Deck 19: An Introduction to Accounting for State and Local Governmental Units

Question 1

Government-wide financial statements exclude the

A)general fund.
B)fiduciary funds.
C)proprietary funds.
D)special revenue funds.

Answer 1

B

Question 2

Approved or authorized expenditures that provide legislative control over the expenditure budget are referred to as

A)appropriations.
B)allotments.
C)allocations.
D)encumbrances.

Answer 2

A

Question 3

A fund

A)has its own accounting equation.
B)has consolidated financial statements for all funds.
C)must follow GAAS.
D)always uses modified accrual accounting.

Answer 3

A

Question 4

The key focus of government fund accounting concerns

A)capital expenditures.
B)intergovernmental transfers from the general fund.
C)income measurement.
D)the current ability to provide and fund services and goods.

Question 5

The modified accrual basis of accounting is used for

A)governmental funds.
B)proprietary funds.
C)internal service funds.
D)enterprise funds.

Question 6

A comprehensive annual financial report has the following three major sections:

A)introductory,financial,and management's discussion and analysis.
B)introductory,financial,and statistical.
C)transmittal,financial,and statistical.
D)transmittal,financial,and management's discussion and analysis.

Question 7

When examining revenue transactions,which of the following transactions is classified as an exchange transaction?

A)When a homeowner pays property taxes
B)When a university receives a federal grant that mandates a certain type of research activity
C)When an aquatic center receives cash for a group swim
D)When an employer deducts money for state tax withholding

Question 8

Governmental accounting differs from corporate financial accounting primarily because

A)the size of the government and the various levels would make it unreasonable to use corporate GAAP.
B)governments lack a profit motive and must focus on accountability to the public they serve.
C)the government has no stakeholders who require financial reporting.
D)the government has too many types of organizations to use one type of corporate GAAP.

Question 9

Government-wide financial statements include a

A)balance sheet,an income statement,and a statement of cash flows.
B)statement of net assets,a statement of activities,and a statement of cash flows.
C)statement of net position and a statement of activities.
D)statement of activities and a statement of cash flows.

Question 10

Centralized data processing,central motor pools and garages,centralized risk-financing activities,and central stores typically would be accounted for using what type of fund?

A)An agency fund
B)An enterprise fund
C)An internal service fund
D)A trust fund

Question 11

Under the modified accrual basis of accounting,revenues are recognized in the period

A)when the relevant service is done.
B)when they are collected.
C)when the paying entity is billed.
D)when they become both measurable and available.

Question 12

Which type of fund is used to account for a government activity that sells goods or services either solely or almost solely to external customers?

A)A temporary fund
B)A general fund
C)An agency fund
D)An enterprise fund

Question 13

Which pronouncements have the highest level of authority for state and local governments?

A)Financial Accounting Standards Board Statements
B)GASB Statements
C)Consensus Positions of GASB Emerging Issues Task Force
D)GASB Technical Bulletins

Question 14

What basis of accounting is used to prepare Government-wide financial statements?

A)Modified accrual basis
B)Accrual basis
C)Cash basis
D)Fiduciary basis

Question 15

The accounting equation for an agency fund is

A)Current assets - Current liabilities = Fund Balance.
B)Assets - Liabilities = Equity.
C)Assets = Equity + Liabilities.
D)Assets = Liabilities.

Question 16

Governmental fund financial statements are prepared on the ________ basis of accounting.Proprietary fund financial statements are prepared on the ________ basis of accounting.

A)modified accrual; modified accrual
B)accrual; fund
C)modified accrual; accrual
D)blended; discrete

Question 17

What funds are reported in Government-wide financial statements?

A)Governmental only
B)Proprietary only
C)Governmental and proprietary
D)Governmental,proprietary and fiduciary

Question 18

The accounting equation for a governmental fund is

A)Assets = Liabilities + Equity.
B)Current assets + Noncurrent assets - Current liabilities - Noncurrent liabilities = Net position.
C)Current assets - Current liabilities = Fund Balance.
D)Assets = Liabilities + Fund Balance.

Question 19

Internal Service Funds differ from Enterprise Funds because Internal Service Funds

A)are a proprietary fund.
B)are intended to show a profit.
C)charge for their services.
D)provide goods and services primarily to other government agencies.

Question 20

Which fund would most likely report depreciation expense?

A)A special revenue fund
B)An enterprise fund
C)A capital projects fund
D)A debt service fund

Question 22

The following are transactions for the city of Salem.
a.Incurred salaries of $44,000 to be paid next month.
b.Tax bills totaling $500,000 mailed to city residents.
c.Paid salaries above.
d.Computer equipment received in the amount of $11,000,to be paid in 30 days.
Required:
Analyze the above transactions by using the accounting equation for a proprietary fund.

Question 23

For each of the following events or transactions,identify the type of fund(s)that will be affected.
1.A central purchasing department was established to handle all the purchasing needs of a county government.
2.A county government levies sales taxes restricted as to use for job creation.
3.A county government receives a large contribution specifying that income from the contribution be distributed each year to the county zoo.The principal is to remain intact indefinitely.
4.A city government paid construction costs of $12,000 on city hall building.
5.A city government paid general operating costs.

Question 24

The following are transactions for the city of Springfield.
a.Borrowed $20,000 by issuing a three-month,5% note.
b.Paid $4,000 for equipment.
c.Services for $1,000 were billed and collected.
d.Year-end accrual of 3 months interest on note in (a).
Required:
Analyze the above transactions by using the accounting equation for a governmental fund.

Question 25

Identify the fund type of the fund being described.
1.A fund used to account for the external portion of investment pools reported by the sponsoring government.
2.A fund used to account for resources that are legally restricted to use of the earnings only for government programs or activities.
3.A fund used to account for resources used to pay for a new stadium.
4.A fund used to account for local taxes withheld on behalf of another county.
5.A fund used to account for resources used to pay interest on a long-term bond issue.
6.A fund used to account for specific revenues that are restricted in use.
7.A fund used to account for the local swimming pool that is owned by the city and used by residents for a membership fee.
8.A fund used to account for the centralized data processing services of the state government.
9.A fund used to account for all funds except those required to be accounted for in another fund.
10.A fund that accounts for government pension plans if the government is the trustee.

Question 26

For each of the following transactions that could be introduced to fund the maintenance of the city park,state the type of fund(s)that would be affected.Assume that a capital project fund will be used to handle any long-term improvements or additions to the park.
1.Resources used to make 60 monthly installments on outstanding long-term debt.
2.Implemented a tax on alcohol purchases specifically designated for the park upkeep.
3.A local sports organization that uses the park raises funds and donates the money,stating that the principal may not be spent,but designating earnings to the park upkeep.
4.City council approves the funds from existing resources for the upkeep required in the upcoming year.
5.Resources used only to pay principal and interest of debt outstanding to finance park maintenance.

Question 27

General governmental activities provide goods and services to citizens without regard to their ability to pay.

Question 28

The following are transactions for the city of Clinton.
a.Borrowed $100,000 by issuing a one-year,5% note,three months before year-end.
b.Accrued interest at year end,but did not pay the interest at year end.
c.Charges for services rendered of $2,500 were billed and collected immediately.
d.Incurred salary costs of $5,000,unpaid.
Required:
Analyze the above transactions by using the accounting equation for a proprietary fund.

Question 29

For each of the following events or transactions,identify the fund or funds that will be affected.
1.A city government provides electricity services to residents for a fee.
2.A printing shop was established to handle the printing needs of a county government.
3.A philanthropist donates $1 million for zoo maintenance,only earnings can be used.
4.A city government collects sales taxes on behalf of the state and for some of its counties and municipalities.
5.Interest is paid on a state government's general obligation bonds.

Question 30

The following are transactions for the city of Franklin.
a.Borrowed $20,000 by issuing a two-year note.
b.Purchased equipment for $6,000 cash.
c.Licenses for $700 were billed on account.
d.Accrued employee salary costs of $7,000.
e.Depreciation expense on equipment for year,$1,000.
Required:
Analyze the above transactions by using the accounting equation for a governmental fund.

Question 31

The following are transactions for the city of Springfield.
a.Borrowed $20,000 by issuing a three-month,5% note.
b.Paid $4,000 for equipment.
c.Services for $1,000 were billed and collected.
d.Year-end accrual of 3 months interest on note in (a).
Required:
Analyze the above transactions by using the accounting equation for a proprietary fund.

Question 32

The following are transactions for the city of Salem.
a.Incurred salaries of $44,000 to be paid next month.
b.Tax bills totaling $500,000 mailed to city residents.
c.Paid salaries above.
d.Computer equipment received in the amount of $11,000,to be paid in 30 days.
Required:
Analyze the above transactions by using the accounting equation for a governmental fund.

Question 34

The following are transactions for the city of Clinton.
a.Borrowed $100,000 by issuing a one-year,5% note,three months before year-end.
b.Accrued interest at year end,but did not pay the interest at year end.
c.Charges for services rendered of $2,500 were billed and collected immediately.
d.Incurred salary costs of $5,000,unpaid.
Required:
Analyze the above transactions by using the accounting equation for a governmental fund.

Question 35

For each of the following events or transactions,identify the fund or funds that will be affected.
1.A city government charges a fee for the use of the municipal golf course.
2.Interest is paid on state government revenue bonds.
3.A motor pool was established to handle the vehicle needs of a county government.
4.Paid salaries for general governmental employees.
5.Accrued salaries for general governmental employees.

Question 36

The following are transactions for the city of Greenville.
a.Issued $50,000 10-year bonds.
b.Used $30,000 of the cash to buy a truck.
c.Sold the truck that was replaced which had cost $28,000,for $2,000.The old truck was fully depreciated.Residual value is zero.
d.Computed depreciation on the new truck for the year of $6,000.
Required:
Analyze the above transactions by using the accounting equation for a proprietary fund.

Question 37

The following are transactions for the city of Greenville.
a.Issued $50,000 10-year bonds.
b.Used $30,000 of the cash to buy a truck.
c.Sold the truck that was replaced which had cost $28,000,for $2,000.The old truck was fully depreciated.Residual value is zero.
d.Computed depreciation on the new truck for the year of $6,000.
Required:
Analyze the above transactions by using the accounting equation for a governmental fund.

Question 38

The following are transactions for the city of Franklin.
a.Borrowed $20,000 by issuing a two-year note.
b.Purchased equipment for $6,000 cash.
c.Licenses for $700 were billed on account.
d.Accrued employee salary costs of $7,000.
e.Depreciation expense on equipment for year,$1,000.
Required:
Analyze the above transactions by using the accounting equation for a proprietary fund.

Question 39

Government business type activities provide services to users for fees that are intended to recover all or a portion of the costs of providing the services.

Question 41

Enterprise funds are used to account for business-type activities that serve primarily internal customers.

Question 42

Enterprise funds and Internal service funds are Fiduciary Fund types.

Question 43

Appropriations are approved or authorized expenditures.

Question 44

For government transactions derived tax revenues are recognized when resources should be available when using accrual accounting.

Question 45

Capital projects funds and debt service funds are governmental fund types.

Question 46

The accounting equation for an agency fund is Assets = Liabilities.

Question 47

Proprietary funds report revenues and expenses using a modified-accrual basis of accounting.

Question 48

Debt service fund accounts for resources to be used to pay principal and interest for general short-term debt.

Question 49

The governmental fund accounting equation is Current Assets - Current Liabilities = Fund Balance.

Question 50

Permanent funds report resources whose use is permanently restricted.