3-1 & 3-2 of Core Concepts of Governmental and Not-for-Profit Accounting 4-5, 4-6, & 4-7 of Essentials of Accounting for Governmental and Not-for-Profit Organizations 3-1 1. Which of the follow

• 3-1 & 3-2 of Core Concepts of Governmental and Not-for-Profit Accounting

• 4-5, 4-6, & 4-7 of Essentials of Accounting for Governmental and Not-for-Profit Organizations

3-1

1. Which of the following best describes government-wide statements?

a. combined on a full accrual basis

b. combined on a modified accrual basis

c. consolidated on a full accrual basis

d. consolidated on a modified accrual basis

2. How many government-wide statements is a major city (e.g., New York, Chicago) required to prepare?

a. two

b. three

c. four

d. six

3. The net assets section of a government-wide statement of net assets would typically not have a separate category to show amounts invested in

a. capital assets

b. unrestricted assets

c. restricted assets

d. current assets

4. Which of the following funds would not be incorporated into the government-wide statements?

a. enterprise funds

b. permanent funds

c. internal service funds

d. fiduciary funds

5. Which of the following funds is least likely to be separately reported in the governmental funds balance sheet?

a. a general fund

b. a nonmajor special revenue fund

c. a major capital projects fund

d. a major permanent fund

6. Which of the following items is least likely to be reported on Midlake County’s governmental funds balance sheet?

a. the county courthouse

b. amounts due the internal service fund

c. amounts due from other governments

d. amounts invested in federal securities

7. How should a fund balance amount resulting from a city council’s formal action to acquire audiovisual equipment for the city high school be classified in a governmental funds balance sheet?

a. nonspendable fund balance

b. committed fund balance

c. unassigned fund balance

d. restricted fund balance

8. The year-end balance of inventory should be reported in a governmental funds statement as an asset and

a. assigned fund balance

b. nonspendable fund balance

c. restricted fund balance

d. unrestricted fund balance

9. Which of the following would not be shown as a revenue of the function “public safety” on Millburg Township’s government-wide statement of activities?

a. a grant from the federal government to acquire radar equipment

b. amounts charged to local funeral homes to provide police escorts

c. an appropriation from the town council to pay police officers

d. fees charged to the surrounding county to provide services outside of township limits

10. Which of the following would most likely be reported among restricted net assets on a city’s government-wide statement of net assets?

a. the balance in the city’s debt service fund

b. the amount owed to city employees for services rendered since they received their last paychecks

c. the actuarial liability of the city’s pension fund

d. the cost, less accumulated depreciation, of the city’s highway system

3-2

1. Internal service funds are reported as

a. business-type activities in government-wide statements and governmental funds in funds statements

b. proprietary funds in funds statements and governmental activities in government-wide statements

c. business-type activities in government-wide statements and proprietary funds in funds statements

d. governmental funds in funds statements and governmental activities in government-wide statements

2. In which of the following statements would depreciation not be reported?

a. internal service fund statement of revenues, expenses, and changes in fund net assets

b. government-wide statement of activities

c. capital projects fund statement of revenues, expenditures, and changes in fund balance

d. enterprise fund statement of revenues, expenses, and changes in fund net assets

3. Which of the following is “required supplementary information”?

a. explanation of accounting principles used in preparing the financial statements

b. schedule of changes in capital assets

c. budgetary comparison

d. ten-year trend of assessed property values

4. Which of the following is not required to be incorporated into the budgetary comparison?

a. expenditures per the originally adopted budget

b. expenditures per the amended budget

c. actual expenditures

d. variance between the actual expenditures and those per the amended budget

5. Management’s discussion and analysis (MD&A) is most likely to include information on

a. service efforts and accomplishments

b. market values of government-owned capital assets

c. the condition of infrastructure assets

d. financial performance during the period covered by the financial statements

6. Which of the following is not one of the three main categories of funds?

a. governmental funds

b. permanent funds

c. proprietary funds

d. fiduciary funds

7. “Major” funds include

a. all governmental funds plus proprietary funds that have fund balances greater than 10% of those of all proprietary funds combined

b. the general fund, special revenue funds, capital projects funds, and debt service funds

c. the general fund plus all funds having assets greater than 50% of those of the general fund

d. the general fund plus other funds in which total assets, revenues, or expenditures/expenses of the fund are at least 10% of the corresponding total for the relevant fund category (governmental or enterprise) and also at least 5% of the corresponding total for all governmental and enterprise funds combined

8. The assets and liabilities of nonmajor governmental funds would be

a. aggregated and reported in the governmental funds balance sheet in a single column

b. excluded from the government-wide statement of net assets

c. shown only in notes to the financial statements

d. reported as required supplementary information

9. Which of the following would not be reported on a government-wide statement of activities?

a. a transfer of cash from the general fund to the debt service fund

b. costs incurred by the recreation department for electricity purchased from the city-owned electric utility

c. depreciation on traffic lights

d. interest on bonds issued by the electric utility department

10. Which of the following is not required to be included in a government’s basic financial statements or required supplementary information?

a. a reconciliation between proprietary fund financial statements and the business-type activities column of the government-wide financial statements

b. a reconciliation between governmental fund financial statements and the governmental activities column of the government-wide financial statements

c. a reconciliation between revenues reported on the basis of GAAP and those reported on a budgetary basis

d. a comparison between actual expenditures and expenditures per the amended budget

4–5. Prepare journal entries in the General Fund of the Brownville School

District.

a. The District had outstanding encumbrances of $13,000 for band instruments

from the previous year. It is the District’s policy to re-establish

those encumbrances in the subsequent year.

114 Chapter 4

b. The District ordered textbooks at an estimated cost of $87,000.

c. The band instruments arrived at an invoice price of $12,500 plus $225

shipping.

d. Textbooks originally estimated to cost $77,000 were received with an in voice

price of $76,900. The remaining portion of the order is backordered.

e. A contract was signed with a CPA to provide the annual audit in the

amount of $11,000.

4–6. The following information was abstracted from the accounts of the General

Fund of the City of Rome after the books had been closed for the fiscal year

ended June 30, 2012.

Transactions

Postclosing July 1, 2011 Postclosing

Trial Balance to June 30, 2012 Trial Balance

June 30, June 30,

2011 Debits Credits 2012

Cash $700,000 $1,820,000 $1,867,000 $653,000

Taxes Receivable 40,000 1,880,000 1,828,000 92,000

$740,000 $745,000

Allowance for

Uncollectible Taxes $ 8,000 $ 8,000 $ 10,000 $ 10,000

Accounts Payable 132,000 1,852,000 1,740,000 20,000

Fund Balance:

Budgetary Fund Balance—

Reserve for Encumbrances ——— 70,000 70,000

Unreserved 600,000 45,000 645,000

$740,000 $745,000

During the year, purchase orders were placed in the amount of $1,070,000.

These purchase orders were filled in the amount of $1,000,000 leaving

$70,000 open at year-end. There were no transfers into the General Fund,

but one transfer out. Prepare journal entries to record the budgeted and

actual transactions for the fiscal year ended June 30, 2012. Include closing

entries.

(AICPA, adapted)

4–7. The following transactions relate to the General Fund of the City of Buffalo

Falls for the year ended December 31, 2012:

1. Beginning balances were: Cash, $150,000; Taxes Receivable, $200,000;

Accounts Payable, $50,000; and Fund Balance, $300,000.

2. The budget was passed. Estimated revenues amounted to $2,000,000

and appropriations totaled $1,980,000. All expenditures are classified as

General Government.

3. Property taxes were levied in the amount of $1,200,000. All of the taxes

are expected to be collected before February 2013.

Accounting for the General and Special Revenue Funds 115

4. Cash receipts totaled $1,200,000 for property taxes and $740,000 from

other revenue.

5. Contracts were issued for contracted services in the amount of $900,000.

6. Contracted services were performed relating to $765,000 of the contracts

with invoices amounting to $759,000.

7. Other expenditures amounted to $950,000.

8. Accounts payable were paid in the amount of $1,700,000.

9. The books were closed.

Required:

a. Prepare journal entries for the above transactions.

b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund

Balance for the General Fund.

c. Prepare a Balance Sheet for the General Fund assuming there are no

restricted or assigned net resources and outstanding encumbrances are

committed by contractual obligation.

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