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Recommended textbook solutions Corporate Finance11th EditionBradford D. Jordan, Randolph W. Westerfield, Stephen A. Ross 1,433 solutions Managerial Accounting13th EditionEric W. Noreen, Peter C. Brewer, Ray H Garrison 353 solutions Corporate Finance11th EditionBradford D. Jordan, Randolph W. Westerfield, Stephen A. Ross 1,433 solutions Intermediate Accounting16th EditionDonald E. Kieso, Jerry J. Weygandt, Terry D. Warfield 2,307 solutions The primary authoritative body for determining measurement focus and basis of accounting standards for governmental fund operating statements is the: Governmental Accounting Standards Board (GASB) Which of the following should be considered part of one of the three primary user groups of the external financial reports of a state government? Advocate groups within the state Which funds would most appropriately use the current financial resources measurement focus and modified accrual basis of accounting in their fund financial statements? Governmental: Yes The economic resources management focus and accrual basis of accounting would be most appropriate for which fund as used in the fund financial statements? Internal service fund Which of the following funds of a government unit uses the modified basis of accounting? Special revenue funds Which of the following funds of a government unit uses the same basis of accounting as the special revenue fund? Permanent fund At December 31, Year 1, the following balances were due from the state government to Clare City's various funds: Capital projects $300,000 In Clare's December 31, Year 1, financial statements, what amount should be reported in governmental funds? $300,000 In which of the following fund types of a city government are revenues and expenditures recognized on the same basis of accounting as the general fund? Debt service Which of the following fund types should account for fixed assets in a manner similar to a "for profit" organization? Enterprise fund A local governmental unit could have funds using which of the following accounting bases? Accrual basis: Yes A permanent fund of a municipality would have the same measurement focus as a(n): General Fund The private purpose funds share the same measurement focus and basis of accounting with all of the following funds, except: Permanent funds All of the following funds use the accrual basis of accounting and the economic resources measurement focus, except: Capital projects funds What basis of accounting should be used when preparing a governmental fund statement of revenues, expenditures, and changes in fund balances? Modified accrual basis of accounting Which of the following funds would be reported as a fiduciary fund in Pine City's financial statements? Private-purpose trust Which of the following local government funds uses the accrual basis of accounting? Enterprise Which of the following funds of a government unit uses the same basis of accounting as the special revenue fund? Capital projects Lemonville Township issues $75,000 of bond anticipation notes at a face amount in the current fiscal period. The proceeds were recorded in the capital projects fund. These notes are due within one year. Lemonville intends to repay the bond anticipation notes with a bond issue. Lemonville has taken legal steps to refinance the notes on a long-term basis. Under these circumstances, what account should be credited in the capital projects fund? Other financing sources An internal service fund of a municipality would have the same basis of accounting as a(n): Enterprise Fund The city of Cobb has two trust funds for the benefit of the city's library, trust fund A and trust fund B. Only the earnings from trust fund A can be expended and both the principal and interest from trust fund B can be expended. How should the city of Cobb report each trust fund? Trust fund A: Permanent Which of the following journal entries should a city use to record $250,000 for fire department salaries and wages incurred during the month of May? Dr. Expenditures - salaries and wages $250,000 The estimated revenues control account of a governmental unit is debited when: The budget is recorded When a snowplow purchased by a governmental unit is received, it should be recorded in the general fund as a(n) Expenditure Expenditures of a governmental unit for insurance extending over more than one accounting period: May be allocated between or among accounting periods or may be accounted for as expenditures of the period of acquisition Ridge Township's governing body adopted its general fund budget for the year ended July 31, Year 1, composed of estimated revenues of $100,000 and appropriations of $80,000. Ridge formally integrates its budget into the accounting records. To record the $20,000 budgeted excess of estimated revenues over appropriations, Ridge should: Credit budgetary control A public school district should recognize revenue from property taxes levied for its debt service fund when: Funds from the levy are measurable and available to the district It in inappropriate to record depreciation expense in a(n): Capital projects fund When equipment was purchased with general fund resources, which of the following accounts would have been increased in the general fund? Expenditures Under the modified accrual basis of accounting for a governmental unit, earned revenues that are measurable should be recognized in the accounting period in which they are: Available 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 The following revenues were among those reported by Ariba Township in Year 1: Net rental revenue (after depreciation) from a parking garage owned by Ariba $40,000 What amount of the foregoing revenues should be accounted for in Ariba's governmental-type funds? $6,000,000 When Rolan County adopted its budget for the year ending June 30, Year 1, $20,000,000 was recorded for estimated revenues control. Actual revenues for the year ended June 30, Year 1, amounted to $17,000,000. In closing the budgetary accounts at June 30, Year 1: Estimated revenues control should be credited for $20,000,000 Dayne County's general fund had the following disbursements during the year: Payment of principal on long-term debt $100,000 What amount should Dayne County report as expenditures in its governmental funds statement of revenues, expenditures, and changes in fund balances? $900,000 The Town of Seabreeze adopted its budget for the year ended December 31, Year 1. The town formally integrates its budget into its accounting records. In journalizing its budget, the town would record: A credit to appropriations control Powell City purchased a piece of equipment to be used by a department financed by the general fund. How should Powell report the acquisition in the general fund? As an expenditure All of the following represent similarities between the application of governmental fund accounting and commercial GAAP accounting, except: Both have a profit motive which is reflected in an income statement A debt service fund prepared a budget on January 1, Year 2, which included estimated revenues of $88,000, appropriations of $69,500, and a fund balance of $18,500. Actual activity for the debt service fund during Year 2 included bond issue proceeds of $60,500, other revenues of $24,000, and interest expenditures of $53,000. Based on the above, what is the entry to close the budget on December 31, Year 2? Dr. Budgetary control $18,500 The town of Muddy Gulch has the following transactions pertaining to Year 2: 12/5/Year 1 - Approval of Year 2 budget.
Estimated expenditures: $1,000,000 What is the journal entry amount to be made to the appropriations control account at the end of Year 2? Debit of $1,060,000 On December 1, Year 1, Coal Creek County places an order for two bulldozers to be used to construct the
county's library. The budgeted cost of each bulldozer is $35,000 and purchase orders are issued. The first bulldozer arrives on December 20, Year 1 and has a cost of $38,000. The second bulldozer is on backorder and will arrive sometime in Year 2. $35,000 The city of Gering budgeted $100,000 for the purchase of two new, identical police cruisers. A purchase order was issued on that date. By the end of the year, one of the cruisers had been received and paid for in full, and the other still was on backorder. Which of the following journal entries would you not find as of year-end related to this transaction? A debit to encumbrances and a credit to budgetary control in the amount of $50,000 Select the description below which best describes the purpose of recording an encumbrance in governmental accounting Record a purchase order and commit funds for eventual payment of the invoice for purchased goods and/or services Under what type of circumstance would an unappropriated (outstanding) encumbrance balance not be closed at the end of the accounting period for a governmental fund? Outstanding encumbrances at year-end associated with an appropriation that does not lapse How should a city's general fund report the acquisition of a new police car in its governmental fund statement of revenues, expenditures, and changes in fund balances? Expenditure In recording its budgetary accounts in its governmental funds at the beginning of the fiscal year, a municipal government would: Credit appropriations control A county's balances in the general fund included the following: Appropriations $745,000 What is the remaining amount available for use by the county? $409,750 Which internal account should Spring Township credit when it uses a purchase order for supplies? Budgetary control In which situation(s) should property taxes due to a governmental unit be recorded as a deferred inflows of resources? I. Property taxes receivable are recognized in advance of the year for which they are levied. Both I and II In Year 1, New City issued purchased orders and contracts of $850,000 that were chargeable against Year 1 budgeted appropriations of $1,000,000. The journal entry to record the issuance of the purchase orders and contracts should include a: Credit to budgetary control of $850,000 Elm City issued a purchase order for supplies with an estimated cost of $5,000. When the supplies were received, the accompanying invoice indicated an actual price of $4,950. What amount should Elm debit (credit) to the budgetary control after the supplies and invoice were received? $5,000 The encumbrance account of a governmental unit is debited when: A purchase order is approved Financial statements for which fund type generally report net position in their individual fund financial statements? Enterprise The budgetary control account of a governmental-type fund is increased when: A purchase order is approved 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: No During the year, a city's electric utility, which is operated as an enterprise fund, rendered billings for electricity supplied to the general fund. Which of the following accounts should be debited by the general fund? Expenditures Upon receipt of an invoice for a previously encumbered estimated cost of supplies, a special revenue fund: Will debit the budgetary control account General fund resources that are limited as to use by constraints imposed by law through constitutional or enabling legislation would be classified within fund balance: Restricted The only fund that should show a positive amount in its unassigned fund balance classification would be the: General fund Encumbrances would not appear in which fund? Enterprise Which of the following statements defines a characteristic of the general fund? The general fund is always classified as a major fund Which of the following defines a characteristic of the special revenue fund? The special revenue fund is set up to account for revenues from specific taxes or other earmarked sources that (by law) are restricted or committed to finance particular activities of government Receipts from a special tax levy to retire and pay interest on general obligation bonds should be recorded in which fund? Debt service The debt service fund of a governmental unit is used to account for the accumulation of resources for, and the payment of, principal and interest in connection with a: Fiduciary Fund: No Central County received proceeds from various towns and cities for capital projects financed by the county's long-term debt. A special tax was assessed by each local government, and a portion of the tax was restricted to repay the long-term debt of the county's capital projects. Central County should account for the restricted portion of the special tax in which of the following funds? Debt service fund Cal City maintains several major fund types. The following were among Cal's cash receipts during the current year: Unrestricted state grant $1,000,000 What amount of these cash receipts should be accounted for in Cal's general fund? $1,000,000 Lake County received the following proceeds that are legally restricted to expenditure for specified purposes: Levies on affected property owners to install
sewers What amount most likely will be accounted for in Lake's special revenue funds? $900,000 Dale City is accumulating financial resources that are legally restricted to payments of general long-term debt principal and interest maturing in future. At December 31, Year 1, $5,000,000 has been accumulated for principal payments and $300,000 has been accumulated for interest payments. These restricted funds should be accounted for in the: Debt service fund: $5,300,000 Revenues that are legally restricted or committed to expenditures for specified purposes should be accounted for in special revenue funds, including: Gasoline taxes to finance road repairs
Which of the following funds of a local government would report transfers to other funds as an other financing use? General Stone Corp. donated investments to Pine City and stipulated that the income from the investments be used to acquire art for the city's museum. Which of the following funds should be used to account for the investments? Permanent fund Kew City received a $15,000,000 federal grant to finance the construction of a center for rehabilitation of drug addicts. The proceeds of this grant should be accounted for in the: Capital projects funds A city received a $9,000,000 federal grant to finance the construction of a homeless shelter. In which fund should the proceeds be recorded? Capital project Land ad other real estate held as investments by endowments in a government's permanent fund should be reported at: Fair value The orientation of accounting and reporting for all proprietary funds of governmental units is: Income determination The billings for transportation services provided to other governmental units are recorded by the internal service fund as: Operating revenues A state government had the following activities: I. State-operated lottery $10,000,000 Which of the above activities should be most likely accounted for in an enterprise fund? Both I and II In fund financial statements for governmental units, depreciation expense on assets acquired with capital grants externally restricted for capital acquisitions should be reported in which type of fund? Governmental Fund: No Which of the following does not affect an internal service fund's change in net position? Due from other funds The town of Hill operates municipal electric and water utilities. In which of the following funds should the operations of the utilities be accounted for? Enterprise fund Bay Creek's municipal motor pool maintains all city-owned vehicles and charges the various departments for the cost of rendering those services. In which of the following funds should Bay Creek account for the cost of such maintenance? Internal service fund Gem City's internal service fund received $50,000 cash from the general fund to capitalize this fund. This $50,000 should be reported in Gem's internal service fund as a credit to: Transfers During Year 1, Spruce City reported the following receipts from self-sustaining activities paid for by users of the services rendered: Operation of water supply plant $5,000,000 What amount should be accounted for in Spruce's enterprise funds? $5,900,000 During the current year, Vann County's motor pool internal service fund sold two vehicles for $5,000. The vehicles had a cost of $6,000 and a carrying value of $4,000. How should Vann County's motor pool internal service fund report this transaction in its fund financial statements? Gain of $1,000 On January 2, Basketville City purchases 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? Capitalize; depreciation is required Gruber Township owns and operates a utility that provides Water & Sewer Service. Although the service is primarily supported by user fees, the system receives a general tax subsidy from the General Fund to keep rates low and to maintain the tax deductibility of a portion of the cost of services to the citizens. What fund would Gruber most likely use to account for the transactions of its utility operations? Enterprise Fund Which of the following funds of a government unit records depreciation? Internal service fund 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 library. What type of fund should King establish in order to meet their measurement objectives? Enterprise fund Which of the following statements is the most significant characteristic in determining the classification of an enterprise fund? The pricing policies of the activity establish fees and charges designed to recover its cost. Taxes collected and held by Franklin County for a separate school district would be accounted for in which fund? Custodial Which of the following funds is required to provide a statement of cash flows? Internal service fund Which of the following statements accurately describes the integration of the government-wide financial statements with the fund financial statements? The fund financial statements and government-wide financial statements have different objectives, which may be reconciled on the face of the fund statements or in the notes to the government-wide statements. The statement of activities of the government-wide financial statements is designed primarily to provide information to assess which of the following? Operational accountability The financial statements of governments have focused on two forms of accountability. Government-wide financial statements focus the reader on accountability in which way(s): Fiscal Accountability: No Citizens of the city of Reformville can expect to find the following items in their basic financial statements reported in accordance with GASB 34: Government-wide Financial Statements, Fund Financial Statements, and Notes to the Financial Statements GASB 34 establishes financial reporting standards for state and local government. Basic financial statements and required supplementary information for general purpose governments should consist of: Management's Discussion and Analysis, Basic Financial Statements and Required Supplementary Information The presentation of government-wide financial statements prepared using a uniform method of accounting and measurement focus in combination with both fund based financial statements that use the method of accounting and measurement focus appropriate to the particular fund type along with appropriate reconciliation is best referred to as: The Integrated Approach Government-wide financial statements would include all government-wide activities associated with operational accountability for all activities except: Fiduciary Activities The city of Basicville is preparing its basic financial statements in conformity with GASB 34. The readers of Basicville's government-wide financial statements prepared as part of the basic financial statements should expect to find information about all of the assets, liabilities, revenues, expenses, and gains and losses of the city in: A statement of net position and a statement of activities using the economic resources measurement focus and the accrual basis of accounting What is the basic criterion used to determine the reporting entity of a governmental unit? Financial accountability Valley Town's public school system is administered by a separately elected Board of Education. The Board of Education is not organized as a separate legal entity and does not have the power to levy taxes or issue bonds. Valley's City Council approves the school system's budget. How should Valley report the public school system's annual financial results? Discrete presentation: No South City School District has a separately elected governing body that administers the public school system. The district's budget is subject to the approval of the city council. The district's financial activity should be reported in the South City's financial statements by: Discrete presentation Marta City's school district is a legally separate entity, but two of its seven board members are also City Council members and the district is financially dependent upon the city. The school district should be reported as a: Discrete presetation A municipality preparing its basic financial statements and required supplementary information in accordance with GASB #34 would introduce the basic financial statements and provide analytical overview of the government's financial statements in: A section titled Management's Discussion and Analysis as part of the city's required supplementary information before the basic financial statements A board of commissioners directly elected by the citizens of the City of Lewisville governs the Lewisville Library Discrete component unit of the City of Lewisville Which of the following fund's data should be reported as part of local government's governmental activities column in its government-wide statements? Debt service Which of the following statements are required to be presented for special-purpose governments engaged only in business-type activities (such as utilities)? The financial statements required for enterprise funds, including MD&A and RSI. If a city government is the primary reporting entity, which of the following is an acceptable method to present component units in its combined financial statements? Discrete presentation Which of the following activities should be excluded when the governmental fund financial statements are converted to government-wide financial statements? Fiduciary activities Which of the following is the measurement focus and basis of accounting for the government-wide financial statements? Measurement focus: Economic resources Which of the following is a minimum required report for the basic financial statements of a government entity? Fund financial statements Feline County established Calico Landfill Presented discretely as a component unit What is a budgetary account of a governmental fund?Budgetary accounts means those accounts necessary to reflect budgetary operations and conditions, such as estimated revenues, appropriations, and encumbrances.
When the budget for the General Fund is recorded?When the budget for the General Fund is recorded, the required journal entry will include: A credit to appropriations.
How should fund information be reported in governmental and enterprise fund financial statements?How should fund information be reported in governmental and enterprise fund financial statements? Each major fund should be reported in a separate column, and nonmajor funds should be combined and reported in a separate column.
Which financial statements are required to be prepared for governmental funds in the fund financial statements?Required governmental fund statements are a balance sheet and a statement of revenues, expenditures, and changes in fund balances. Required proprietary fund statements are a statement of net assets; a statement of revenues, expenses, and changes in fund net assets; and a statement of cash flows.
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In recording its budgetary accounts in its governmental funds at the beginning of the fiscal year
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