FAR: Gov't Accounting: 2/20/2018 Flashcards Preview

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Flashcards in FAR: Gov't Accounting: 2/20/2018 Deck (10):
1

Park City uses encumbrance accounting and formally integrates its budget into the general fund's accounting records. For the year ending July 31, 2005, the following budget was adopted:

Estimated revenues $30,000,000
Appropriations 27,000,000
Estimated transfer to debt service fund 900,000
When Park's budget is adopted and recorded, Park's budgetary fund balance would be a

1) $3,000,000 credit balance.
2) $3,000,000 debit balance.
3) $2,100,000 credit balance.
4) $2,100,000 debit balance.

$2,100,000 credit balance

The budgetary fund balance account represents the difference between estimated revenues (debit) and the total of appropriations and estimated transfers (credit) to the debt service fund. Since estimated revenues exceed the total of appropriations and estimated transfers to the debt service fund, the budgetary fund balance account would be credited.

Park would credit the budgetary fund balance account for $2,100,000 when it makes the following entry to record the budget.

Estimated revenues $30,000,000
Appropriations $27,000,000
Estimated transfers to debt service fund $900,000
Budgetary fund balance $2,100,000


2

As of the end of the fiscal year, a Capital Projects Fund has material balances of supplies inventory. Which fund balance classification would reflect the inventory of supplies?

1) Nonspendable.
2) Restricted.
3) Committed.
4) Assigned.

Nonspendable

According to GASB Statement No. 54, Nonspendable Fund Balance classification pertains to amounts that cannot be spent either because they are not in a spendable form (e.g., inventory) or are legally or contractually required to be maintained intact. Amounts that are constrained by the government's intent to be used for specific purpose are neither restricted or committed. Intent should be expressed by the governing body itself (e.g., finance committee) or an official of the governing body. Constraints of assigned amounts are more easily removed or modified than those amounts that are classified as Committed.

3

Question 4
AICPA.101142FAR-SIM

Which of the following fund balance classifications is used for budgetary accounting but not for GAAP financial statement reporting?

1) Nonspendable Fund Balance.
2) Unreserved Fund Balance.
3) Committed Fund Balance.
4) Unassigned Fund Balance.

Unreserved Fund Balance

GASB Statement No. 54 eliminated the use of "reserve" and "unreserved" fund balances. The appropriate fund balance classifications are Nonspendable, Restricted, Committed, Assigned, and Unassigned.

4

AICPA.101143FAR-SIM

A Capital Projects Fund has outstanding encumbrances of $250,000 as of the end of the fiscal year. Assume that all resources in the Capital Projects Fund are considered to be committed due to the constraints established by the enabling legislation of the governing body of the government. How should the encumbrances be reported in the year-end external financial statements?

1) As a specific identifiable component of the restricted fund balance.
2) As a specific identifiable component of the committed fund balance.
3) As a specific identifiable component of the Assigned Fund balance.
4) The encumbrances would only be reported in the note disclosures.

The encumbrances would only be reported in the note disclosures

According to GASB Statement No. 54, outstanding encumbrances are no longer reported as Reserves in the fund balance section, which was the practice prior to Statement No. 54. Significant encumbrances should be disclosed in the notes to the financial statements.

5

AICPA.110591FAR

In preparing Chase City's reconciliation of the Statement of Revenues, Expenditures, and Changes in fund balances to the Government-Wide Statement of Activities, which of the following items should be subtracted from the changes in fund balances?

1) Capital Assets Purchases.
2) Payment of long-term debt principal.
3) Internal Service Fund increase in Net Position.
4) Book value of capital assets sold during the year.

Book value of capital assets sold during the year.

At the Governmental-Fund level, the entire proceeds from the sale of capital assets is a financial resource of the fund - it is spendable. Only the gain or loss on the sale of capital assets is reported in the Government-Wide Financial Statements. Therefore, the book value of capital assets should be subtracted. All Internal Service Fund assets and liabilities are added to the governmental activities, as are the Net Position.

6

AICPA.060243FAR-AR

The City of Minton recorded the following transactions in its Special Revenue Fund:

Transfer from the General Fund of $400,000 to help finance a fire safety improvement project
Transfer of $5,000 from a Capital Projects Fund to pay for office supplies, which the Special Revenue Fund initially paid for in error
Federal grant proceeds of $300,000, which can only be used to pay for salary increases for public safety workers
Which of the following is correct regarding the recognition of Revenue and Other Financing Source in the Special Revenue Fund?

Revenue Other Financing Sources
$305,000 $400,000
$300,000 $405,000
$300,000 $400,000
$0 $405,000




$300,000, $400,000

The $5,000 transferred from the Capital Projects Fund is recognized as an Expenditure Reimbursement (a credit to an expenditure account) rather than an Other Financing Source.

7

AICPA.060238FAR-AR

The funded ratio of a pension plan compares:

1) Actual employer contributions to the unfunded actuarial accrued pension liability.
2) The fair value of plan assets to the actuarial value of plan assets.
3) Actual employer contributions to the accumulated required employer contributions.
4) The plan's fiduciary net position as a percentage of the actuarially determined total pension liability..



The plan's fiduciary net position as a percentage of the actuarially determined total pension liability..

According to GASB Statment No. 68 (para 46(b)(1)(d), governmental employers must report as required supplemental information, the pension plan's fiduciary net position as a percentage of the actuarially determined total pension liability.

8

The City of New Hope Rotary Club, a private, not-for-profit organization, recently ended a fund drive that raised $500,000 to be used as a scholarship fund.

The $500,000 is to be used to create an endowment that will be invested and retained in perpetuity and the earnings used to provide college scholarships to outstanding local high school graduates selected by the Rotary Club. The City has agreed to manage the investment and disbursement of these monies on behalf of the Rotary Club.

The City should account for the $500,000 corpus of the endowment in a(n):

1) Agency Fund.
2) Private-Purpose Trust Fund.
3) Permanent Fund.
4) Special Revenue Fund.

Private-Purpose Trust Fund

9

AICPA.120641FAR

A government makes a contribution to its pension plan in the amount of $10,000 for year 1. The actuarially-determined annual required contribution for year 1 was $13,500. The pension plan paid benefits of $8,200 and refunded employee contributions of $800 for year 1. What is the pension expenditure for the general fund for year 1?

1) $8,200
2) $9,000
3) $10,000
4) $13,500

$10,000

The actuarially-determined annual required contribution ($13,500) would be reported in the Required Supplemental Information (RSI) and also in the footnotes to the financial statements, but the $10,000 is the expenditure.

10

The City of Macon maintains a defined contribution pension plan for its employees. During the year, the city contributed $5,000,000 to the plan, which represented 100% of its required contribution for the year. City employees contributed $1,800,000 to the plan. In addition, plan assets earned $4,500,000.

What amount should the City report as Additions in its Pension Trust Fund?

1) $11,300,000
2) $9,500,000
3) $6,800,000
4) $4,500,000

$11,300,000

Both the employer and the employee contributions, as well as the earnings on plan assets, are recognized as Additions in the Pension Trust Fund.