M3 - Transactions and Events: Part 1 Flashcards Preview

FAR 9 - State and Local Governments: Part 1 > M3 - Transactions and Events: Part 1 > Flashcards

Flashcards in M3 - Transactions and Events: Part 1 Deck (23):
1

Derived tax revenues represents:

taxes imposed on or derived from exchange transaction such as commercial sales (sales taxes).

(ex: A 2% tax on hotel charges represents a derived non-exchange tax revenue based on commercial sales per rule above.)

Derived tax revenues represent a non-exchange transaction that derives its revenue from exchange transactions such as sales taxes (on sales) and income taxes (on income).

2

To record the budget and appropriations the journal entry would be:

DR: Estimated Revenues 100,000
CR: Appropriations 80,000
CR: Budgetary Control 20,000

(budgetary control is the budgeted excess of estimated revenues over appropriations)

3

Imposed non-exchange revenues include:

Property taxes and fines

Imposed non-exchange revenues represent taxes imposed on non-exchange transactions (such as fines) or wealth (such as property taxes).

4

Governmental-mandated non-exchange transactions represent:

non-exchange transactions that compel the collection of revenues for certain activities, such as environmental clean up, etc.

Government mandated non-exchange transactions represent instances in which a higher level of government (e.g., a state) provides funds and mandates certain activities by another level of government (e.g., a county) such as environmental clean up, etc.

5

Voluntary non-exchange transactions are:

non-exchange transactions that effectively represent contributions, such as grants, etc.

Voluntary non-exchange transactions represent instance in which the government receives resources and does not provide equal value.

6

How should a city record $250,000 for fire department salaries and wages incurred during the month of may on a journal entry?

DR: Expenditures-Salaries and Wages 250,000
CR: Salaries Payable 250,000


The fire department salaries would be paid out of the general fund, as this is a service of the city. The general fund records the salaries as expenditures with a credit to salaries payable.

7

Appropriations is the term for authorized (estimated) resource outflows, including expenditures, used when recording a budget. It does not represent actual expenditures. (true or false)

True

8

If they ask for what the right journal entry is for something and a choice includes "expense", the word "expense" is associated with accrual accounting. The city in its general fund, recognizes "expenditures" not "expenses" (true or false)

True

9

Encumbrances represent commitments or assignments, not actual amounts payable. (true or false)

True

Encumbrances are recorded when resources are committed for future expenditures, not when goods are received.

10

The revenues control account of a governmental unit is increased when:

Property taxes are recorded (levied)

DR: Property Taxes Receivable
CR: Allowance for uncollecible property taxes
CR: Revenues

Not when the encumbrance account is decreased. That J/E would look like:
DR: Budgetary Control
CR: Encumbrances

Not when appropriations are recorded. That J/E would look like:
DR: Budgetary Control
CR: Appropriations

11

Wages and salaries is an example of what type of classification?

Object Classification

This is the most specific classification in the hierarchy and represents the chart of accounts title. Expenditures of governmental resources should be classified by object classes, according to the type of items purchased or services obtained.

12

Program classification groups what:

Activities, operations, or organizational units that are directed to the attainment of specific purposes or objectives.

13

Function classification groups what:

Related activities that are aimed at accomplishing a major service or regulatory responsibility.

14

Activity classification provides what:

Data for calculating expenditures per unit of activity. An activity is a specific and distinguishable line of work performed by an organizational unit.

15

General fixed assets, such as land, buildings, and equipment, purchased with general fund resources should be recorded as:

expenditures in the general fund.

DR: expenditures
CR: vouchers payable

16

Expenditures extending over more than one period may be allocated between or among accounting periods. (true or false)

True

Non Spendable current resources such as inventory or prepaid may be recorded using either the consumption or the purchases method. Current assets of this character serve as the basis for calculation of fund balance as non spendable.

17

Journal entries using the purchase method:

Buying item:
DR: Expenditure
CR: Vouchers Payable

Use of Item:
No entry

On hand at year end:
DR: Supplies Inventory
CR: Nonspendable fund balance- inventory

18

Journal entries using the consumption method:

Buying Item:
DR: Supplies Inventory
CR: Vouchers Payable

Use of Item:
DR: Expenditure
CR: Supplies Inventory

On hand at year end:
No entry

19

Proceeds of debt issue and interfund transfers would be classified as what?

Estimated other Financing Sources in the budgetary entry

Not estimated revenues

20

Receiving state appropriations (such as grants and subsidies) represents a non-exchange transaction and will be treated as nonoperating revenues. (true or false)

True

21

What is the major difference between an exchange transaction and non-exchange transaction for governmental units?

The relationship between the amount of value given and received.

An exchange transaction is a reciprocal transfer in which each party receives and sacrifices something of approximately equal value. A non-exchange transaction involves giving/receiving value without receiving/giving equal value in return. With an exchange transaction, there is a bargained value in the transaction, with a non exchange transaction there is no bargained value or arms length transaction.

22

The measurement focus of governmental funds is the flow of financial resources. Because depreciation expense does not reflect the use of financial resources, it is not recorded in the governmental funds. (true or false)

True
GRaSPP

23

The journal entry at period end to reverse the budget is always for the same dollar amounts as the original budgetary journal entry +/- any amendments. (true or false)

True