Deck 5: Recognizing Expenditures in Governmental Funds

Question 1

When accounting for inventory items in a governmental fund, a reclassification of the appropriate portion of fund balance is always required when the consumption method is used.

Answer 1

True

Question 2

If recording a general long-term liability in a governmental fund upon issuing a bond, the credit should be to a bonds payable account.

Answer 2

False

Question 3

A transfer of cash from the general fund to a debt service fund to pay interest on debt should be recorded in the general fund as a nonreciprocal transfer-out.

Answer 3

True

Question 4

When accounting for inventory items in a governmental fund, GASB standards permit the use of the consumption method only.

Question 5

Which of the following funds would use the modified accrual basis of accounting in preparing its fund financial statements?

A)City Electric Utility Enterprise Fund.
B)City Hall Capital Projects Fund.
C)City Motor Pool Internal Service Fund.
D)City Employee Pension Trust Fund.

Question 6

Governmental fund liabilities are considered current only when they must be liquidated with expendable available financial resources-not, as in businesses and in the government-wide statements, when they must be paid within a year.

Question 7

Prepaid expenses such as for insurance are classified as deferred outflows, rather than as assets.

Question 8

Compensated absences, such as vacation pay and sick leave, should be accounted for on the accrual basis in governmental funds.

Question 9

Per GASB standards, governments do not report general capital assets or depreciation in governmental funds.

Question 10

The purchases method is consistent with full accrual basis of accounting.

Question 11

Assume that the City of Juneau maintains its books and records to facilitate the preparation of its fund financial statements.The city pays its employees bi-weekly on Friday.The fiscal year ended on Wednesday, June 30.Employees had been paid on Friday, June 25.The employees paid from the general fund had earned $90,000 on Monday, Tuesday, and Wednesday (June 28, 29, and 30).What entry, if any, should be made in the city's general fund on June 30?

A)Debit Expenditures $90,000; credit Wages and salaries payable $90,000.
B)Debit Expenses $90,000; credit Wages and salaries payable $90,000.
C)Debit Expenditures $90,000; credit Encumbrances $90,000.
D)No entry is required.

Question 12

Which of the following funds would use the accrual basis of accounting in preparing its fund financial statements?

A)City General Fund.
B)City Hall Capital Projects Fund.
C)City Motor Pool Internal Service Fund.
D)None of the above.

Question 13

Proceeds of debt intended to finance general capital assets should be reported in the fund financial statements as a fund liability.

Question 14

Expenditures are generally recognized when resources are acquired; expenses when resources are consumed.

Question 15

Most governments budget (appropriate)resources for principal and interest only for the period in which a payment is due-not for future payments.

Question 16

In a governmental fund, expenditures for wages and salaries should be recognized in the period in which the employees earn them.

Question 17

Government-wide statements present revenues and expenses from the perspective of the government, not of individual funds.

Question 18

In budgeting for governmental funds, governments appropriate the resources for general capital assets in the periods when they are to be purchased, not in the periods in which the assets will be used.

Question 19

Use of the consumption method of accounting for inventory is not acceptable for the fund financial statements.

Question 20

As used in government accounting, expenditures are decreases in

A)Net assets.
B)Net current financial resources.
C)Net cash.
D)Net economic resources.

Question 21

The amount of sick leave liability that should appear on the general fund balance sheet at 6/30/15 is

A)$1.2 million.
B)$0.4 million.
C)$0.2 million.
D)No liability should appear.

Question 22

Employees of the City of Orleans earn ten days paid leave for each 12 months of employment.The city has a policy that employees must take their vacation days during the year following the year in which they are earned.If they do not take vacation in the allotted period, they forfeit the vacation pay benefit.Traditionally, employees have taken 80 percent of the vacation days earned.During the current year, city employees earned $600,000 in vacation pay.Assuming the city maintains its books and records in a manner to facilitate the preparation of fund financial statements, which of the following entries should be made in the general fund to record the vacation pay earned during the current period?

A)Debit Expenditures $600,000; credit Vacation pay payable $600,000.
B)Debit Expenses $600,000; credit Vacation pay payable $600,000.
C)Debit Expenditures $480,000; credit Vacation pay payable $480,000.
D)No entry required.

Question 23

State Community College, a public college, grants faculty members a one-year sabbatical leave after each seven years of service.There are no requirements for research, study, or service during the compensated sabbatical leave.A particular faculty member earns $40,000 per year.Assuming that the college maintains its books and records in a manner that facilitates the preparation of fund financial statements and assuming that any appropriate accruals have been made, what is the appropriate entry to record the employee's salary paid while on sabbatical?

A)Debit Expenditures $40,000; Credit Cash $40,000.
B)Debit Sabbatical leave payable $40,000; Credit Cash $40,000.
C)Debit Expenditures $40,000; Credit Sabbatical leave payable $40,000.
D)No entry required.

Question 24

The amount of sick leave liability that should appear on the government-wide financial statements at 6/30/15 is

A)$1.2 million.
B)$0.4 million.
C)$0.2 million.
D)No liability should appear.

Question 25

Employees of the general fund of Scott City earn ten days of vacation for each 12 months of employment.The city permits employees to carry the vacation days forward as long as they wish.During the current year employees earned $800,000 of vacation benefits, of which the city estimates $500,000 will be taken in the next year and the balance will be carried forward.Assuming that the city maintains its books and records in a manner that facilitates the preparation of government-wide financial statements, which of the following entries should be made to record the vacation pay earned during the current period?

A)Debit Expenditures $800,000; credit Vacation pay payable $800,000.
B)Debit Expenditures $500,000; credit Vacation pay payable $500,000.
C)Debit Vacation expense $800,000; credit Vacation pay payable $800,000.
D)No entry required.
Use the following information to answer Questions 10 through 13.
Lincoln City has a 6/30 fiscal year-end.The city has a policy of recognizing fund revenues/ expenditures when collected/paid or if expected to be collected/paid within 60 days of year-end.
The city has a sick leave benefit policy for its employees.The policy allows city employees one day of paid sick leave per month and permits them to accumulate sick leave that they do not take.Sick leave vests at the completion of the fifth year of employment, and unused sick leave is paid in cash upon termination or retirement.During the fiscal year ended 6/30/15, city employees who are paid from the general fund earned $2.8 million of sick leave, of which $1.0 was taken.Of the balance, the city estimates that $0.2 million will be taken in the next 60 days, $0.6 million will be taken in the next five years, $0.4 million will vest, and $0.6 million will never be taken.

Question 26

State Community College, a public college, grants faculty members a one-year sabbatical leave after each seven years of service.There are no requirements for research, study, or service during the compensated sabbatical leave.A particular faculty member earns $40,000 per year.Assuming that the college maintains its books and records in a manner that facilitates the preparation of government-wide financial statements and assuming that any appropriate accruals have been made, what is the appropriate entry to record the employee's salary paid while on sabbatical?

A)Debit Expenditures $40,000; Credit Cash $40,000.
B)Debit Sabbatical leave payable $40,000; Credit Cash $40,000.
C)Debit Expenditures $40,000; Credit Cash $40,000.
D)No entry required.

Question 27

Culver City recognizes as revenues/expenditures those amounts collected/paid during the year or within 60 days of fiscal year-end.The city offers a pension benefit to its employees who meet certain age and years of employment criteria.The city participates in the State Pension Plan.Per its contractual arrangement, the city's required contribution to the State Pension Plan for the fiscal year ended 6/30/15 is $5 million.Due to cash inflow shortages the city, which budgeted $5 million for pension contributions, paid only $4 million in the fiscal year ended 6/30/15.The city paid the remaining amount on September 30, 2015.Assuming the city maintains its books and records in a manner that facilitates the preparation of its fund financial statements, how should the city record the pension contribution and any associated liability for the year ended 6/30/15?

A)Debit Expenditures $5 million; Credit Cash $4 million and Pension payable $1 million.
B)Debit Expenses $5 million; Credit Cash $4 million and Pension payable $1 million.
C)Debit Expenditures $4 million; Credit Cash $4 million.
D)Debit Expenses $4 million; Credit Cash $4 million.

Question 28

Culver City recognizes as revenues/expenditures those amounts collected/paid during the year or within 60 days of fiscal year-end.The city offers a pension benefit to its employees who meet certain age and years of employment criteria.The city participates in the State Pension Plan.Per its contractual arrangement, the city's required contribution to the State Pension Plan for the fiscal year ended 6/30/15 is $5 million.Due to cash inflow shortages the city, which budgeted $5 million for pension contributions, paid only $4 million in the fiscal year ended 6/30/15.The city paid the remaining amount on September 30, 2015.Assuming the city maintains its books and records in a manner that facilitates the preparation of government-wide financial statements, how should the city record the pension contribution and any associated liability for the year ended 6/10/15?

A)Debit Expenditures $5 million; Credit Cash $4 million and Pension contribution payable $1 million.
B)Debit Expenses $5 million; Credit Cash $4 million and Pension contribution payable $1 million.
C)Debit Expenditures $4 million; Credit Cash $4 million.
D)Debit Expenses $4 million; Credit Cash $4 million.

Question 29

State University, a very large public university, has a policy of granting faculty members a one-year sabbatical leave after a period of seven years of continuous employment.The leave is to be used for further study, research, or service.During the fiscal year ended 6/30/15, the university paid $3 million to faculty members on sabbatical leave and estimated that faculty members currently not on sabbatical leave earned $3.5 million toward sabbatical leaves they are likely to take in the future.The amount of sabbatical expenditures for the year ended 6/30/15 should be

A)$0 million.
B)$3 million.
C)$3.5 million.
D)$6.5 million.

Question 30

This year, Port City was sued for injuries sustained when a citizen slipped and broke her hip on the icy City Hall steps.The city attorney estimates the city will be held liable by the courts and a judgment of $300,000 will result.Because of the nature of the case it will likely be four years before the city makes any payment related to the accident.The present value of the likely future payment is $251,000.In the government-wide financial statements, at the end of the current fiscal year, Port City should recognize a liability of

A)$300,000.
B)$251,000.
C)$0.
D)$75,000.

Question 31

Assume that the City of Juneau maintains its books and records to facilitate the preparation of its government-wide financial statements.The city pays its employees bi-weekly on Friday.The fiscal year ended on Wednesday, June 30.Employees had been paid on Friday, June 25.The employees paid from the general fund had earned $90,000 on Monday, Tuesday, and Wednesday (June 28, 29, and 30).They will earn $60,000 on Thursday and Friday (July 1 and 2).What entry, if any, should be made on June 30?

A)Debit Expenditures $90,000; credit Wages and salaries payable $90,000.
B)Debit Expenditures $150,000; credit Wages and salaries payable $150,000.
C)Debit Expenses $90,000; credit Wages and salaries payable $90,000.
D)No entry is required.

Question 32

Employees of the City of Orleans earn ten days paid leave for each 12 months of employment.The city has a policy that employees must take their vacation days during the year following the year in which they are earned.If they do not take vacation in the allotted period, they forfeit the vacation pay benefit.Traditionally, employees have taken 80 percent of the vacation days earned.During the current year, city employees earned $600,000 in vacation pay.Assuming the city maintains its books and records in a manner to facilitate the preparation of government-wide financial statements, which of the following entries should be made to record the vacation pay earned during the current period?

A)Debit Expenditures $600,000; credit Vacation payable $600,000.
B)Debit Expenses $600,000; credit Vacation payable $600,000.
C)Debit Expenses $480,000; credit Vacation pay payable $480,000.
D)No entry required.

Question 33

The amount of pension expenditures that a government should recognize in its general fund financial statements during the current year is

A)The amount paid.
B)The amount paid plus the amount that will be paid with available expendable financial resources.
C)The amount paid so long as it does not exceed the contractually agreed amount.
D)The contractually agreed amount.

Question 34

The amount of pension expense that a government should recognize in its government-wide financial statements during the current year is

A)The amount paid.
B)The amount paid plus the amount that will be paid with available expendable financial resources.
C)The amount paid so long as it does not exceed the contractually agreed amount.
D)The contractually agreed amount.

Question 35

State University, a public university, has a policy of granting faculty members a one-year paid sabbatical leave after a period of seven years continuous employment.The leave is for further study, research, or public service.A particular faculty member earns $90,000 per year.Assuming that the college maintains its books and records in a manner that facilitates the preparation of fund financial statements and assuming that any appropriate accruals have been made, what is the appropriate entry to record the employee's salary paid while on sabbatical leave?

A)Debit Expenditures $90,000; Credit Cash $90,000.
B)Debit Expenses $90,000; Credit Cash $90,000.
C)Debit Sabbatical leave payable $90,000; Credit Cash $90,000.
D)No entry required.

Question 36

The amount of sick leave expenditures that should appear on the general fund financial statements for the fiscal year ended 6/30/15 is

A)$1.4 million.
B)$1.3 million.
C)$0.6 million.
D)$1.0million.

Question 37

The amount of sick leave expense that should appear on the government-wide financial statements for the fiscal year ended 6/30/15 is

A)$2.8 million.
B)$2.6 million.
C)$1.2 million.
D)$1.4 million.

Question 38

This year, Port City was sued for injuries sustained when a citizen slipped and broke her hip on the icy City Hall steps.The city attorney estimates the city will be held liable by the courts and a judgment of $300,000 will result.Because of the nature of the case it will likely be four years before the city makes any payment related to the accident.The present value of the likely future payment is $251,000.In the general fund, at the end of the current fiscal year, Port City should recognize a liability of

A)$300,000.
B)$251,000.
C)$0.
D)$75,000.

Question 39

Employees of the general fund of Scott City earn ten days of vacation for each 12 months of employment.The city permits employees to carry the vacation days forward as long as they wish.During the current year employees earned $800,000 of vacation benefits, of which the city estimates $500,000 will be taken in the next year and the balance will be carried forward.Assuming that the city maintains its books and records in a manner that facilitates the preparation of fund financial statements, which of the following entries should be made in the general fund to record the vacation pay earned during the current period?

A)Debit Expenditures $800,000; credit Vacation pay payable $800,000.
B)Debit Expenditures $500,000; credit Vacation pay payable $500,000.
C)Debit Vacation expense $800,000; credit Vacation pay payable $800,000.
D)No entry required.

Question 40

State University, a public university, has a policy of granting faculty members a one-year paid sabbatical leave after a period of seven years continuous employment.The leave is for further study, research, or public service.A particular faculty member earns $90,000 per year.Assuming that the college maintains its books and records in a manner that facilitates the preparation of government-wide financial statements and assuming that any appropriate accruals have been made, what is the appropriate entry to record the employee's salary paid while on sabbatical leave?

A)Debit Expenditures $90,000; Credit Cash $90,000.
B)Debit Expenses $90,000; Credit Cash $90,000.
C)Debit Sabbatical leave payable $90,000; Credit Cash $90,000.
D)No entry required.

Question 41

Bay City uses the purchases method to account for supplies.At the beginning of the year the city had no supplies on hand.During the year the city purchased $600,000 of supplies for use by activities accounted for in the general fund.The city used $400,000 of those supplies during the year.Assuming that the city maintains its books and records in a manner that facilitates the preparation of its fund financial statements, at fiscal year-end the appropriate account balances related to supplies expenditures and supplies inventory would be

A)Expenditures $600,000; Supplies inventory $200,000.
B)Expenditures $600,000; Supplies inventory $0.
C)Expenditures $400,000; Supplies inventory $200,000.
D)Expenditures $400,000; Supplies inventory $0.

Question 42

The City of Hiawatha issued $10 million of term bonds as of April 1, 2014.The bonds bear interest at 6 percent, due and payable each October 1 and April 1.Assuming the city maintains its books and records in a manner that facilitates the preparation of its fund financial statements the appropriate entity to record interest on the debt at June 30, 2015 (the city's fiscal year-end)is

A)Debit Expenditures $300,000; Credit Interest payable $300,000.
B)Debit Expenditures $300,000; Credit Other financing uses $300,000.
C)Debit Expenditures $300,000; Credit Due to bondholders $300,000.
D)No entry required.

Question 43

The City of Holbrook transferred $100,000 from the general fund to a debt service fund for payment of interest.The appropriate entry in the debt service fund to record this transfer would be

A)Debit Cash $100,000; Credit Revenue $100,000.
B)Debit Cash $100,000; Credit Reciprocal transfer-in $100,000.
C)Debit Cash $100,000; Credit Fund balance $100,000.
D)Debit Cash $100,000; Credit Nonreciprocal transfer-in $100,000.

Question 44

Banker County has outstanding $4 million of term bonds that bear interest at 6 percent payable semiannually each January 30 and July 30.The county's fiscal year-end is 12/31.On December 28, 2015, the County transferred $240,000 to a debt service fund.At December 31, the maximum amount the debt service fund may recognize as interest expenditure is

A)$120,000
B)$240,000.
C)$100,000.
D)$0.

Question 45

Shoshone County uses the consumption method to account for supplies.At the beginning of the year the city had no supplies on hand.During the year the city purchased $450,000 of supplies for use by activities accounted for in the general fund.The city used $300,000 of those supplies during the year.At fiscal year-end, the appropriate account balances on the general fund financial statements would be

A)Expenditures $450,000; Supplies inventory $150,000.
B)Expenditures $450,000; Supplies inventory $0.
C)Expenditures $300,000; Supplies inventory $150,000.
D)Expenditures $300,000; Supplies inventory $0.

Question 46

Star City leased a bulldozer for use in activities accounted for in the general fund.The city paid $40,000 and agreed to pay $40,000 per year for 3 years.The bulldozer has a useful life of six years.The lease qualified as a capital lease.Assuming that the city maintains is books and records in a manner that facilitates the preparation of the government-wide financial statements, the appropriate entry at the date of acquisition would be

A)Debit Expenditures $160,000; Credit Cash $40,000 and Other financing sources $120,000.
B)Debit Expenditures $53,333 and Prepaid lease $106,667; Credit Cash $40,000 and Other financing sources $120,000.
C)Debit Equipment $160,000; Credit Cash $40,000 and Lease payable $120,000.
D)Debit Expenditures $160,000; Credit Cash $40,000 and Lease payable $120,000.

Question 47

The City of Upper Falls accounts for its inventory using the purchases method.During the year the city bought $500,000 of supplies, for which it owed $100,000 at year-end.The city will pay for the supplies from available expendable financial resources.The entry that should be recorded in the city's general fund is

A)Debit Expenditures $500,000; Credit Cash $400,000 and Accounts payable $100,000.
B)Debit Expenditures $400,000; Credit Cash $400,000.
C)Debit Supplies inventory $500,000; Credit Cash $400,000 and Accounts payable $100,000.
D)Debit Supplies inventory $400,000; Credit Cash $400,000.

Question 48

Pocahontas School District, an independent public school district, financed the acquisition of a new school bus by signing a note for $105,000 plus interest on the unpaid balance at 6 percent.Annual principal payments of $35,000, plus interest, are due each July 1.Assuming that the district maintains its books and records in a manner that facilitates the preparation of the fund financial statements, the appropriate entry in the general fund at the date of acquisition is

A)Debit Expenditures $105,000; Credit Notes payable $105,000.
B)Debit Capital assets $105,000; Credit Notes payable $105,000.
C)Debit Expenditures $105,000; Credit Other financing sources $105,000.
D)Debit Capital assets $105,000; Credit Other financing sources $105,000.

Question 49

Several years ago, Durham City issued $1 million in zero coupon bonds due and payable in 2023.The bonds were sold at an amount to yield investors 6 percent over the life of the bonds.During the current year, how much in interest expenditures should Durham City recognize related to these bonds?

A)Difference between the present value of the bonds at the beginning of the period and the present value of the bonds at the end of the period.
B)Face amounts of bonds times 6 percent.
C)Book value of bonds times 6 percent.
D)None.

Question 50

On July 1, Gilbert County bought computer equipment for use in the administrative offices of the county.The equipment has an estimated useful life of three years and salvage of $10,000.The county has a 6/30 fiscal year-end.Assuming that the county maintains its books and records in a manner that facilitates the preparation of government-wide financial statements, the $85,000 cost of this equipment would require which of the following entries?

A)Debit Expenditures $85,000; Credit Cash $85,000.
B)Debit Equipment $85,000; Credit Cash $85,000.
C)Debit Expenses $85,000; Credit Cash $85,000.
D)No entry is required.

Question 51

Campbell County uses the consumption method to record all inventories and prepayments.The County has a 9/30 fiscal year-end.On April 1, 2015, the county purchased a two-year insurance policy at a total cost of $400,000, paying for the policy out of the general fund.In the fund financial statements, the amount of insurance expenditures for the fiscal year ended 9/30/15 would be

A)$400,000.
B)$300,000.
C)$200,000.
D)$100,000.

Question 52

Sugar City uses the purchases method to record all prepayments.The city has a 6/30 fiscal year-end.On 12/31/14, the city purchased a three-year insurance policy covering all city owned vehicles acquired by the general fund to be used in general government activities.Cost of the policy was $360,000.After the 6/30/15 closing entries, the appropriate balance sheet accounts and balances in the city's general fund associated with this transaction are

A)Prepaid insurance $300,000; Expenditures $60,000.
B)Prepaid insurance $300,000; Expenditures $360,000
C)Prepaid insurance $0; Expenditures $360,000.
D)Prepaid insurance $0; Expenditures $60,000.

Question 53

Shoshone County uses the consumption method to account for supplies.At the beginning of the year the city had no supplies on hand.During the year the city purchased $450,000 of supplies for use by activities accounted for in the general fund.The city used $300,000 of those supplies during the year.At fiscal year-end the appropriate account balances on the government-wide financial statements would be

A)Expenses $450,000; Supplies inventory $150,000.
B)Expenses $450,000; Supplies inventory $0.
C)Expenses $300,000; Supplies inventory $150,000.
D)Expenses $300,000; Supplies inventory $0.

Question 54

Pocahontas School District, an independent public school district, financed the acquisition of a new school bus by signing a note for $105,000 plus interest on the unpaid balance at 6 percent.Annual principal payments of $35,000, plus interest, are due each July 1.Assuming that the district maintains its books and records in a manner that facilitates the preparation of the government-wide financial statements, the appropriate entry at the date of acquisition is

A)Debit Expenditures $105,000; Credit Notes payable $105,000.
B)Debit Capital assets $105,000; Credit Notes payable $105,000.
C)Debit Expenditures $105,000; Credit Other financing sources $105,000.
D)Debit Capital assets $105,000; Credit Other financing sources $105,000.

Question 55

On July 1, Gilbert County bought computer equipment for use in the administrative offices of the county.The equipment has an estimated useful life of three years and salvage of $10,000.The county has a 6/30 fiscal year-end.Assuming that the county maintains its books and records in a manner that facilitates the preparation of fund financial statements, the $85,000 cost of this equipment would require which of the following entries?

A)Debit Expenditures $85,000; Credit Cash $85,000.
B)Debit Equipment $85,000; Credit Cash $85,000.
C)Debit Expenses $85,000; Credit Cash $85,000.
D)No entry in the city's governmental funds.

Question 56

The City of Holbrook transferred $100,000 from the general fund to a debt service fund for payment of interest.The appropriate entry in the general fund to record this transfer would be

A)Debit Expenditures $100,000; Credit Cash $100,000.
B)Debit Nonreciprocal transfer-out $100,000; Credit Cash $100,000.
C)Debit Fund balance$100,000; Credit Cash $100,000.
D)Debit Reciprocal transfer-out $100,000; Credit Cash $100,000.

Question 57

The City of Roswell has a 6/30 fiscal year-end.The city uses the consumption method for recognizing inventories and prepayments.On July 1, 2014, the city leased computer equipment for use in the city's general activities.The lease is a three-year lease that qualifies as an operating lease.The city prepaid the entire three-year rental fee of $45,000.At June 30, 2015, the appropriate account balances in the general fund associated with this transaction would be

A)Prepaid lease $0; Expenditures $45,000; Fund balance-nonspendable $0.
B)Prepaid lease $45,000; Expenditures $0; Fund balance-nonspendable $45,000.
C)Prepaid lease $30,000; Expenditures $45,000; Fund balance-nonspendable $30,000.
D)Prepaid lease $30,000; Expenditures $15,000; Fund balance-nonspendable $0.

Question 58

Star City leased a bulldozer for use in activities accounted for in the general fund.The city paid $40,000 and agreed to pay $40,000 per year for 3 years.The bulldozer has a useful life of six years.The lease qualified as a capital lease.Assuming that the city maintains is books and records in a manner that facilitates the preparation of the fund financial statements, the appropriate entry in the general fund at the date of acquisition would be

A)Debit Expenditures $160,000; Credit Cash $40,000 and Other financing sources $120,000.
B)Debit Expenditures $40,000 and Prepaid lease $120,000; Credit Cash $40,000 and Other financing sources $120,000.
C)Debit Equipment $160,000; Credit Cash $40,000 and Other financing sources $120,000.
D)Debit Expenditures $160,000; Credit Cash $40,000 and Lease payable $120,000.

Question 59

Several years ago, Grant County was sued by a former county employee for wrongful discharge.Although it was to be contested by the county, at the time of the lawsuit the attorneys believed that the county was likely to lose the suit and the estimated amount of the ultimate judgment would be $100,000.This year, the case was finally settled with a judgment against the county of $150,000, which was paid.Assuming that the county maintains its books and records in a manner to facilitate the preparation of its fund financial statements, the entry in the current year should be

A)Debit Expenditures $150,000; Credit Cash $150,000.
B)Debit Expenses $150,000; Credit Cash $150,000.
C)Debit Expenditures $50,000 and Claims payable $100,000; Credit Cash $150,000.
D)Debit Expenses $50,000 and Claims payable $100,000; Credit Cash $150,000.

Question 60

Several years ago, Grant County was sued by a former county employee for wrongful discharge.Although it was to be contested by the county, at the time of the lawsuit the attorneys believed that the county was likely to lose and the estimated amount of the ultimate judgment would be $100,000.This year, the case was finally settled with a judgment against the county of $150,000, which was paid.Assuming that the county maintains its books and records in a manner to facilitate the preparation of its government-wide financial statements, the entry in the current year should be

A)Debit Expenditures $150,000; Credit Cash $150,000.
B)Debit Expenses $150,000; Credit Cash $150,000.
C)Debit Expenditures $50,000 and Claims payable $100,000; Credit Cash $150,000.
D)Debit Expenses $50,000 and Claims payable $100,000; Credit Cash $150,000.

Question 61

When a government finances the purchase of a capital asset from a governmental fund, the acquisition is treated as an expenditure and reduces net current financial resources during the year of acquisition.During the years that principal and interest payments are being made on the debt incurred to finance the capital asset acquisition, the principal and interest amounts are also treated as expenditures.This appears to reduce the net current financial resources by twice the cost of the capital asset.Discuss these transactions and their overall effect on the net current financial resources of the government.

Question 62

State employees earn $10 million in vacation leave.$7 million is paid in the current year and the remaining amount is deferred to future years.Which of the following the accounts will be credited in the general fund entry and the government-wide entry?

Question 63

Paid vacations, paid sick leave, and pensions are employee benefits frequently offered by governments.Discuss the reporting requirements related to each of these benefits and explain, if necessary, any differences between reporting for vacation pay earned but unused, sick leave earned but unused, and pensions earned during the current period.

Question 64

Harris County transferred $300,000 from the general fund to the Motor Pool Internal Service Fund to pay for the use of automobiles during the first six months of FY 2015.The appropriate entry in the general fund to record this transfer of cash would be

A)Debit Expenditures $300,000; Credit Cash $300,000.
B)Debit Nonreciprocal transfer-out $300,000; Credit Cash $300,000.
C)Debit Fund balance-transfer out $300,000; Credit Cash $300,000.
D)Debit Nonreciprocal transfer-in $300,000; Credit Cash $300,000.

Question 65

In the governmental fund types, expenditures are generally recognized when resources are acquired.Liabilities are generally recognized if they will be liquidated with available expendable financial resources.Define "available." Relate the definition of available to the recognition of liabilities and expenditures in governmental fund financial statements.Discuss the reporting deficiencies that are directly associated with the use of the available criterion in the governmental funds.

Question 66

Other financing sources/uses would appear on which of the following statements?

A)Balance sheet.
B)Statement of revenues, expenditures, and changes in fund balances.
C)Cash flows statement.
D)None of the above.

Question 67

Which of the following items is NOT an example of an item that would be reported as Other Financing Sources/Uses in the general fund?

A)$10 million received from the issuance of bonds.
B)$7,000 received from the sale of a used bulldozer.
C)$200,000 capital lease obligation for a new bulldozer.
D)$100,000 paid to a Motor Pool Internal Service Fund for automobile usage during the period.