Deck 3: Governmental Operating Statement Accounts; Budgetary Accounting

Question 1

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

Answer 1

True

Question 2

Other financing sources and uses are disclosed in a separate section below expenditures on the statement of revenues, expenditures, and changes in fund balances.

Answer 2

True

Question 3

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

Answer 3

True

Question 4

Interfund transfers are shown as general revenues on the government-wide statement of activities.

Question 5

The legal level of budgetary control represents the administrative level at which expenditures may not exceed appropriations without a formal budgetary amendment.

Question 6

Three categories of program revenues are reported in the statement of activities: charges for services, operating grants and contributions, and capital grants and contributions.

Question 7

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

Question 8

The government-wide statement of net position displays the net expense or revenue for each function or program of the government.

Question 9

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 10

In the GASB reporting model, extraordinary items and special items must be reported as separate line items below General Revenues in the statement of activities to distinguish these nonrecurring items from normal recurring general revenues.

Question 11

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

Question 12

Expenses represent the costs to purchase goods or services, whereas expenditures represent the costs of goods or services consumed or expired during the period.

Question 13

All encumbrances must be closed at year-end.

Question 14

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.

Question 15

When goods for which an encumbrance has been recorded are received at an invoiced amount that varies from the amount encumbered, the encumbrance is reversed in the amount of the actual invoiced cost of the goods.

Question 16

On the government-wide statement of activities, 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 17

Contributions to permanent funds are shown on a separate line below the general revenues on the government-wide statement of activities.

Question 18

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

Question 19

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

Question 20

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 21

Encumbrance accounting is required in the accounting for payroll of governmental funds.

Question 22

When an activity accounted for by the General Fund results in issuance of purchase orders or contracts for goods or services a record must be kept, but no journal entries in the General Fund are necessary.

Question 23

Extraordinary items and special items are reported on the government-wide statement of activities.

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 24

According to GASB standards, which of the following is not classified as a budgetary account?

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

Question 25

Which of the following is not a category of program revenue reported on the statement of activities at the government-wide level?

A) General program revenues.
B) Charges for services.
C) Operating grants and contributions.
D) Capital grants and contributions.

Question 26

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

A) Encumbrances.
B) Appropriations.
C) Expenditures.
D) Other Financing Sources.

Question 27

At the end of the fiscal year Encumbrances is closed to Budgetary Fund Balance with a credit.

Question 28

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 29

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 30

The numerical difference between (1) current assets and deferred outflows and (2) current liabilities and deferred inflows recorded in governmental funds is denoted as net position.

Question 31

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

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

Question 32

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 33

Public school systems prepare their financial reports in accordance with the requirements of the National Center for Education Statistics.

Question 34

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 35

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 36

The fund classification system used by public schools follows the GASB standards.

Question 37

Any balance in Encumbrances Outstanding that remains at the end of the fiscal year is reported as a line item under Fund Balances on the governmental funds balance sheet.

Question 38

The cost to purchase a good or service is the definition of an

A) Expenditure.
B) Expense.
C) Other financing use.
D) Interfund transfer out.

Question 39

Public school systems tend to follow the revenue and expenditure classifications of the National Center for Education Statistics rather than the GASB classifications.

Question 40

Which of the following would not appear on a governmental fund balance sheet?

A) Accounts receivable.
B) Inventory.
C) Vouchers payable.
D) Bonds payable.

Question 41

The Expenditures control account of a government is debited when:

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

Question 42

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

A) Choice A.
B) Choice B.
C) Choice C.
D) Choice D.

Question 43

One characteristic that distinguishes other financing sources from revenues is that other financing sources:

A) Arise from debt issuances or interfund transfers in.
B) Increase fund balances when they are closed at year-end.
C) Provide financial resources for the recipient fund.
D) Have a normal credit balance.

Question 44

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 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

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 47

The Estimated Revenues control account of a government is credited when:   
A-            
B-             
C-            
D-          

A) Choice A.
B) Choice B.
C) Choice C.
D) Choice D.

Question 48

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 49

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 50

The process by which a legal valuation is placed on taxable property is called:

A) An appropriation.
B) A property tax levy.
C) Property assessment.
D) Ad valorem determination.

Question 51

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 52

When equipment that is to be used by the General Fund is received, how should it be recorded?

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

Question 53

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 54

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 55

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 56

Under the modified accrual basis of accounting used by the General Fund, financial resources are considered available if the revenue or other financing source is expected to be collected

A) Within 60 days after year-end.
B) Within 90 days after year-end.
C) During the current fiscal period.
D) During the current fiscal period or soon enough after year-end to pay current period obligations.

Question 57

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 58

Which of the following depict the typical order of steps in the acquisition of goods and services by an activity accounted for by the General Fund?

A) Appropriation, disbursement, encumbrance, expenditure.
B) Appropriation, encumbrance, expenditure, disbursement.
C) Encumbrance, appropriation, expenditure, disbursement.
D) Encumbrance, expenditure, appropriation, disbursement.

Question 59

The County Commission of Seminole County adopted its General Fund budget for the year ending June 30, comprising estimated revenues of $13,200,000 and appropriations of $12,900,000. Seminole County utilizes the budgetary accounts required by GASB standards. The journal entry to record budgeted appropriations will include:

A) A credit to Appropriations, $12,900,000.
B) A credit to Encumbrances, $12,900,000.
C) A debit to Estimated Expenditures, $12,900,000.
D) A credit to Budgetary Fund Balance, $12,900,000.

Question 60

The County Commission of Canyon County adopted its General Fund budget for the year ending June 30, comprising estimated revenues of $13,200,000 and appropriations of $12,900,000. 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 61

Which of the following accounts is not closed at the end of the reporting period?

A) Deferred inflows of resources.
B) Revenues.
C) Expenditures.
D) Other financing sources.

Question 62

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 63

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 less 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 64

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 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 65

The Encumbrances account is properly termed a

A) Long-term liability.
B) Reservation of unassigned fund balance.
C) Budgetary account.
D) Current liability if paid within a year; otherwise, long-term debt.

Question 66

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 67

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 68

The city amended its budget to increase expected grant revenues by $500,000 and increase expected culture and recreation expenditures by $500,000. Which of the following statements concerning the budget amendment journal entry is correct?

A) Estimated Revenues will be credited for $500,000.
B) Appropriations will be debited for $500,000.
C) There will be no adjustment to Budgetary Fund Balance.
D) Expenditures will be debited for $500,000.

Question 69

For each revenue source listed indicate its correct classification recommended by GASB standards.
A. Taxes
B. Licenses and permits
C. Intergovernmental revenue
D. Charges for services
E. Fines and forfeits
F. Miscellaneous
________ 1. Capital grant received by a city from a state
________ 2. Property tax levied by city
________ 3. Library use fees
________ 4. Building permit

Question 70

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 71

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

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

Question 72

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 73

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 74

The Encumbrances control account of a city is decreased when            
A-                   
B-                   
C-                     
D-                  

A) Choice A.
B) Choice B.
C) Choice C.
D) Choice D.

Question 75

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 76

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 77

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 may be presented as a statement or as required supplementary information (RSI).
D) The budgetary reconciliation must focus on the operating statement, but not the statement of position.

Question 78

The county determined it needed to prepare a budget amendment to reflect a decrease in charges for services of $100,000 and an increase in public safety expenditures of $150,000. What will be the effect of these two adjustments on the Budgetary Fund Balance account?

A) Budgetary Fund Balance will be debited $250,000.
B) Budgetary Fund Balance will be credited $250,000.
C) Budgetary Fund Balance will be debited $50,000.
D) Budgetary Fund Balance will be credited $50,000.

Question 79

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 80

For each of the following expenditure items, indicate its correct classification scheme suggested by GASB standards.
A. Function
B. Program
C. Organization unit
D. Activity
E. Character
F. Object
________ 1. Streetlight repair
________ 2. City clerk
________ 3. Salaries and wages
________ 4. Transportation
________ 5. Current operating expenditures