Deck 3: Governmental Operating Statement Accounts; Budgetary Accounting

Question 1

Other financing sources increase fund balance in the same manner as revenues.

Answer 1

True
Explanation: Other financing sources include items such as interfund transfers and debt issue proceeds. They increase fund balance when closed.

Question 2

Interfund transfers and debt issue proceeds received by a governmental fund should be recorded as other financing sources.

Answer 2

True
Explanation: GASB standards specifically classify these items as other financing sources. Revenue is simply defined as increases in a fund's financial resources other than from interfund transfers and debt proceeds.

Question 3

GASB standards require that all state and local governments present a statement of revenues,expenditures,and changes in fund balances-budget and actual for the General Fund,and major special revenue funds for which annual budgets have been legally adopted.

Answer 3

False
Explanation: A budgetary comparison schedule is required supplementary information for the General Fund and major special revenue funds that have legally adopted budgets and should be placed immediately after the notes to the financial statements. This schedule may optionally take the form of the statement of revenues, expenditures, and changes in fund balances budget and actual and be included with the basic financial statements.

Question 4

Available means that a revenue or other financing source is expected to be collected during the current fiscal period or within one month of the fiscal year end.

Question 5

Depreciation expense for assets that essentially benefit all functions,such as the city hall,may be reported as a separate line item or on the same line as the General Government or similar function.

Question 6

Fund-based financial statements are intended to provide detailed financial information about the governmental,business-type,and fiduciary activities of the primary government.

Question 7

An encumbrance represents the estimated future liability for goods or services resulting from placing a purchase order or signing a contract.

Question 8

Budgetary accounts used in the General Fund include Estimated Revenues,Estimated Other Financing Sources,Appropriations,Estimated Other Financing Uses,and Encumbrances.

Question 9

Which of the following statements is not a true statement about expenses that are directly related to a government function or program?

A) They are reported in the government-wide statement of activities at the government-wide level.
B) They include expenses that are specifically associated with a function or program.
C) They include interest on general long-term liabilities.
D) They include depreciation expense on capital assets that are clearly identified with a function or program.

Question 10

Government-wide financial statements include financial information presented for the General Fund and major governmental funds.

Question 11

Revenues and expenditures reported in the budgetary comparison schedule must be reported on the budget basis in the "budget" column and on the GAAP basis in the "actual" column.

Question 12

All decreases in fund financial resources,other than for repayment of fund liabilities,are termed "expenditures."

Question 13

Which of the following best describes the recommended format for the government-wide statement of activities?

A) Program revenues minus expenses minus other revenues and expenses equals change in net position.
B) Program revenues plus general revenues minus expenses equals change in net position.
C) Program revenues minus expenses plus general revenues equals change in net position.
D) Expenses minus program revenues plus general revenues equals change in net position.

Question 14

Financial information for governmental funds must be reported on the economic resources measurement focus.

Question 15

All purchases of goods and services and all interfund transfers of the General Fund are recorded as Expenditures.

Question 16

Program revenues are distinguished from general revenues on the government-wide statement of activities under GASB standards.

Question 17

An allotment may be described as an internal allocation of funds on a periodic basis usually agreed upon by the department heads and the chief executive.

Question 18

Aggregate financial information for all special revenue funds is reported in a single separate column of the governmental funds statement of revenues,expenditures,and changes in fund balances.

Question 19

"Available appropriation" is calculated as the difference between appropriations and the sum of expenditures and encumbrances.

Question 20

All encumbrances must be closed at year-end.

Question 21

Under the modified accrual basis of accounting used by the General Fund,financial resources are considered available if they will be received in the current period or within

A) 60 days after year-end.
B) 90 days after year-end.
C) One year.
D) The time after year-end defined by each individual government.

Question 22

Which of the following are reported in the functions/programs section of the statement of activities at the government-wide level where they reduce the net expense of each function or program or produce a net revenue?

A) General revenues.
B) Program revenues.
C) Indirect revenues.
D) Extraordinary items.

Question 23

Which of the following items would not appear in a statement of revenues,expenditures,and changes in fund balances prepared for a governmental fund?

A) Depreciation expense.
B) Interfund transfers in.
C) Revenues from property taxes.
D) Expenditures for employee salaries.

Question 24

A statement of revenues,expenditures,and changes in fund balances-budget and actual is

A) Required by GAAP for the General Fund,special revenue funds,and all other governmental fund types for which an annual budget has been adopted.
B) Required by GAAP for internal management reports only; not permitted for external financial reporting.
C) Required by GAAP for all governmental fund types.
D) Optional under GAAP,as long as a budgetary comparison schedule is presented.

Question 25

The account "Interfund Transfers In" would be classified in a General Fund statement of revenues,expenditures,and changes in fund balance as a(an)

A) Revenue.
B) Other financing use.
C) Other financing source.
D) Current liability.

Question 26

Under which basis of accounting for a government should revenues be recognized in the period when they are measurable and available?

A) Accrual basis: No; Modified accrual basis: No
B) Accrual basis: Yes; Modified accrual basis: No
C) Accrual basis: Yes; Modified accrual basis: Yes
D) Accrual basis: No; Modified accrual basis: Yes

Question 27

Which of the following is true regarding other financing sources and other financing uses?

A) Both must be reported separately from revenues and expenditures in the statement of revenues,expenditures,and changes in fund balances.
B) These terms are used to distinguish program revenues or expenses from general revenues or expenses.
C) These terms are used for minor revenue or expenditure items that are peripheral to the government's mission.
D) Other financing sources are equivalent to gains and other financing uses are equivalent to losses.

Question 28

Which of the following accounts of a government is credited when a purchase order is approved?

A) Encumbrances.
B) Encumbrances Outstanding.
C) Vouchers Payable.
D) Appropriations.

Question 29

Which of the following is not a budgetary account?

A) Encumbrances.
B) Encumbrances Outstanding.
C) Estimated Revenues.
D) Appropriations.

Question 30

Extraordinary items and special items are reported

A) With normal recurring general revenues.
B) As separate line items in the Function/Programs section of the statement of activities.
C) As separate line items below General Revenues in the statement of activities.
D) As separate line items above General Revenues.

Question 31

The Expenditures control account of a government is debited when

A) The budget is recorded.
B) Supplies are ordered.
C) Supplies previously encumbered are received.
D) The invoice is paid.

Question 32

When the budget for the General Fund is recorded,the required journal entry will include

A) A credit to Estimated Revenues.
B) A debit to Encumbrances.
C) A credit to Appropriations.
D) A credit to Fund Balance.

Question 33

Which of the following accounts is a budgetary account of a governmental fund?

A) Encumbrances Outstanding.
B) Estimated Other Financing Uses.
C) Expenditures.
D) Other Financing Sources.

Question 34

The Estimated Revenues control account of a government is credited when

A) The budgetary accounts are closed: Yes; Revenues are recorded: No
B) The budgetary accounts are closed: No; Revenues are recorded: No
C) The budgetary accounts are closed: No; Revenues are recorded: Yes
D) The budgetary accounts are closed: Yes; Revenues are recorded: Yes

Question 35

The expenditure classification "Public Safety" is an example of which of the following types of classifications?

A) Activity.
B) Function.
C) Character.
D) Object.

Question 36

The expenditure classification "City Attorney" is an example of which of the following types of classification?

A) Function.
B) Organization unit.
C) Character.
D) Program.

Question 37

Which of the following would be classified as a general revenue?

A) Parking meter fees.
B) Special assessment charges for snow removal.
C) Library fines.
D) Fuel taxes earmarked for maintenance of roads and bridges.

Question 38

When supplies ordered for use in an activity accounted for in the General Fund are received at an actual price that is more than the estimated price on the purchase order,the Encumbrance account is

A) Debited for the estimated price on the purchase order.
B) Credited for the estimated price on the purchase order.
C) Debited for the actual price for the supplies received.
D) Credited for the actual price for the supplies received.

Question 39

When the budget of a government is recorded and Appropriations exceeds Estimated Revenues,the Budgetary Fund Balance account is

A) Credited at the beginning of the year and debited at the end of the year.
B) Credited at the beginning of the year and no entry is made at the end of the year.
C) Debited at the beginning of the year and no entry is made at the end of the year.
D) Debited at the beginning of the year and credited at the end of the year.

Question 40

When the budget of a government is adopted and Estimated Revenues exceed Appropriations,the excess is

A) Credited to Budgetary Fund Balance.
B) Debited to Budgetary Fund Balance.
C) Debited to Encumbrances Outstanding.
D) Credited to Encumbrances Outstanding.

Question 41

When equipment that is to be used by an activity accounted for by the General Fund of a government is received,it should be recorded in the General Fund as a(an)

A) Capital Asset.
B) Appropriation.
C) Encumbrances.
D) Expenditure.

Question 42

Which of the following statements is true regarding the required disclosure of budgetary information?

A) All budgetary disclosures should be presented in the notes to the financial statements.
B) There is one specific format for presenting the budgetary comparison statement.
C) Budgetary comparisons are required supplementary information (RSI).
D) The budgetary reconciliation must focus on the operating statement,but not the statement of position.

Question 43

Which of the following neither increases nor decreases fund balance of the General Fund during the current period?

A) Deferred revenues.
B) Revenues.
C) Expenditures.
D) Other financing sources.

Question 44

For what funds do budgetary comparisons need to be presented in connection with the basic financial statements?

A) General Fund.
B) General Fund and all major funds.
C) All governmental funds with legally adopted annual budgets.
D) General Fund and major special revenue funds for which a budget is legally adopted.

Question 45

The journal entry to record budgeted revenues will include

A) A debit to Estimated Revenues.
B) A credit to Estimated Revenues.
C) A debit to Revenues Receivable.
D) Only a memorandum entry is necessary.

Question 46

A liability is recorded in governmental funds when:

A) Goods or services are ordered.
B) Goods or services are received and the invoice is vouchered.
C) Invoices are paid.
D) The appropriation is reduced.

Question 47

Under the modified accrual basis of accounting,expenditures generally are not recognized until

A) They are paid in cash.
B) An obligation is incurred that will be paid from currently available financial resources.
C) Goods or services are ordered.
D) They are approved by the legislative body.

Question 48

Fund balance may be classified as all of the following except

A) Restricted.
B) Committed.
C) Uncommitted.
D) Assigned.

Question 49

Which of the following terms refers to an actual cost rather than an estimate?

A) Budget.
B) Encumbrance.
C) Expenditure.
D) Appropriation.

Question 50

Which of the following steps in the acquisition of goods and services by an activity accounted for by the General Fund generally occurs first?

A) Disbursement.
B) Appropriation.
C) Encumbrance.
D) Expenditure.

Question 51

Comparisons of budgeted versus actual revenues and expenditures are

A) Required by GAAP for the General Fund and major special revenue funds for which an annual budget has been legally adopted.
B) Required by GAAP for all governmental fund types.
C) Required by generally accepted accounting principles (GAAP)for internal management reports only; not permitted for external financial reporting.
D) Optional under GASB standards for all funds.

Question 52

Which of the following will increase the fund balance of a government at the end of the fiscal year?

A) The sum of revenues and other financing sources is more than the sum of expenditures and other financing uses.
B) Expenditures are more than the difference between revenues and the excess of other financing sources over other financing uses.
C) Revenues are more than the sum of expenditures,other financing sources,and other financing uses.
D) The sum of fund balance,revenues,and other financing sources is more than the sum of expenditures and other financing uses.

Question 53

When the budget for the General Fund is recorded,the required journal entry will include

A) A credit to Estimated Revenues.
B) A debit to Encumbrances.
C) A debit to Appropriations.
D) Either a debit or credit to Budgetary Fund Balance,as appropriate.

Question 54

The County Commission of Benton County adopted its General Fund budget for the year ending June 30,comprising estimated revenues of $3,200,000 and appropriations of $2,900,000.Benton County utilizes the budgetary accounts required by GASB standards.The budgeted excess of estimated revenues over appropriations will be recorded as

A) A credit to Surplus Revenues,$300,000.
B) A debit to Estimated Excess Revenues,$300,000.
C) A credit to Budgetary Fund Balance,$300,000.
D) A memorandum entry only.

Question 55

Which of the following fund types uses the current financial resources measurement focus and modified accrual basis of accounting?

A) Enterprise fund.
B) Special revenue fund.
C) Investment trust fund.
D) Pension trust fund.

Question 56

Which of the following fund types is most likely to have a legally adopted annual budget?

A) Permanent fund.
B) General Fund.
C) Pension trust fund.
D) Capital projects fund.

Question 57

When computers are ordered by the mayor's office,the purchase order should be recorded in the General Fund as a debit to:

A) Encumbrances.
B) Equipment.
C) Expenditures.
D) Appropriations.

Question 58

The County Commission of Benton County adopted its General Fund budget for the year ending June 30,comprising estimated revenues of $3,200,000 and appropriations of $2,900,000.Benton County utilizes the budgetary accounts required by GASB standards.The journal entry to record budgeted appropriations will include

A) A credit to Appropriations,$2,900,000.
B) A credit to Encumbrances,$2,900,000.
C) A debit to Estimated Expenditures,$2,900,000.
D) A credit to Budgetary Fund Balance,$2,900,000.

Question 59

The Encumbrances control account of a city is decreased when

A) Goods are ordered: No; Goods are received: No
B) Goods are ordered: Yes; Goods are received: No
C) Goods are ordered: Yes; Goods are received: Yes
D) Goods are ordered: No; Goods are received: Yes

Question 60

The expenditure classification "Current Expenditures" is an example of which of the following types of classifications?

A) Activity.
B) Character.
C) Function.
D) Object.

Question 61

Explain why governmental fund financial statements are insufficient for users seeking information about operational accountability.

Question 62

The Appropriations account of a governmental fund is credited when

A) The budgetary accounts are closed.
B) The budget is recorded.
C) Supplies are purchased.
D) Expenditures are recorded.

Question 63

Distinguish between the Encumbrances account and the Encumbrances Outstanding account.

Question 64

The Board of Aldermen of Fitchburg approved the appropriations budget for its General Fund for the year ending December 31,as shown below.
1)Explain the legal significance of an appropriation and why auditors engaged for a financial and compliance audit need to know the meaning of the term.
2)It is illegal for a government to spend money for any purpose unless a valid appropriation for that purpose exists.Does this legal rule assure good financial management for each government? Why or why not?

Question 65

The Charleston city council approved and adopted its budget for FY 2014.The budget for the General Fund contained the following amounts:
When the General Fund budget for FY 2014 is recorded,indicate whether each of the following accounts should be debited (D),credited (C),or is not affected (N).
_____ 1.Estimated revenues
_____ 2.Budgetary Fund balance
_____ 3.Appropriations
_____ 4.Estimated other financing uses
_____ 5.Expenditures

Question 66

If supplies that were ordered by a department financed by the General Fund are received at an actual price that is less than the estimated price on the purchase order,the department's available balance of appropriations for supplies will be

A) Decreased.
B) Increased.
C) Unaffected.
D) Either a or b,depending on the department's specific budgetary control procedures.

Question 67

The Expenditures control account of a government is credited when:

A) Supplies are ordered.
B) Supplies previously encumbered are received.
C) The budget is recorded.
D) Temporary accounts are closed out at the end of the year.

Question 68

What benefits do financial statement users derive from the net (expense)revenue format used for the government-wide statement of activities?

Question 69

Why is depreciation expense typically reported as a direct expense in the government-wide statement of activities?

Question 70

An interfund transfer of $30,000 was made from the General Fund to the debt service fund.(No previous entries were made regarding this transaction).When this event occurred,indicate whether each of the following accounts of the General Fund should be debited (D),credited (C),or is not affected (N).
_____ 1.Interfund Loan to Debt Service Fund-Noncurrent.
_____ 2.Due from Debt Service Fund.
_____ 3.Cash.
_____ 4.Other Financing Uses-Interfund Transfers Out.
_____ 5.Encumbrances.

Question 71

The revenue classifications recommended by GASB standards are listed below:
A.Taxes
B.Licenses and permits
C.Intergovernmental revenue
D.Charges for services
E.Fines and forfeits
F.Miscellaneous
For each revenue source listed below indicate its correct classification by placing the appropriate letter in the blank space next to the item.
____ 1.Capital grant received by a city from a state
____ 2.Property tax levied by city
____ 3.Library use fees
____ 4.Occupational licenses
____ 5.Loitering fine

Question 72

If a state law requires that local governments prepare General Fund and special revenue fund budgets on a basis that differs from the basis of accounting required by generally accepted accounting principles (GAAP)

A) The actual amounts in the budgetary comparison schedule should be reported using the government's budgetary basis.
B) The actual amounts in the budgetary comparison schedule should be reported on the GAAP basis.
C) Both the budgeted and actual amounts in the budgetary comparison schedule prepared as part of the required supplementary information (RSI)should be reported on the GAAP basis; a separate budget-basis comparison schedule should be prepared for the appropriate state oversight body.
D) Only a budgetary comparison schedule prepared for the appropriate state oversight body is required.

Question 73

GASB standards suggest the following classification scheme for expenditures:
A.Function
B.Program
C.Organization unit
D.Activity
E.Character
F.Object
For each of the following expenditure items,indicate its correct classification by placing the appropriate letter in the blank space next to the item.
____ 1.Solid waste collection-residential
____ 2.City clerk
____ 3.Supplies
____ 4.Transportation
____ 5.Health and welfare

Question 74

The City of Charleston recorded its FY 2014 property tax levy in the general fund.It was estimated that $6,000 would be uncollectible.When the tax levy is recorded,indicate whether each of the following accounts of the General Fund should be debited (D),credited (C),or is not affected (N).
_____ 1.Taxes Receivable Current
_____ 2.Bad Debt Expense
_____ 3.Estimated Uncollectible Current Taxes
_____ 4.Revenues
_____ 5.Estimated revenues

Question 75

Define the term revenue and distinguish between that term and other financing sources.

Question 76

When encumbrances are recognized at the time purchase orders are issued,indicate whether each of the following accounts of the General Fund should be debited (D),credited (C),or is not affected (N).
_____ 1.Encumbrances
_____ 2.Encumbrances Outstanding
_____ 3.Expenditures
_____ 4.Vouchers payable
_____ 5.Purchases