Question 1

Over the years, four alternatives have been suggested for constructing the financial statements for public colleges and universities. These alternatives include all of the following except:
A) Adopt FASB's requirements so that all colleges and universities (public and private) prepare comparable financial statements.
B) Apply a more traditional model focusing on fund financial statements and the wide variety of funds that such schools often have to maintain.
C) Create an entirely new set of financial statements designed specifically to meet the unique needs of public colleges and universities.
D) Adopt the requirements issued by the Private Company Council (PCC) of the FASB.
E) Adopt the same reporting model for public schools that has been created for state and local governments.

Accepted Answer

The Private Company Council (PCC) of the FASB focuses on private companies, not public colleges and universities, making it an inappropriate choice for constructing financial statements for public institutions.

Question 2

What is meant by the term legally independent?

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Question 3

Which information must be disclosed regarding tax abatement agreements?
i) The purpose of the tax abatement program.
ii) The dollar amount of abatement and the names of recipients.
iii) The type of tax being abated.
A) i and iii.
B) i only.
C) ii only.
D) iii only.
E) i, ii, and iii.

Accepted Answer

The purpose of the tax abatement program and the type of tax being abated are typically required disclosures to provide transparency and understanding of the tax abatement's impact.

Question 4

The City of Wade has a fiscal year ending June 30. Examine the following transactions for Wade:(A.) On 6/5/21, Wade opens a new landfill. The engineers estimate that at the end of 12 years the landfill will be full. Estimated costs to close the landfill are currently $4,800,000.(B.) On 6/18/21, Wade receives a donation of a vintage railroad steam engine. The engine will be put on display at the local town park. A fee will be charged to actually climb up into the engine. The engine has been valued at $650,000.(C.) On 6/30/21, Wade estimates that the landfill is 2% filled.Determine and prepare the journal entries for the City of Wade for each lettered item for the purposes of preparing the government-wide financial statements.

Accepted Answer

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Question 5

Which statement is false regarding the Statement of Revenues, Expenditures, and Other Changes in Fund Balance when it is included with government-wide financial statements?
A) The Statement of Revenues, Expenditures, and Other Changes in Fund Balance uses the modified accrual method of accounting.
B) The Statement of Revenues, Expenditures, and Changes in Fund Balance presents revenues as either program revenues or general revenues.
C) A presentation reconciles the change in governmental fund balance to the change in net position for governmental activities.
D) Other financing sources are presented on the Statement of Revenues, Expenditures, and Other Changes in Fund Balance.
E) All non-major funds are combined and reported together.

Accepted Answer

The Statement of Revenues, Expenditures, and Changes in Fund Balance does not present revenues as either program revenues or general revenues; this classification is used in government-wide financial statements, not fund financial statements.

Question 6

What is meant by the term fiscally independent?

Accepted Answer

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Question 7

What are the three broad sections of a state or local government's CAFR?

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Question 8

A city operates a swimming pool as a proprietary fund because there is a $2 admission fee. In fund financial statements, where is this revenue reported?
A) Statement of Net Position.
B) Statement of Revenue, Expenditures, and Other Changes in Fund Balance.
C) Statement of Revenue, Expenses, and Other Changes in Fund Balance.
D) Statement of Net Revenue and Expenses.
E) Statement of Revenue, Expenses, and Other Changes in Net Position.

Accepted Answer

The revenue from the swimming pool, operated as a proprietary fund, is reported in the Statement of Revenue, Expenses, and Other Changes in Net Position, which is used for proprietary funds.

Question 9

The City of Wade has a fiscal year ending June 30. Examine the following transactions for Wade:(A.) On 6/5/21, Wade opens a new landfill. The engineers estimate that at the end of 12 years the landfill will be full. Estimated costs to close the landfill are currently $4,800,000.(B.) On 6/18/21, Wade receives a donation of a vintage railroad steam engine. The engine will be put on display at the local town park. A fee will be charged to actually climb up into the engine. The engine has been valued at $650,000.(C.) On 6/30/21, Wade estimates that the landfill is 2% filled.Determine and prepare the general fund journal entries for the City of Wade for each lettered item for the purposes of preparing the fund financial statements.

Accepted Answer

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Question 10

A city starts a solid waste landfill during 2020. When the landfill was opened the city estimated that it would fill to capacity within 6 years and that the cost to cover the facility would be $1.8 million which will not be paid until the facility is closed. At the end of 2020, the facility was 15% full, and at the end of 2021 the facility was 35% full.On government-wide financial statements, which of the following are the appropriate amounts to present in the financial statements for 2021?
A) Both expense and liability will be zero.
B) Expense will be $270,000 and liability will be $540,000.
C) Expense will be $540,000 and liability will be $540,000.
D) Expense will be $630,000 and liability will be $540,000.
E) Expense will be $360,000 and liability will be $630,000.

Accepted Answer

The expense for 2021 is calculated based on the increase in the percentage of the landfill filled during the year (35% - 15% = 20%) multiplied by the total estimated closure cost ($1.8 million), resulting in $360,000. The liability at the end of 2021 is based on the total percentage filled (35%) multiplied by the total estimated closure cost, resulting in $630,000.

Question 11

What are the four steps established by GASB Statement No. 68, Accounting for Financial Reporting for Pensions, in the reporting of a government's liability?

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Question 12

Which of the following is false regarding defined benefit pension plans provided to employees by a state or local government?
A) Defined benefit pension plans are fully funded by the employees of a state or local government.
B) Pension requirements create a huge financial obligation for many governments across the United States.
C) Many state and local governments establish pension trust funds to accumulate and invest monetary resources and to pay out pension benefits.
D) Pension trusts are classified as fiduciary funds.
E) Pension trusts are not included in reporting government-wide financial statements.

Accepted Answer

Defined benefit pension plans are typically funded by both the employer (state or local government) and the employees, not solely by the employees.

Question 13

A city starts a solid waste landfill during 2020. When the landfill was opened the city estimated that it would fill to capacity within 6 years and that the cost to cover the facility would be $1.8 million which will not be paid until the facility is closed. At the end of 2020, the facility was 15% full, and at the end of 2021 the facility was 35% full.If the landfill is judged to be a governmental fund, what liability is reported on the fund financial statements at the end of 2021?
A) $0.
B) $270,000.
C) $360,000.
D) $540,000.
E) $630,000.

Accepted Answer

In governmental fund accounting, liabilities are recognized when they are due and payable. Since the cost to cover the landfill will not be paid until the facility is closed, no liability is reported in the fund financial statements at the end of 2021.

Question 14

How is the Statement of Cash Flows for Proprietary Funds similar and dissimilar to a Statement of Cash Flows for a for-profit business?

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Question 15

The parking garage and parking lots owned by the City of Barnard reported the following balances for 2021:  Required:Prepare the appropriate financial statement for the fund that was used to account for parking operations.

Accepted Answer

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Question 16

The Town of Harvest opened a solid waste landfill in 1998 that is filled to capacity in the current year. The city initially anticipated closure costs of $3 million. These costs were not expected to be incurred until the landfill was closed. What is the final journal entry to record these costs assuming the estimated $3 million closure costs were properly recorded and the landfill is accounted for in an enterprise fund? 
A) Option A.
B) Option B.
C) Option C.
D) Option D.
E) Option E.

Accepted Answer

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Question 17

Under GASB Statement No. 87, Leases, which of the following is false?
A) Unless the maximum life of a lease is one year or less, all leases are the equivalent of financing leases.
B) A lessee is required to recognize a lease liability and an intangible right-to-use lease asset.
C) The lessor records both a receivable and a deferred lease revenue at present value.
D) The lessor is provided with separate categories for all lease contracts.
E) The lessor reclassifies the deferred lease revenue as lease revenue over time and in a systematic and rational manner.

Accepted Answer

Under GASB Statement No. 87, the lessor is not provided with separate categories for all lease contracts; all leases are treated similarly.

Question 18

What information is required in the introductory section of a state or local government's CAFR?

Accepted Answer

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Question 19

What three criteria must be met before a governmental unit can elect to not capitalize and therefore not report a work of art or historical treasure as an asset?

Accepted Answer

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Question 20

What information is required in the financial section of a state or local government's CAFR?

Accepted Answer

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Quiz 17: Accounting for State and Local Governments, Part II

Over the years, four alternatives have been suggested for constructing the financial statements for public colleges and universities. These alternatives include all of the following except:

What is meant by the term legally independent?

Which information must be disclosed regarding tax abatement agreements? i) The purpose of the tax abatement program. ii) The dollar amount of abatement and the names of recipients. iii) The type of tax being abated.

Which statement is false regarding the Statement of Revenues, Expenditures, and Other Changes in Fund Balance when it is included with government-wide financial statements?

What is meant by the term fiscally independent?

What are the three broad sections of a state or local government's CAFR?

A city operates a swimming pool as a proprietary fund because there is a $2 admission fee. In fund financial statements, where is this revenue reported?

What are the four steps established by GASB Statement No. 68, Accounting for Financial Reporting for Pensions, in the reporting of a government's liability?

Which of the following is false regarding defined benefit pension plans provided to employees by a state or local government?

How is the Statement of Cash Flows for Proprietary Funds similar and dissimilar to a Statement of Cash Flows for a for-profit business?

The parking garage and parking lots owned by the City of Barnard reported the following balances for 2021: Required:Prepare the appropriate financial statement for the fund that was used to account for parking operations.

Under GASB Statement No. 87, Leases, which of the following is false?

What information is required in the introductory section of a state or local government's CAFR?

What three criteria must be met before a governmental unit can elect to not capitalize and therefore not report a work of art or historical treasure as an asset?

What information is required in the financial section of a state or local government's CAFR?