Deck 11: Accounting for State and Local Governments, part I

Question 1

The Governmental Accounting Standards Board (GASB)requires state and local governments to prepare two sets of financial statements which include:

A)Fund financial statements and proprietary financial statements.
B)Proprietary financial statements and fund- based financial statements.
C)Fund financial statements and government-wide financial statements.
D)GAAP-based financial statements and government-wide financial statements.
E)Statement of net assets and statement of cash flows.

Answer 1

C

Question 2

Which of the following is a fiduciary fund?

A)Pension trust fund.
B)Debt service fund.
C)Permanent fund.
D)Enterprise fund.
E)Capital projects fund.

Answer 2

A

Question 3

A city received a grant of $5,000,000 from a private agency.The money was to be used to build a new city library.In which fund should the money be recorded for the governmental fund financial statements?

A)The General Fund.
B)An Expendable Trust Fund.
C)A Capital Projects Fund.
D)An Agency Fund.
E)A Permanent Fund.

Answer 3

C

Question 4

Bay City received a federal grant to provide health care services to low income mothers and children.When should the revenues be recognized?

A)As health care services are provided.
B)When the awarding of the grant is announced.
C)When the grant money is received.
D)At the end of Bay City's fiscal year.
E)When the grant money is receivable.

Question 5

What are the broad classifications of funds for a governmental entity such as a city?

A)General,governmental,and trust funds.
B)Governmental,proprietary,and fiduciary funds.
C)Revenue,trust,and governmental funds.
D)Enterprise,revenue,and fiduciary funds.
E)Governmental,agency,and enterprise funds.

Question 6

Which group of government financial statements reports all revenues and all costs as well as all assets and liabilities of the governmental entity?

A)GAAP-based Financial Statements
B)Fund financial Statements.
C)Governmental fund financial statements.
D)Government-wide financial statements.
E)General fund financial statements.

Question 7

Proprietary funds are

A)Funds used to account for the activities of a government that are carried out primarily to provide services to citizens.
B)Funds used to account for a government's ongoing activities that are similar to those operated by for-profit organizations.
C)Funds used to account for monies held by the government in a trustee or agency capacity.
D)Funds used to account for all financial resources except those required to be accounted for in another fund.
E)Funds used to account for resources that are restricted or committed for a specific purpose other than debt payments or capital projects.

Question 8

When a city received a county grant designated for providing food and other assistance to the homeless,the money should have been recorded in

A)The General Fund.
B)An Expendable Trust Fund.
C)A Capital Projects Fund.
D)An Agency Fund.
E)A Special Revenue Fund.

Question 9

Which group of financial statements is prepared using the "modified accrual accounting" approach?

A)GAAP-based financial statements.
B)Governmental fund financial statements.
C)Cost-based financial statements.
D)Government-wide financial statements.
E)General-purpose financial statements.

Question 10

Fiduciary funds are

A)Funds used to account for the activities of a government that are carried out primarily to provide services to citizens.
B)Funds used to account for a government's ongoing organizations and activities that are similar to those operated by for-profit organizations.
C)Funds used to account for monies held by the government in a trustee or agency capacity.
D)Funds used to account for all financial resources except those required to be accounted for in another fund.
E)Funds used to account for resources that are restricted or committed for a specific purpose other than debt payments or capital projects.

Question 11

Governmental funds are

A)Funds used to account for the activities of a government that are carried out primarily to provide services to citizens.
B)Funds used to account for a government's ongoing organizations and activities that are similar to those operated by for-profit organizations.
C)Funds used to account for monies held by the government in a trustee or agency capacity.
D)Funds used to account for all financial resources except those required to be accounted for in another fund.
E)Funds used to account for resources that are restricted or committed for a specific purpose other than debt payments or capital projects.

Question 12

The term "current financial resources" refers to

A)Those assets that can quickly be converted into cash.
B)Assets that are available to be used for current expenditures.
C)The government's current assets and current liabilities.
D)The current value of all net assets owned by the governmental unit.
E)Financial resources used to provide electricity to local citizens.

Question 13

Trapper City issued 30-year bonds for the purpose of building a new City Hall.The proceeds of the bonds are deposited in the General Fund.For the governmental fund financial statements,in what fund will Bonds Payable appear?

A)General fund.
B)Internal service fund.
C)Permanent fund.
D)Debt service fund.
E)Bonds Payable do not appear in governmental fund financial statements.

Question 14

Under modified accrual accounting,when should an expenditure be recorded to recognize interest on long-term debt?

A)At the end of each accounting period.
B)When payment is due within one fiscal year.
C)When it reduces current financial resources.
D)When cash is available to pay the interest.
E)When the interest is incurred.

Question 15

Revenue from property taxes should be recorded in the General Fund

A)When received.
B)When there is an enforceable legal claim.
C)When they are available for recognition.
D)In the period for which the resulting resources are required or permitted to be used.
E)In the period in which the tax bills are mailed.

Question 16

Special Revenue funds are

A)Funds used to account for the activities of a government that are carried out primarily to provide services to citizens.
B)Funds used to account for a government's ongoing organizations and activities that are similar to those operated by for-profit organizations.
C)Funds used to account for monies held by the government in a trustee or agency capacity.
D)Funds used to account for all financial resources except those required to be accounted for in another fund.
E)Funds used to account for resources that are restricted or committed for a specific purpose other than debt payments or capital projects.

Question 17

Which of the following is a governmental fund?

A)Enterprise fund.
B)Internal service fund.
C)Permanent fund.
D)Investment trust fund.
E)Agency fund.

Question 18

Under modified accrual accounting,revenues should be recognized when they are

A)Collected.
B)Realizable and estimable.
C)Reasonably estimable.
D)Measurable and available to be used.
E)Earned and collected.

Question 19

Which of the following funds is most likely created with an endowed gift?

A)Enterprise Fund.
B)Internal Service Fund.
C)Debt Service Fund.
D)Capital Projects Fund.
E)Permanent Fund.

Question 20

Government-wide financial statements benefit users by allowing them to do all of the following except:

A)Determine whether the government's overall financial position improved or deteriorated during the reporting period.
B)Understand the cost of providing services to the citizenry.
C)See how the government finances its programs.
D)Identify the government official responsible for managing each fund.
E)Understand the extent to which the government has invested in capital assets.

Question 21

Which of the following statements is true regarding governmental fund financial statements?

A)Governmental fund financial statements report a government's activities and financial position as a whole.
B)Governmental fund financial statements should tell the amount spent this year on such services as public safety,education,health and sanitation,and the construction of a new road.
C)Governmental fund financial statements utilize the accrual basis of accounting much like any for-profit entity.
D)Governmental fund financial statements help to determine whether the government's overall financial position improved or deteriorated.
E)Governmental fund financial statements report all assets and liabilities in a way comparable to business-type accounting.

Question 22

When a city received a private donation of $1,000,000 stipulating that the principal donation would be preserved but allowing the interest income to be spent on building a city park with access for disabled children,which fund should the money be recorded in?

A)The general fund.
B)A private purpose trust fund.
C)A permanent fund.
D)An agency fund.
E)A special revenue fund.

Question 23

Which of the following statements is false regarding government-wide financial statements?

A)Government-wide financial statements report a government's activities and financial position as a whole.
B)The government-wide financial statement approach helps users make long-term evaluations of the financial decisions and stability of the government.
C)Government-wide financial statements focus on the short-term instead of the long-term.
D)Government-wide financial statements assess the finances of the government in its entirety,including the year's operating results.
E)The measurement focus of government-wide financial statements is on all economic resources and utilizes accrual accounting.

Question 24

When a city received a federal grant designated for books to be purchased for a library,the money should have been recorded in

A)A permanent fund.
B)A private purpose trust fund.
C)A capital projects fund.
D)An agency fund.
E)A special revenue fund.

Question 25

What are the two proprietary fund types?
(1)Internal service funds.
(2)Investment trust funds.
(3)Enterprise funds.
(4)Agency funds.

A)1 and 2.
B)2 and 3.
C)1 and 3.
D)2 and 4.
E)1 and 4.

Question 26

Salaries and wages that have been earned by governmental employees that have not yet been paid are recorded in the general fund as:

A)An expenditure.
B)An encumbrance.
C)An appropriation.
D)An expense.
E)An investment.

Question 27

A city operates a central data processing facility.The expenses of this facility would be accounted for using

A)The general fund.
B)An enterprise fund.
C)A capital projects fund.
D)An agency fund.
E)An internal service fund.

Question 28

For governmental entities,the accrual basis of accounting is used for:

A)Special revenue funds.
B)Internal service funds.
C)Debt service funds.
D)The general fund.
E)Capital projects funds.

Question 29

The reporting of the fund balance of governmental funds will result in a maximum of how many categories:

A)One
B)Two
C)Three
D)Four
E)Five

Question 30

How do the balance sheet and statement of revenues,expenditures,and changes in fund balances of governmental funds differ from the financial statement presentation for the governmental activities in the government-wide statement of net assets and statement of activities?
(1)Internal service funds are not included in the fund financial statements of governmental funds but could be reported in the governmental activities of government-wide financial statements.
(2)The economic resources measurement basis is used for fund financial statements of governmental funds and the current financial resources measurement basis is used for governmental activities in the government-wide financial statements.
(3)Modified accrual accounting is used for fund financial statements of governmental funds to time revenues and expenditures and accrual accounting is used for governmental activities of government-wide financial statements.
(4)The financial statements of governmental funds for fund financial statements are the same as governmental activities in government-wide financial statements but with different titles of the financial statements.

A)1 and 2.
B)2,3,and 4.
C)1,2 and 3.
D)1 and 3.
E)1,2,3,and 4.

Question 31

When a city collects admission fees from citizens who use the public swimming pool,the money should be recorded in

A)The general fund.
B)An enterprise fund.
C)A capital projects fund.
D)An agency fund.
E)An internal service fund.

Question 32

What account is debited in the general fund when equipment is received by a governmental entity?

A)Expenditures.
B)Encumbrances.
C)Plant assets.
D)Accounts Payable.
E)Fund Balance-Reserve for Encumbrances.

Question 33

Which of the following is not a classification of non-exchange transactions?

A)Derived tax expenditures.
B)Voluntary non-exchange transactions.
C)Government-mandated non-exchange transactions.
D)Derived tax revenues.
E)Imposed non-exchange revenues.

Question 34

For determining revenue recognition,eligibility requirements for government-mandated nonexchange transactions and voluntary nonexchange transactions are categorized into four general classifications including all of the following except:

A)Required characteristics of the recipients.
B)Time requirements.
C)Reimbursement.
D)Contingencies.
E)Refunding.

Question 35

Which of the following statements is true about Fund Balance classifications for the governmental funds?

A)A restricted fund balance is for monies the governing board has appropriated.
B)An assigned fund balance has been designated for a specific purpose and is restricted to use for only that purpose.
C)An unassigned fund balance has no restriction for use of the money and is normally applicable to the general fund.
D)A committed fund balance has been designated by an outside party for a particular use.
E)A nonspendable fund balance is designated only for the balance of permanent funds.

Question 36

When a city holds pension monies for city employees,the monies should be recorded in

A)The general fund.
B)A private purpose trust fund.
C)A fiduciary fund.
D)An agency fund.
E)A special revenue fund.

Question 37

Which of the following is not one of the categories for reporting fund balances of governmental funds?

A)Spendable
B)Nonspendable
C)Assigned
D)Unassigned
E)Restricted

Question 38

Which statement is not correct?

A)Governmental funds account for expenditures of financial resources rather than matching revenues and expenses.
B)The Encumbrances Outstanding account should be reversed and closed at the end of a fiscal year.
C)Revenues from licenses and permit fees are recognized when received in cash if using the modified accrual basis of accounting for governmental funds.
D)A fund is an independent accounting entity composed of cash and other financial resources,segregated for the purpose of carrying on specific activities and objectives.
E)Commitments for purchase orders are recorded as expenses.

Question 39

According to GASB Concepts Statement No.1,what are the three groups of primary users of external state and local governmental financial reports?

A)The Securities and Exchange Commission,the citizenry,and legislative and oversight bodies.
B)The Securities and Exchange Commission,legislative and oversight bodies,and investors and creditors.
C)The Securities and Exchange Commission,the citizenry,and investors and creditors.
D)The citizenry,legislative and oversight bodies,and investors and creditors.
E)The citizenry,management,and the Governmental Accounting Office.

Question 40

Annual budgets must be recorded within:

A)The general fund and special revenue funds.
B)Capital projects funds and debt service funds.
C)Enterprise funds and internal service funds.
D)The general fund and pension trust Fund.
E)Agency funds and the general fund.

Question 41

Under modified accrual accounting,when should revenues be recognized by a governmental-type fund?

Question 42

What are the two proprietary fund types?

Question 43

Which of the following is not a true statement regarding revenues from various types of nonexchange transactions?

A)Derived tax revenues occur as a result of sales and or income tax.
B)Imposed nonexchange revenues consist of only fines and penalties assess by the governing agency.
C)Government mandated nonexchange transactions includes grants from the federal government to the local public school system for a free lunch program.
D)Voluntary nonexchange transactions can originate from a governmental agency or private citizen organization.
E)Imposed nonexchange transactions revenue recognition is made in the time period when the resulting resources are required to be used or in the first period in which use is permitted.

Question 44

Which statement most accurately reflects property taxes?

A)Property taxes are derived tax revenues because property owners have the benefit of ownership.
B)Property taxes are considered a special assessment by the governing agency.
C)When recording,property taxes the receivable is record and the revenue is recognized when the government has enforceable legal claim.
D)When recording,property taxes the revenue is recognized in the period in which it can be used.
E)Property taxes are the result of the government making an assessment,only when an underlying exchange has occurred.

Question 45

In governmental accounting,what term is used for a decrease in financial resources?

Question 46

For what is a special revenue fund used to account?

Question 47

What is the primary difference between monies accounted for in the general fund and monies accounted for in the special revenue fund?

Question 48

What assets would be included in the accounting records of a city's general fund?

Question 49

Under modified accrual accounting,when are expenditures recorded?

Question 50

Which type of account would you assign a gift of $1.5 million dollars with restriction indicating that only the future income generated from this balance can be used by the government?

A)Committed
B)Nonspendable
C)Assigned
D)Unassigned
E)Restricted

Question 51

What is the definition of the term fund?

Question 52

Which of the following would be considered a derived tax revenue?

A)Collection of property taxes.
B)FICA is withheld from the employee pay.
C)A grant is received from the federal government.
D)A private citizen willing sends money to buy books for the local library.
E)Fees are collected on overdue library books.

Question 53

What are the five types of governmental funds?

Question 54

A county enacted a special tax levy and the money must be used to buy unused farmland for environmental preservation.What kind of fund should be used to record the revenues generated by the tax?

Question 55

When should property taxes be recognized under modified accrual accounting?

Question 56

The government has just voted to repair the parking garages to all federal building and estimate the cost to be $750,000.The government discloses this decision by debiting which account?

A)Committed
B)Nonspendable
C)Assigned
D)Unassigned
E)Restricted

Question 57

For a government,what kinds of operations are accounted for using a proprietary fund? Give three examples.

Question 58

Which organization is responsible for establishing accounting principles for governmental entities? By whom was this organization established?

Question 59

For each of the following transactions,select the area of accounting records in which an entry will be recorded for governmental fund financial statements and for government-wide financial statements.
(A)General fund only.
(B)Governmental activities only.
(C)General fund and Governmental activities.
(D)General fund and Debt service fund.
(E)Capital projects fund and Governmental activities.
(F)Debt service fund and Governmental activities.
(G)Special revenue fund and Governmental activities.
___ (1. )The city council adopts an annual budget for the general fund.
___ (2. )Property taxes are levied.
___ (3. )Computers are ordered for the fire department.
___ (4. )A transfer of funds is made from the general fund to the debt service fund.
___ (5. )The principal and interest of a bond are paid.
___ (6. )A building is acquired for the police department,and renovations begin immediately.
___ (7. )Depreciation on fire trucks is recorded.
___ (8. )Citizens are assessed for a street lighting project that has been legally restricted for those
citizens.
___ (9. )A grant is received to landscape tree-lined areas beside city-owned streets.
___ (10. )The city spends grant money received in (9. )above and landscapes the tree-lined areas
beside the streets for which the grant money was received.

Question 60

What are the two sets of financial statements mandated by GASB for state and local governments? For each set,what are the names of the individual statements that must be produced?

Question 61

Prepare the journal entry and identify the fund to record Simple City's purchase order of two trucks for $100,000.Identify the fund in which the entry is recorded.

Question 62

Simple City has recorded the purchase order of two trucks for a total of $100,000.
Prepare the journal entries to reflect that the two trucks have been received with an invoice amount of $105,000.This invoice has been approved but not yet paid.Identify the fund in which the entries are recorded.

Question 63

The board of commissioners of the city of Jarmaine adopted a General fund budget for the year ending June 30,2018,which indicated tax levy revenues of $1,300,000,bond proceeds of $520,000,appropriations for government operations of $1,170,000,and operating transfers out of $390,000.
Required:
If this budget was formally integrated into the accounting records used to produce the governmental fund financial statements,what was the required journal entry at the beginning of the year?

Question 64

What is the purpose of fund financial statements?

Question 65

Property taxes of 1,500,000 are levied for Miner County.All except 5% of the taxes are expected to be collected within 60 days of year-end.
Required:
Prepare the required journal entry and identify the fund in which it is recorded.

Question 66

On January 1,2018,Wakefield City purchased office supplies for $40,000.During the year,$35,000 of these supplies were used.
Required:
Record the journal entries for these transactions using the consumption method.(Disregard the encumbrance entries. )

Question 67

On June 14,2018,Fred City agreed to transfer cash of $52,000 from the general fund to provide permanent financing for a municipal swimming pool that will be viewed as an enterprise fund.The cash was transferred on June 30,2018.
Required:
(A)Prepare all the required journal entries and identify the fund in which each entry was recorded for the fund financial statements.
(B)Prepare all the required journal entries and identify the type of activity for the government-wide financial statements.

Question 68

A $910,000 bond was issued on October 1,2018 to build a new road.The bonds carried a 6% interest rate and are due in 10 years.
Required:
(A. )Prepare the required journal entry in the capital projects fund on October 1 for the governmental fund financial statements.
(B. )Prepare the required journal entry for the government-wide financial statements.

Question 69

A $5,000,000 bond is issued by Northern City to build a new hospital and the proceeds of the bond are received directly by the fund that will be disbursing the monies for the hospital construction.
Required:
Prepare the journal entry and identify the fund in which it is recorded to reflect the bond issue.

Question 70

On January 1,2018,Wakefield City purchased office supplies for $40,000.During the year,$35,000 of these supplies were used.
Required:
Record the journal entries for these transactions using the purchases method.(Disregard the encumbrance entries. )

Question 71

What is the purpose of government-wide financial statements?

Question 72

On August 21,2018,Fred City transferred $100,000 from one fund to another fund to cover major repairs to the town hall building.
Required:
Prepare all the required journal entries and identify the fund in which each entry was recorded for the governmental fund financial statements.

Question 73

On July 12,2018,Fred City ordered a new computer at an anticipated cost of $114,400.The computer was received on July 16,2018 with an actual cost of $116,220.Payment was subsequently made on August 15,2018.
Required:
(A)Prepare all the required journal entries and identify the type of fund in which each entry was recorded for the governmental fund financial statements.
(B)Prepare all the required journal entries to be recorded for the government-wide financial statements.

Question 74

What are the four fiduciary fund types?

Question 75

The Town of Anthrop has recorded the receipt of a $60,000 grant restricted for transporting all senior citizens to polling locations on Election Day in November of 2018.The town now spends $60,000 to transport the citizens on Election Day.
Required:
Prepare the journal entry (or entries),and identify the fund for recording,to record that the town spends $60,000 of the grant it received to transport senior citizens on Election Day.

Question 76

A new truck was ordered for the sanitation department at a cost of $122,200 on September 3,2018.
Required:
(A)Prepare the required journal entry in the general fund for the governmental fund financial statements.
(B)Prepare the required journal entry for the government-wide financial statements.

Question 77

The school system had some brochures printed by a local printing service on September 22,2018.The school system received an invoice showing an amount of $1,560 for the printing,but the bill is not due until October 15,2018.
Required:
(A)Prepare the required journal entry in the general fund for the governmental fund financial statements.
(B)Prepare the required journal entry for the government-wide financial statements.

Question 78

Shell City makes a transfer of $100,000 from the General fund to the Debt service fund.
Required:
Prepare the required journal entries and identify the funds in which they are recorded.

Question 79

On July 1,2018,Fred City ordered $1,500 of office supplies.They were to be paid for out of the general fund.
Required:
(A)What journal entry was required for the governmental fund financial statements?
(B)What journal entry was required for the government-wide financial statements?

Question 80

In May of 2018,the Town of Anthrop receives a $60,000 grant restricted for transporting all senior citizens to polling locations on Election Day in November of 2018.
Required:
Prepare the journal entry,and identify the fund in which it is recorded,to record the receipt of the grant.