fund. Therefore, this liability appears in the business-type activity section of the government-wide financial statements and not in the governmental activity section.

12

A government has the following debt:

Capital lease liabilities that mature in more than one year (General Fund department leases)-$2,000,000.
Net pension liability associated with general government employees-$4,000,000.
General government bonds that mature in the next fiscal year-$14,000,000.

What amount of debt should be reported in the long-term liabilities in the government-wide financial positions?

$20,000,000
All of the items listed are Un-matured Long-Term Liabilities of the general government that will not be recorded in any of the Governmental Funds but will appear as liabilities in the Government-Wide Statement of Net Position.

13

T/F: Liabilities in the Government-wide statements are reported only at face value.

False.
may be reported at either face value or at discounted value, depending on the circumstances.

14

T/F: Governmental funds incur liabilities that don't require the use of current resources and therefore are not reported in the Fund-based statements until the period in which they are expected to be paid.

True

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