Deck 17: Governmental Entities: General Fund

Question 1

The Governmental Accounting Standards Board has recommended eleven types of funds for governmental entities.

Answer 1

True

Question 2

Under the modified accrual basis of accounting for governmental funds of a governmental entity, revenues from licenses and permit fees are recognized when received in cash, assuming the fees are not refundable.

Answer 2

True

Question 3

In a journal entry for the annual budget of a governmental entity's general fund, the Appropriations ledger account is debited and the Estimated Revenues account is credited.

Answer 3

False

Question 4

The journal entry to close the Appropriations ledger account of a governmental entity's general fund includes credits to the Expenditures and Encumbrances (if used) accounts, and either a debit or a credit to the Unreserved and Undesignated Fund Balance account.

Question 5

An unreserved and undesignated fund balance in a governmental entity's general fund at the end of Fiscal Year 2005 is available, if required, for appropriation for a deficit budget for Fiscal Year 2006.

Question 6

Component units are subdivisions of the primary government of a governmental financial reporting entity.

Question 7

In accounting for governmental entities, a fund is an independent fiscal and accounting entity composed of cash and other financial resources, segregated for the purpose of carrying on specific activities or attaining certain objectives.

Question 8

Governmental funds of governmental entities account for expenditures of financial resources rather than expenses matched against revenues.

Question 9

The general fund of a governmental entity accounts for doubtful accounts expense as a business enterprise does.

Question 10

Payments by a governmental entity's general fund for services to be received in the future are debited to a short-term prepayments ledger account.

Question 11

The Governmental Accounting Standards Board and the Financial Accounting Standards Board share responsibility for the establishment of accounting standards for state and local governmental entities.

Question 12

A governmental entity may have more than one general fund.

Question 13

The Fund Balance Reserved for Encumbrances ledger account sometimes used by a governmental entity's general fund is not closed at the end of a fiscal year.

Question 14

A designated portion of the fund balance of a governmental entity's general fund is the same as a reserved portion of the fund balance.

Question 15

A capital projects fund of a governmental entity is an example of:

A) An internal service fund
B) A proprietary fund
C) A fiduciary fund
D) A governmental fund
E) None of the foregoing fund types

Question 16

When plant assets acquired by a governmental entity's general fund were received, an appropriate journal entry was made in the voluntarily maintained general capital assets account group. What ledger account is debited in the general fund?

A) No journal entry is made in the general fund
B) Expenditures
C) Plant assets
D) Receivable from General Capital Assets Account Group

Question 17

Generally, annual budgets are recorded in a governmental entity's:

A) General fund and special revenue funds
B) Capital projects funds and agency funds
C) Enterprise funds and internal service funds
D) Funds not listed above

Question 18

Which of the following processes in the purchase of goods and services by a governmental entity's general fund occurs first?

A) Appropriation
B) Encumbrance (if used)
C) Budget
D) Expenditure
E) None of the foregoing

Question 19

Encumbrances (used voluntarily) are not entered in the accounting records of a governmental entity's:

A) Capital projects fund
B) Special revenue fund
C) General fund
D) Enterprise fund

Question 20

Which of the following terms applicable to governmental entity accounting refers to an actual cost rather than to an estimate?

A) Expenditure
B) Appropriation
C) Budget
D) Encumbrance
E) None of the foregoing

Question 21

Wages that have been earned by the employees of a governmental entity, but not yet paid, are recorded in the general fund as:

A) An appropriation
B) An encumbrance
C) An expenditure
D) An expense

Question 22

Which of the following increases the unreserved and undesignated fund balance of a governmental entity's general fund at the end of a fiscal year?

A) Appropriations are less than expenditures and fund balance reserved for encumbrances
B) Estimated revenues are less than expenditures and encumbrances
C) Appropriations are more than estimated revenues
D) Revenues are more than expenditures and encumbrances

Question 23

In preparing the general fund budget of the City of Wacko for the forthcoming fiscal year, the city council appropriated an amount larger than expected revenues. This action of the council will result in:

A) An increase in encumbrances by the end of that fiscal year
B) A bank overdraft during that fiscal year
C) A necessity for compensatory offsetting action in the debt service fund
D) A debit to the Budgetary Fund Balance ledger account

Question 24

Which of the following ledger accounts is a budgetary account in governmental entity accounting?

A) Fund Balance Reserved for Inventory of Supplies
B) Fund Balance Reserved for Encumbrances
C) Appropriations
D) Allowance for Uncollectible Delinquent Taxes

Question 25

The current accounting standards for state and local governmental entities are developed by the:

A) Governmental Accounting Standards Board
B) Financial Accounting Standards Board
C) American Institute of Certified Public Accountants
D) National Council on Governmental Accounting

Question 26

The following journal entry (explanation omitted) was in the general journal for the General Fund of Wabash County:
The foregoing journal entry indicates that:

A) Taxes have become uncollectible
B) Taxes have become delinquent
C) Taxes were misclassified in a previous journal entry
D) Delinquent taxes are doubtful of collection and current taxes are written off

Question 27

The purpose of a governmental entity's general fund's Fund Balance Reserved for Inventory of Supplies ledger account is to:

A) Earmark resources for replacement of supplies
B) Provide for outstanding purchase orders for supplies
C) Prevent improper appropriation of the fund balance to finance a deficit budget
D) Accomplish none of the above

Question 28

In a governmental entity's general fund, are budgeted amounts included in the:

A)
B)
C)
D)

Question 29

The June 30, 2006, trial balance of Oberon County General Fund included the following balances (there were no estimated or actual other financing sources or other financing uses):
Prepare a working paper to compute the balance of the Unreserved and Undesignated Fund Balance ledger account after the June 30, 2006, closing entries have been posted.

Question 30

Following is the trial balance of the Town of Granville General Fund on June 30, 2006:
a. Prepare closing entries for the Town of Granville General Fund on June 30, 2006. Omit explanations.
b. Prepare a three-column ledger account for the Unreserved and Undesignated Fund Balance account of the Town of Granville General Fund, and post the journal entries in a above to the account.

Question 31

During the months of June and July, 2006, the City of Earhart General Fund had the following journal entries (explanations omitted) pertaining to a purchase order for goods:
Prepare explanations for the three journal entries of the City of Earhart General Fund.

Question 32

The inexperienced accountant for the Village of Crossley prepared the following journal entries in the general fund:
Prepare journal entries to correct the errors in the Village of Crossley General Fund. Include a brief explanation for each journal entry. (Do not reverse the incorrect entries.)

Question 33

Selected ledger account balances from the June 30, 2006, preclosing trial balance of the Town of Olivos General Fund were as follows:
Prepare closing entries for the Town of Washburn General Fund on June 30, 2006. Omit explanations for the closing entries.

Question 34

Why, in your opinion, does the general fund of a governmental entity differentiate other financing sources from revenues and other financing uses from expenditures? Explain.