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Flashcards in GOV Deck (113):
1

In accordance with GASB 33, Accounting and Financial Reporting for Nonexchange Transactions, which of the following items is classified as a derived tax revenue?
a. Grants.
b. Fines.
c. Motor fuel taxes.
d. Property taxes.

Motor fuel taxes.

2

Gold County received goods that had been approved for purchase but for which payment had not yet been made. Should the accounts listed below be increased?
Encumbrances Expenditures
a. No No
b. No Yes
c. Yes No
d. Yes Yes

No Yes

3

In year 1, Beech City issued $400,000 of bonds, the proceeds of which were restricted to the financing of a capital project. The bonds will be paid wholly from special
assessments against benefited property owners. However, Beech is obligated to provide a secondary source of funds for repayment of the bonds in the event of default by the assessed property owners. In Beech’s basic financial statements, this $400,000 special assessment debt should

Be reported in the government-wide statements only.

4

In year 1, Menton City received $5,000,000 of bond proceeds to be used for capital projects. Of this amount $1,000,000 was expended in year 1. Expenditures for
the $4,000,000 balance were expected to be incurred in year 2. These bond proceeds should be recorded in capital projects fund for

$5,000,000 in year 1.

5

The Critical criteria for identifying a legally separate organization as a component unit of a primary government is that the primary government can impose its will on
the unit or the unit is financially dependent on the primary government and

There is a potential for the unit to provide specific benefits to, or burdens on, the primary government.

6

The City of Tyler entered in an agreement with Huffington Company to operate a parking structure owned by the City of Tyler. Huffington agrees to pay Tyler $10 million to operate the parking garage for the next 20 years. Which of the following is true about the accounting for this arrangement?
a. When the contract is executed, the City of Tyler should record deferred inflow of resources of $10 million.
b. When the contract is executed, the City of Tyler should record revenue of $10 million.
c. The City of Tyler should discontinue the depreciation on the parking garage for the 20-year period.
d. When the contract is executed, the City of Tyler should record a deferred outflow of resources in the amount of $10 million.

When the contract is executed, the City of Tyler should record deferred inflow of resources of $10 million.

7

When a purchase order is released, a commitment is made by a governmental unit to buy a computer to be manufactured to specifications for use in property tax
administration. This commitment should be recorded in the general fund as an

Encumbrance.

8

A state government enters into an agreement in which a private company agrees to build a toll road for the state in exchange for the tolls to be collected for the next
30 years. The toll road has a fair value of $500 million at the time it is put in service. Which of the following is correct about the accounting for this arrangement?
a. The state government should record the toll road on its books at $500 million when the agreement is executed.
b. The state government should record a deferred outflow of resources in the amount of $500 million.
c. The state government should record revenue of $500 when the agreement is executed.
d. The private company should record the toll road on its books for the 30 years in which it collects the revenue.

The state government should record the toll road on its books at $500 million when the agreement is executed.

9

According to the GASB Concepts Statements governmental financial reports are primarily used to do all of the following except to
a. Evaluate the value of assets and liabilities.
b. Assess financial condition and results of operations.
c. Assist in evaluating effectiveness and efficiency
d. Compare actual financial results with budgets.

Evaluate the value of assets and liabilities.

10

Kingsford City incurred $100,000 of salaries and wages for the month ended March 31, year 1. How should this be recorded at that date in the General Fund, using
modified accrual accounting?

Expenditures $100,000
Vouchers Payable $100,000

11

Park City uses encumbrance accounting and formally integrates its budget into the general fund’s accounting records. For the year ending July 31, year 1, the
following budget was adopted:
Estimated revenues $30,000,000
Appropriations 27,000,000
Estimated transfer to debt
service fund 900,000
Park should record budgeted appropriations by a

Credit to appropriations, $27,000,000.

12

The City of Oakland has a defined contribution plan that covers the majority of its employees. Which of the following is not accurate statement about such a plan?
a. The city must disclose in Required Supplementary Information (RSI) descriptive information about the types of benefits provided.
b. The city should record its proportionate share of the collective net pension liability and expense for the plan.
c. The city should record a change in pension liability equal to the difference between amounts recognized as pension expense and the amount contributed by the employer.
d. Pension expense should be accrued equal to the amount of contributions or credits to employees’ accounts that are defined by the benefit terms as attributable to current period service, net of forfeited amounts.

The city should record its proportionate share of the collective net pension liability and expense for the plan.

13

The following data relates to Lely Township:
Printing and binding equipment used
for servicing all of Lely’s departments
and agencies, on a cost-reimbursement
basis $100,000
Equipment used for supplying water to
Lely’s residents 900,000
Receivables for completed sidewalks to
be paid for in installments by affected
property owners 950,000
Cash received from federal government,
dedicated to highway maintenance,
which must be accounted for in a separate
fund 995,000
How much should be accounted for in a Special Revenue Fund or Funds?

$ 995,000

14

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

15

Which of the following would be included in the Budgetary Comparison Schedule in the comprehensive annual financial report (CAFR) of a governmental unit?
Enterprise fund Pension trust fund
a. Enterprise fund and Pension trust fund
b. Enterprise fund
c. Pension trust fund
d. Neither

d. Neither

16

The Town of Boyd Electric Utility Fund, which is an Enterprise Fund, had the following:
Prepaid insurance paid in December year 1 $ 43,000
Depreciation for year 1 129,000
Provision for doubtful accounts for year 1 14,000
What amount should be reflected in the Statement of Revenues, Expenses and Changes in Fund Net Position of the Town of Boyd Electric Utility Fund for the above
items?

$143,000

17

Under the modified accrual basis of accounting for governmental funds of a governmental unit, revenues should be recognized in the accounting period in which they

Become available and measurable.

18

In accordance with GASB 35, a public college or university that chooses to report only business-type activities should prepare which of the following financial
statements?
a. Statement of cash flows
b. Statement of cash flows and Statement of revenues, expenses, and changes in net position
c. Neither
d. Statement of revenues, expenses, and changes in net position.

b. Statement of cash flows and Statement of revenues, expenses, and changes in net position

19

Revenues of a municipality should be recognized in the accounting period in which they become available and measurable for a
a. Governmental fund
b. Governmental fund and Proprietary fund
c. Proprietary fund
d. Neither

Governmental fund

20

The City of Oakland has a defined contribution plan that covers the majority of its employees. Which of the following is not an accurate statement about such a plan?
a. Pension expense should be accrued equal to the amount of contributions or credits to employees’ accounts that are defined by the benefit terms as attributable
to current period servicer net of forfeited amounts.
b.The city must disclose in Required Supplementary Information (RSI) descriptive information about the types of benefits provided.
c. The city should record its proportionate share of the collective net pension liability and expense for the plan.
d. The city should record a change in pension liability equal to the difference between amounts recognized as pension expense and the amount contributed by the employer.

The city should record its proportionate share of the collective net pension liability and expense for the plan.

21

The city of Towson has a single employer defined-benefit plan. All of the following are true about Towson’s accounting for the plan, except:
a. In determining the amount of pension liability, the selection of all assumptions should be in conformity with Actuarial Standards of Practice issued by the Actuarial
Standards Board.
b. Pension expense should include recognition of annual service cost and interest on the pension liability along with the effect on the net pension liability of changes in benefit terms.
c.The entry age actuarial cost method should be used to attribute the actuarial present value of projected benefit payments of each employee to periods.
d. Pension liability should be determined without discounting future benefits, if the entity has an unfunded plan.

Pension liability should be determined without discounting future benefits, if the entity has an unfunded plan.

22

Harland County received a $2,000,000 capital grant to be equally distributed among its five municipalities. The grant is to finance the construction of capital assets.
Harland had no administrative or direct financial involvement in the construction. In which fund should Harland record the receipt of cash?
a. Private purpose trust fund
b. Agency fund.
c. Special revenue fund.
d. General fund.

Agency fund.

23

GASB 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, requires the use of full accrual accounting in the preparation of the Statement of Net Position and the Statement of Activities. The use of full accrual accounting should provide information to users to help them assess which of the following?
I. Whether current-year citizens paid for the services they received in the current year, or if the costs of services were shifted to citizens in future years.
II. Whether the government’s financial position has improved or deteriorated as a result of the year’s operations.

Both I and II

24

A component unit is a legally separate organization for which the elected officials of the primary government:
a. Rely upon for services.
b. Are financially accountable.
c. Have a reciprocal relationship.
d. Provide funds.

Are financially accountable.

25

Which of the following transactions is an expenditure of a governmental unit’s general fund?
a. Operating subsidy transfer from the general fund to an enterprise fund.
b. Contribution of enterprise fund capital by the general fund.
c. Routine employer contributions from the general fund to a pension trust fund.
d. Transfer from the general fund to a capital projects fund.

Routine employer contributions from the general fund to a pension trust fund.

26

Which of the following is not included in the elements of service efforts and accomplishments reporting?
a. Measures that relate service efforts to service accomplishments.
b. Measures of service effort.
c. Measures of service accomplishments.
d. Estimates of accomplishments values.

Estimates of accomplishments values.

27

Harbor City’s appropriations control account at December 31, year 1, 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

Been debited

28

Brockton City serves as collecting agency for the local independent school district and for a local water district. For this purpose, Brockton has created a single
agency fund and charges the other entities a fee of 1% of the gross amounts collected. (The service fee is treated as general-fund revenue.) During the latest fiscal year a gross amount of $268,000 was collected for the independent school district and $80,000 for the water district. As a consequence of the foregoing, Brockton’s General Fund should

Record revenue of $3,480.

29

Nack City received a donation of a valuable painting. Nack planned to add the painting to its collection and display it in the protected exhibition area of city hall. Nack
had a policy that if such donated art works were sold, the proceeds would be used to acquire other items for its collections. Which of the following would be correct
regarding the donated painting?
a. Must be capitalized and depreciated.
b. May be capitalized, but it is not required, and depreciation is not required.
c. May be capitalized, but it is not required, and it must be depreciated.
d. Must be capitalized but not depreciated.

May be capitalized, but it is not required, and depreciation is not required.

30

Fred Bosin donated a building to Palma City in year 1. Bosin’s original cost of the property was $100,000. Accumulated depreciation at the date of the gift amounted
to $60,000. Fair market value at the date of the gift was $300,000. In the government-wide statements, at what amount should Palma report this donated fixed asset?

$300,000

31

The general fund of Miller City levied property taxes of $700,000 for year 1. The city, which reports on a calendar year, expected the taxes to be collected in the
following manner:
. $500,000 during year 1
. $100,000 during the first 60 days of year 2
. $90,000 during the remainder of year 2
. $10,000 is estimated to be uncollectible
On the government-wide Statement of Activities prepared in accordance with GASB 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, what amount should be reported for property tax revenues for the year ended December 31, year 1?

$690,000

32

In accordance with GASS 35, a public college or university that chooses to report both governmental and business-type activities should prepare which of the
following financial statements?
a. Statement of cash flows for the proprietary funds
b. Neither
c. Statement of revenues, expenditures, and changes in fund balances for the governmental funds
d. Both

Both

33

King City Council will be establishing a library fund. Library fees are expected to cover 55% of the library’s annual resource requirements. King has decided that an
annual determination of net income is desirable in order to maintain management control and accountability over the library. What type of fund should King establish
in order to meet their measurement objectives?

Enterprise fund.

34

When a truck is received by a governmental unit, the truck should be recorded in the General Fund as a debit to

Expenditures

35

Which of the following accounts of a governmental unit is(are) closed out at the end of the fiscal year?
Estrnated Revenues Fund Belance
a. Neither
b. Fund Balance
c. Estimated Revenues and Fund Balance
d. Estimated Revenues

Estimated Revenues

36

The Highwood School District participates in a cost-sharing defined benefit plan. What is the amount of expense and liability that it should record?

Its proportionate share of the collective net pension liability and expense for the plan.

37

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. Special items.
b. Purchase of fixed assets.
c. Payment to a debt-service fund.
d. Proceeds from the sale of capital assets.

Purchase of fixed assets.

38

Brandon County’s general fund had the following transactions during the year:
Transfer to a debt service fund $100,000
Payment to a pension trust fund 500,000
Purchase of equipment 300,000
What amount should Brandon County report for the general fund as other financing uses in its governmental funds statement of revenues, expenditures, and changes
in fund balances?

$100,000

39

Which of the following will increase the fund balance—unreserved of a governmental unit at the end of the fiscal year, when closing entries are prepared?
a. Revenues are less than expenditures and encumbrances.
b. Revenues are less than estimated revenues.
c. Revenues are more than expenditures and encumbrances.
d. Revenues are less than expenditures and fund balance reserved for encumbrances.

Revenues are more than expenditures and encumbrances.

40

Which fund would account for fixed assets in a manner similar to a “for-profit” organization?

Enterprise

41

The accounting for special revenue funds is most similar to which type of fund?

General

42

Albee Township’s fiscal year ends on June 30. Albee uses encumbrance accounting. On April 5, year 1, an approved $1,000 purchase order was issued for supplies.
Albee received these supplies on May 2, year 1, and the $1,000 invoice was approved for payment. What journal entry should Albee make on April 5, year 1, to
record the approved purchase order’
Debit Credit
a. Memorandum entry only — —
b. Encumbrances $1,000
Reserved for Encumbrances $1,000
c. Supplies 1,000
Vouchers Payable 1,000
d. Encumbrances 1,000
Appropriations 1,000

Encumbrances $1,000
Reserved for Encumbrances $1,000

43

The state of Illinois is obligated to fund the pension plans of certain school districts in the state. Which of the following is true about the accounting for this special
funding situation?
a. The obligations are accounted for as a transfer to the school districts.
b. The obligations are accounted for as pension expense for the state of Illinois.
c. The obligations are accounted for as advances to the school districts.
d. The obligations are accounted for on the financial statements of the state of Illinois.

The obligations are accounted for as pension expense for the state of Illinois.

44

According to the GASB Concept Statements the primary users of governmental financial reports include all of the following except
a. Investors and creditors.
b. The citizenry.
c. Legislative and oversight bodies.
d. Government employees.

Government employees.

45

When goods which have been previously approved for purchase are received by a governmental unit but not yet paid for, what account is credited?

Vouchers Payable.

46

In accordance with GASB 33, Accounting and Financial Reporting for Nonexchange Transactions, how is each of the following items classified?
Fines Corporate Income taxes
a. Derived revenue Imposed revenue
b. Imposed revenue Derived revenue
c. Derived revenue Derived revenue
d. Imposed revenue Imposed revenue

Imposed revenue Derived revenue

47

Assuming no outstanding encumbrances at year-end, closing entries for which of the following situations would increase the unreserved fund balance at year-end?
a. Actual revenues were less than estimated revenues.
b. Actual expenditures exceed appropriations.
c. Appropriations exceed actual expenditures.
d. Estimated revenues exceed actual appropriations.

Appropriations exceed actual expenditures.

48

The following events relating to the City of Albury’s Debt Service Funds occurred during the year ended December 31, year 1:
Debt principal matured $2,000,000
Unmatured (accrued) interest on outstanding debt at 1/1/Yl 50,000
Interest on matured debt 900,000
Unmatured (accrued) interest on outstanding debt at 12/31/Yl 100,000
Interest revenue from investments 600,000
Cash transferred from General Fund for retirement of debt principal 1,000,000
Cash transferred from General Fund for payment of matured interest 900,000
All principal and interest due in year 1 were paid on time.
How much revenue should Albury’s Debt Service Funds record for the year ended December 31, year 1, using modified accrual accounting?

$ 600,000

49

In accordance with GASB 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, what should be the measurement focus for government-wide financial statements?
A. Current financial resources
B. Economic resources
C. Neither
D. Both

Economic resources

50

Which of the following statements are required to be presented for special-purpose governments engaged only in business-type activities (such as utilities)?
a. Statement of net position only.
b. The financial statements required for governmental funds including MD&A.
c. The financial statements required for enterprise funds, including MD&A and RSI.
d. Management’s Discussion and Analysis (MD&A) and Required Supplementary Information (RSI) only.

The financial statements required for enterprise funds, including MD&A and RSI.

51

Which of the following funds of a governmental unit records depreciation?
a. Capital projects fund.
b. Debt service fund.
c. Internal service fund.
d. Special revenue fund.

Internal service fund.

52

The state of Illinois is obligated to fund the pension plans of certain school districts in the state. Which of the following is true about the accounting for this special funding situation?
a. The obligations are accounted for as advances to the school districts.
b. I The obligations are accounted for on the financial statements of the state of Illinois.
c. The obligations are accounted for as a transfer to the school districts.
d. The obligations are accounted for as pension expense for the state of Illinois.

The obligations are accounted for as pension expense for the state of Illinois.

53

The following items were among Wood Township’s expenditures from the general fund during the year ended June 30, year 1:
Furniture for Township Hall $10,000
Minicomputer for tax collector’s office 15,000
The amount that should be classified as fixed assets in Wood’s general fund balance sheet at June 30, year 1, is

$0

54

Which of the following accounts of a governmental unit is credited to close it out at the end of the fiscal year?
a. Revenues.
b. Encumbrances.
c. Appropriations.
d. Reserved for Encumbrances.

Encumbrances.

55

On December 31, year 1, Madrid Township paid a contractor $2,000,000 for the total cost of a new firehouse built in year 1 on Township-owned land. Financing was
by means of a $1,500,000 general obligation bond issue sold at face value on December 31, year 1, with the remaining $500,000 transferred from the general fund.
What should be reported on Madrid’s year 1 financial statements for the Capital Project Fund?

Other financing sources, $2,000,000; Expenditures, $2,000,000.

56

Which of the following accounts should Moon City close at the end of its fiscal year?
a. Vouchers Payable.
b. Fund balance—Unreserved.
c. Expenditures.
d. Reserved for Encumbrances.

Expenditures.

57

Tang City received land from a donor who stipulated that the land must remain intact, but any income generated from the property may be used for general
government services. In which fund should Tang City record the donated land?

Permanent.

58

On January 2, Basketville City purchased equipment with a useful life of three years to be used by its water and sewer enterprise fund. Which of the following is the correct treatment for the asset?
a. Capitalize; depreciation is required.
b. Record the purchase of the equipment as an expenditure.
c. Capitalize; depreciation is not permitted.
d. Capitalize; depreciation is optional.

Capitalize; depreciation is required.

59

The general fund of Karsten City received a $30,000 unrestricted grant from the State on June 12, year 1. The cash was received by the general fund on June 12 and
was used to pay for capital expenditures that were incurred on June 29. Accounts payable related to the capital expenditures were paid in July year 1. Karsten City’s
fiscal year ends on June 30.
What account should be credited in the general fund on the date the grant was received?

Revenue.

60

The Expenditures account of a governmental unit is increased when
a. Neither
b. The budget is recorded
c. A purchase order is approved and The budget is recorded
d. A purchase order is approved.

Neither

61

If a state or local government files for bankruptcy under Chapter g of the US Bankruptcy Code accounts payable should be

Remeasured based on the Plan of Adjustment.

62

Park City uses encumbrance accounting and formally integrates its budget into the general fund’s accounting records. For the year ending July 31, year 1, the
following budget was adopted:
$30,000,000
27,000,000
900,000
Park incurred salaries and wages of $800,000 for the month of April year 1. What account should Park debit to record this $800,000?

Expenditures

63

Brockton City’s water utility, which is an Enterprise Fund, submits a bill for $9,000 to the General Fund for water service supplied to city departments and agencies.
Submission of this bill would result in

Recognition of revenue by the water-utility fund and of an expenditure by the General Fund.

64

The following data relates to Lely Township:
Printing and binding equipment used for servicing all of Lely’s departments and agencies, on a cost-reimbursement basis $100,000
Equipment used for supplying water to Lely’s residents $900,000
Receivables for completed sidewalks to be paid for in installments by affected property owners $950,000
Cash received from federal government, dedicated to highway maintenance, which must be
accounted for in a separate fund $995,000
How much could be accounted for in an Internal Service Fund?

$100,000

65

When a capital project is financed entirely from a single bond issue, and the proceeds of the bond issue equal the par value of the bonds, the Capital Projects Fund
would record this transaction by debiting cash and crediting

Other Financing Sources—Bond Issue Proceeds.

66

What are the GASB Concept Statements intended to establish?

Fundamentals on which governmental accounting and reporting standards will be based.

67

The following data relates to Lely Township:
Printing and binding equipment used for servicing all of Lely’s departments and agencies, on a cost-reimbursement basis $100,000
Equipment used for supplying water to Lely’s residents $9,000
Receivables for completed sidewalks to be paid for in installments by affected property owners $950,000
Cash received from federal government, dedicated to highway maintenance, which must be
accounted for in a separate fund $995,000
How much could be accounted for in an Enterprise Fund?

$900,000

68

The following events relating to the City of Albury’s Debt Service Funds occurred during the year ended December 31, year 1:
Debt principal matured $2,000,000
Unmatured (accrued) interest on outstanding debt at 1/1/Yl $50,000
Interest on matured debt $900,000
Unmatured (accrued) interest on outstanding debt at 12/31/Yl $100,000
Interest revenue from investments $600,000
Cash transferred from General Fund for retirement of debt principal $1,000,000
Cash transferred from General Fund for payment of matured interest $900,000
All principal and interest due in year 1 were paid on time. What is the total amount of expenditures that Albury's Debt Service Funds should record for the year ended December 31, year 1, using modified accrual accounting?

$2,900,000

69

In the preparation of the statement of activities for a nongovernmental not-for-profit organization, all expenses are reported as decreases in which of the following
net position classes?
a. Total net.
b. Unrestricted.
c. Temporarily Restricted
d. Permanently Restricted

Unrestricted.

70

In addition to governmental activities, what other activities may be reported on the government-wide Statement of Net Position prepared in accordance with GASB 34,
Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments?
a. Business-type activities and Discretely presented component units
b. Business-type activities
c. Discretely presented component units
d. Neither

Business-type activities and Discretely presented component units

71

The following balances are included in the subsidiary records of Burwood Village’s Parks and Recreation Department at March 31, year 2:
Appropriations—supplies $7,500
Expenditures—supplies 4,500
Encumbrances—supply orders 750
How much does the Department have available for additional purchases of supplies?

$2,250

72

GASB 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, requires a Statement of Net Position and a
Statement of Activities, both of which are government-wide financial statements. Which of the following activities are reported on these financial statements?
a. Governmental activities and Fiduciary activities
b. Fiduciary activities
c. Governmental activities
d. Neither

Governmental activities

73

Taxes collected and held by Eldorado County for a school district would be accounted for in which of the following funds?
a. Special Revenue.
b. Trust.
c. Internal Service.
d. Agency.

Agency.

74

Assume fixed assets purchased from General Fund revenues are received; what account, if any, should be debited in the General Fund?

Expenditures Control.

75

During the current year, Wythe County levied $2,000,000 property taxes, 1% of which is expected to be uncollectible. During the year, the county collected
$1,800,000 and wrote off $15,000 as uncollectible. What amount should Wythe County report as property tax revenue in its government-wide statement of activities
for the current year?

$1,980,000

76

Premiums received on general obligation bonds are generally transferred to what fund?

Debt Service.

77

Sig City used the following funds for financial reporting purposes:
General fund
Internal service fund
Airport enterprise fund
Pension trust fund
Capital projects fund
Special revenue fund
Debt service fund
How many of Sig’s funds use the accrual basis of accounting?

3

78

In accordance with GASB 33, Accounting and Financial Reporting for Nonexchange Tranc,actions, personal income taxes are an example of what type of nonexchange transaction?

Derived

79

The debt service fund of a governmental unit is used to account for the accumulation of resources to pay, and the payment of, general long-term debt
a. Principal and Interest
b. Principal
c. Neither
d. Interest

Principal and Interest

80

Carlson City’s fiscal year ends December 31. On August 1, the city issued a purchase order for new vehicles to be delivered at the rate of two per month beginning
October 15. Twelve vehicles were delivered as scheduled and payments of $264,000 were made upon delivery. If these were the only transactions made by the city,
which of the following balances would appear on the balance sheet as of December 31?
a. Encumbrances $132,000
Reserve for encumbrances 132,000
b. Fund balance 132,000
Reserve for encumbrances 132,000
c. Reserve for encumbrances 132,000
Fund balance 132,000
d. Encumbrances 264,000
Reserve for encumbrances 264,000

Fund balance 132,000
Reserve for encumbrances 132,000

81

Which of the following accounts of a governmental unit is credited when the budget is recorded?
a. Appropriations.
b. Fund Balance—Reserved for Encumbrances.
c. Estimated Revenues.
d. Encumbrances.

Appropriations.

82

Which of the following funds of a governmental unit uses the same basis of accounting as an Enterprise Fund?
a. Permanent.
b. Special Revenue.
c. Internal Service.
d. Capital Projects.

Internal Service.

83

Which of the following is a required financial statement for an investment trust fund?
a. Statement of activities.
b. Statement of revenues, expenditures, and changes in fiduciary net position.
c. Statement of changes in fiduciary net position.
d. Statement of revenues, expenses, and changes in fiduciary net position.

Statement of changes in fiduciary net position.

84

The general fund of Karsten City received a $30,000 unrestricted grant from the State on June 12, year 1. The cash was received by the general fund on June 12 and
was used to pay for capital expenditures that were incurred on June 29. Accounts payable related to the capital expenditures were paid in July year 1. Karsten City’s fiscal year ends on June 30. Answer the question below based upon the guidance provided in GASS 33, Accounting and Financial Reporting for Nonexchange
Transactions.
The grant from the state is an example of what type of nonexchange transaction?

Voluntary.

85

Reserved for Encumbrances account of a governmental fund type is increased when

A purchase order is approved.

86

According to GASB 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, which of the following categories of
required supplementary information should be disclosed in the financial reports of state and local governments?
a. Information about infrastructure assets reported using the modified approach
b. Budgetary comparison schedules
c. Neither
d. Both

Both

87

Which of the following should be accrued as revenues by the General Fund of a local government, when using modified accrual accounting?
a. Sales taxes collected by merchants.
b. Sales taxes held by the state which will soon be remitted to the local government.
c. Parking meter revenues.
d. Income taxes accrued but not paid by citizens.

Sales taxes held by the state which will soon be remitted to the local government.

88

Encumbrances would not appear in which fund?

Enterprise.

89

Which of the following funds should be reported as part of a local government’s governmental activities column in its government-wide statements’
a. Debt service.
b. Private-purpose trust.
c. Pension trust.
d. Agency.

Debt service.

90

Which of the following items is an example of imposed nonexchange revenue for a governmental entity?
a. Retail sales tax.
b. Property taxes.
c. Federal grant money.
d. Personal income taxes.

Property taxes.

91

Park City uses encumbrance accounting and formally integrates its budget into the general fund’s accounting records. For the year ending July 31, year 1, 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

Credited for $2,100,000.

92

When the budget of a governmental unit is adopted and the estimated revenues exceed the appropriations, the excess is

Credited to Budgetary Fund Balance.

93

On the government-wide Statement of Net Position, prepared in accordance with GASB 34, Basic Financial Statements—and Management’s Discussion and Analysis— for State and Local Governments, internal service fund activities are normally reported in

Governmental activities.

94

Ariel Village issued the following bonds during the year ended June 30, year 1:
For installation of street lights, to be assessed against properties benefited $300,000
For construction of public swimming pool; bonds to be paid from pledged fees collected from pool users 400,000
If Ariel Village is not potentially liable for the bonds for the assessments, how much should be accounted for through Debt Service Funds for payments of principal over the life of the bonds?

$0

95

Which of the following would be reported as program revenues on a local government’s government-wide statement of activities?
a. Taxes levied for a specific function.
b. Charges for services.
c. Interest revenues.
d. Proceeds from the sale of a capital asset used for a specific function.

Charges for services.

96

Cash receipts from grants and subsidies to decrease operating deficits should be classified in which of the following sections of the statement of cash flows for
governmental, not-for-profit entities?

Noncapital financing.

97

In accordance with GASB 34, Basic Financial Statements—and Managements Discussion and Analysis—for State and Local Governments, which of the following funds
should be classified as governmental funds?
a. Permanent funds.
b. Pension trust funds.
c. Private-purpose trust funds.
d. Agency funds.

Permanent funds.

98

Albee Township’s fiscal year ends on June 30. Albee uses encumbrance accounting. On April 5, year 1, an approved $1,000 purchase order was issued for supplies. Albee received these supplies on May 2, year 1, and the $1,000 invoice was approved for payment. What journal entry or entries should Albee make on May 2, year 1, upon receipt of the supplies and approval of the invoice?

Reserved for encumbrances $1000
Encumbrances $1000

99

Which of the following types of revenue would generally be recorded directly in the General Fund of a governmental unit?
a. Interest earned on investments held for retirement of employees.
b. Property taxes.
c. Receipts from a city-owned parking structure.
d. Revenues from Internal Service funds.

Property taxes.

100

An expenditures account appears in

The Governmental fund statements.

101

The city of Towson has a single employer defined-benefit plan. All of the following are true about Towson’s accounting for the plan, except:
a. The entry age actuarial cost method should be used to attribute the actuarial present value of projected benefit payments of each employee to periods.
b. Pension liability should be determined without discounting future benefits, if the entity has an unfunded plan.
c. Pension expense should include recognition of annual service cost and interest on the pension liability along with the effect on the net pension liability of changes
in benefit terms.
d. In determining the amount of pension liability, the selection of all assumptions should be in conformity with Actuarial Standards of Practice issued by the Actuarial Standards Board.

Pension liability should be determined without discounting future benefits, if the entity has an unfunded plan.

102

The following financial resources were among those received by Seco City during year 1:
For acquisition of major capital facilities $6,000,000
To create a permanent trust for governmental purposes 2,000,000
With respect to the foregoing resources, what amount should be recorded in special revenue funds?

$0

103

According to GASS Concepts Statements which of the following is an essential characteristic of a liability?
a. A liability is an obligation that is satisfied by a cash outflow.
b. A liability involves a consumption of net position by the government.
c. A liability is a present obligation to sacrifice resources.
d. A liability involves the use of service capacity.

A liability is a present obligation to sacrifice resources.

104

A county’s balances in the general fund included the following:
Appropriations $435,000
Encumbrances 18,000
Expenditures 164,000
Vouchers payable 23,000
What is the remaining amount available for use by the county?

$253,000

105

During the current year Knoxx County levied property taxes of $2,000,000, of which 1% is expected to be uncollectible. The following amounts were collected during the current year:
Prior year taxes collected within the 60 days of the current year $ 50,000
Prior year taxes collected between 60 and 90 days into the current year 120,000
Current year taxes collected in the current year 1,800,000
Current year taxes collected within the first 60 days of the subsequent year 80,000
What amount of property tax revenue should Knoxx County report in its entity-wide statement of activities?

$1,980,000

106

In which of the following funds would it be appropriate to record depreciation of fixed assets?
a. Special Revenue.
b. General.
c. Internal Service.
d. Capital Projects.

Internal Service.

107

What is the major difference between an exchange transaction and a nonexchange transaction for governmental units?

The relationship between the amount of value given and received.

108

On January 2, City of Walton issued $500,000, 10-year, 7% general obligation bonds. Interest is payable annually, beginning January 2 of the following year. What
amount of bond interest is Walton required to report in the statement of revenue, expenditures, and changes in fund balance of its governmental funds at the close of
this fiscal year, September 30?

$0

109

How should state appropriations to a state university choosing to report as engaged only in business-type activities be reported in its statement of revenues,
expenses, and changes in net position?

Nonoperating revenues.

110

The Highwood School District participates in a cost-sharing defined benefit plan. What is the amount of expense and liability that it should record?

Its proportionate share of the collective net pension liability and expense for the plan.

111

The following proceeds received by Grove City in year 1 are legally restricted to expenditure for specified purposes:
Donation by a benefactor mandated to a permanent fund to provide funds, the income of $300,000
which is to provide meals for the needy (a government program)
Sales taxes to finance the maintenance of tourist facilities in the shopping district 900,000
What amount should be accounted for in Grove’s special revenue funds?

$ 900,000

112

Which of the following terms refers to an actual cost rather than an estimate?
a. Encumbrance.
b. Budget.
c. Expenditure.
d. Appropriation.

Expenditure.

113

Both Curry City and the State have a general sales tax on all merchandise. Curry City’s tax rate is 2% and the State’s rate is 4%. Merchants are required by law to remit all sales tax collected each month to the State by the 15th of the following month. By law, the State has 45 days to process the collections and to make disbursements to the various jurisdictions for which it acts as an agent. Sales tax collected by merchants in Curry totals $450,000 in May and $600,000 in June. Both merchants and the State make remittances in accordance with statutes. What amount of sales tax revenue for May and June is included in the June 30 year-end government-wide financial statements of the State and Curry?
State Curry
a. $1,050,000 $ 0 .
b. $1,050,000 $350,000
c. $ 700,000 $350,000
d. $ 300,000 $150,000

$ 700,000 $350,000