Question 1

Internal Service Funds, classified as a proprietary fund type, are reported in the government-wide statements as

Accepted Answer

Internal Service Funds are reported in the government-wide statements under either governmental activities or business-type activities, depending on the primary users of the services they provide.

Question 2

In the two-worksheet approach, each of the following worksheet adjustments would be made for the operating statement except

Accepted Answer

The two-worksheet approach separates the operating statement and the balance sheet. Accumulated depreciation is a balance sheet item and is not included in the operating statement. All other options involve adjustments to the operating statement in the two-worksheet approach.

Question 3

In the two-worksheet approach, what type of adjustment will be necessary for interest expenditure/expense on the operating statement conversion worksheet?

Accepted Answer

In the two-worksheet approach, an adjustment to the interest expenditure reported on the governmental funds operating statement will be necessary for the net change in accrued interest payable on long-term debt from the beginning of the year to the end of the year. This is because the interest on long-term debt that has been incurred but not paid is not reflected in the governmental fund financial statements, and therefore needs to be added or deducted as necessary to reflect the total interest expense on the government-wide statements.

Question 4

The required reconciliation of the governmental fund balance sheet to the governmental activities statement of net position does not include adjustments related to

Accepted Answer

Interfund charges for services are eliminated in the process of consolidation and do not require adjustments in the reconciliation between the governmental fund balance sheet and the governmental activities statement of net position. Adjustments for capital assets, deferred revenue, and long-term liabilities are necessary to transition from the modified accrual basis of accounting used in the fund financial statements to the full accrual basis used in the government-wide financial statements.

Question 5

Net investment in capital assets would not include

Accepted Answer

Net investment in capital assets refers to the amount spent on acquiring or improving capital assets, which is represented by the difference between the total cost of capital assets and accumulated depreciation. Inventory is not a capital asset and is therefore not included in net investment in capital assets. Accounts payable and notes payable that are capital related are included in net investment in capital assets, as they represent amounts owed for the acquisition of capital assets. Accumulated depreciation is also included because it represents the amount of the asset's cost that has been allocated to depreciation over time.

Question 6

Which of the following items would be added to the change in fund balances in reconciling the governmental funds operating statement information to the change in net position in the government-wide statement?

Accepted Answer

The answer of Which of the following items would be...

Question 7

The Capital Projects Fund issued general long-term debt at a premium. The balance sheet conversion worksheet of the two-worksheet approach would include

Accepted Answer

The answer of The Capital Projects Fund issued general long-term...

Question 8

The General Fund transferred $10,000 to Enterprise Fund A; a Special Revenue Fund transferred $20,000 to a Capital Projects Fund; Enterprise Fund A transferred $35,000 to a Capital Projects Fund and $25,000 to Enterprise Fund B The governmental activities column on the Statement of Activities will be report

Accepted Answer

The transfers out of $10,000 from the General Fund to Enterprise Fund A and $35,000 from Enterprise Fund A to the Capital Projects Fund are not reported in the governmental activities column on the Statement of Activities since they involve transactions between different types of funds (i.e. internal service funds).

Similarly, the transfer in of $20,000 from the Special Revenue Fund to the Capital Projects Fund does not affect the governmental activities column.

The only transfer that would be reported in the governmental activities column is the transfer in of $25,000 from Enterprise Fund A to Enterprise Fund B. Therefore, choice A is correct.

Question 9

A county's Central Warehouse Internal Service Fund provides 65% of its services to governmental funds, 30% of its services to Enterprise Funds, and the remaining 5% to a local municipality. If there was a $10,000 loss in the Internal Service Fund during 20X9, the expenses in the governmental activities column would

Accepted Answer

Since 65% of the services are provided to governmental funds, the loss of $10,000 will be allocated to these funds. 65% of $10,000 is $6,500. However, since governmental funds use the modified accrual basis of accounting, expenses are recognized when they are incurred, not necessarily when they are paid. Therefore, the expenses in the governmental activities column will increase by $7,000 ($6,500 + $500 from the remaining 5% allocated to the municipality) to reflect the loss incurred during the year.

Question 10

The required reconciliation of the governmental fund financial statement information to the governmental activities information in the corresponding government-wide financial statements

Accepted Answer

The reconciliation of the governmental fund financial statement information to the governmental activities information in the corresponding government-wide financial statements may be presented either at the bottom of the fund financial statements or in separate schedules. It is not required to be presented on the face of the financial statements, and it can be presented in a separate schedule if the information is too voluminous to be presented at the bottom of the fund financial statements.

Question 11

Which of the following items would be subtracted from the change in fund balances in reconciling the governmental funds operating statement information to the change in net position in the government-wide statement?

Accepted Answer

Depreciation is not recorded in governmental funds but is recognized in the government-wide financial statements, so it needs to be subtracted when reconciling the two.

Question 12

Which of the following items is not included in reconciling the governmental funds operating statement information to the change in net position in the government-wide statement?

Accepted Answer

The increase in salaries payable is a short-term liability and does not affect the change in net position in the government-wide statement, which reflects the long-term financial position of the government. The other items listed are adjustments for items that are not recognized in the governmental funds operating statement but impact the change in net position in the government-wide statement.

Question 13

Which of the following items would be added to the change in fund balances in reconciling the governmental funds operating statement information to the change in net position in the government-wide statement?

Accepted Answer

The answer of Which of the following items would be...

Question 14

Depreciation expense on assets of the public safety function totaled $195,000 for the year. What is the effect on the operating statement conversion worksheet in the two-worksheet approach of this event?

Accepted Answer

Depreciation expense on assets of the public safety function is a direct expenditure and will increase the public safety expenditure/expenses by $195,000. The impact of depreciation is not reflected in the General Capital Assets accounts until the Comprehensive Annual Financial Report is prepared at the end of the year. Therefore, option A is incorrect. Option C is incorrect as unallocated depreciation would be accounted for in the General Capital Assets account. Option D is incorrect as program revenues are generated by the public safety function and depreciation expense does not affect them.

Question 15

Depreciation expense for the current year was $366,750 in the Water Enterprise Fund. Depreciation expense will be reported at the government-wide level as

Accepted Answer

Depreciation expense in the Water Enterprise Fund is a direct expense of the business-type activity and should be included as part of the business-type activities expenses for the water activity at the government-wide level. It should not be reported as part of unallocated depreciation expense in governmental or business-type activities, or as capital outlay expenses in business-type activities.

Question 16

In the two-worksheet approach, what type of adjustment will be necessary for interest payable on the balance sheet conversion worksheet?

Accepted Answer

Interest on long-term debt that has not been paid by the end of the reporting period needs to be recognized as interest payable in the government-wide financial statements, even though it may not be recognized as such in the fund financial statements due to the use of the modified accrual basis of accounting in governmental funds. This adjustment ensures that all liabilities, including accrued interest, are accurately reported on the government-wide financial statements, which are prepared on the full accrual basis of accounting.

Question 17

If a county sells a capital asset with a net book value of $35,000 for $27,000, how will this transaction be recorded on the operating statement conversion worksheet of the two-worksheet conversion approach?

Accepted Answer

The answer of If a county sells a capital asset...

Question 18

In the two-worksheet approach, which of the following worksheet adjustments would not be made for the balance sheet?

Accepted Answer

Depreciation expenses are included in the income statement, not the balance sheet. The other options listed would be adjustments made on the balance sheet.

Question 19

The General Fund paid $195,000 related to compensated absences during the year. If the beginning balance of long-term compensated absences payable for the governmental activities was $65,000 and the ending balance was $55,000, then the expenses related to compensated absences in the governmental activities column would be

Accepted Answer

The expenses related to compensated absences in the governmental activities column would be equal to the change in the long-term compensated absences payable balance during the year, which is $65,000 beginning balance minus $55,000 ending balance plus $195,000 paid during the year, equaling $185,000. So, the correct answer is option B.

Question 20

Which of the following items would be subtracted from the change in fund balances in reconciling the governmental funds operating statement information to the change in net position in the government-wide statement?

Accepted Answer

Depreciation is not recorded in governmental funds but is recognized in the government-wide financial statements, so it needs to be subtracted when reconciling the two.

Quiz 14: Financial Reporting Deriving Government-Wide Financial Statements and Required Reconciliations

Internal Service Funds, classified as a proprietary fund type, are reported in the government-wide statements as

In the two-worksheet approach, each of the following worksheet adjustments would be made for the operating statement except

In the two-worksheet approach, what type of adjustment will be necessary for interest expenditure/expense on the operating statement conversion worksheet?

The required reconciliation of the governmental fund balance sheet to the governmental activities statement of net position does not include adjustments related to

Net investment in capital assets would not include

Which of the following items would be added to the change in fund balances in reconciling the governmental funds operating statement information to the change in net position in the government-wide statement?

The Capital Projects Fund issued general long-term debt at a premium. The balance sheet conversion worksheet of the two-worksheet approach would include

The required reconciliation of the governmental fund financial statement information to the governmental activities information in the corresponding government-wide financial statements

Which of the following items would be subtracted from the change in fund balances in reconciling the governmental funds operating statement information to the change in net position in the government-wide statement?

Which of the following items is not included in reconciling the governmental funds operating statement information to the change in net position in the government-wide statement?

Which of the following items would be added to the change in fund balances in reconciling the governmental funds operating statement information to the change in net position in the government-wide statement?

Depreciation expense on assets of the public safety function totaled $195,000 for the year. What is the effect on the operating statement conversion worksheet in the two-worksheet approach of this event?

Depreciation expense for the current year was $366,750 in the Water Enterprise Fund. Depreciation expense will be reported at the government-wide level as

In the two-worksheet approach, what type of adjustment will be necessary for interest payable on the balance sheet conversion worksheet?

If a county sells a capital asset with a net book value of $35,000 for $27,000, how will this transaction be recorded on the operating statement conversion worksheet of the two-worksheet conversion approach?

In the two-worksheet approach, which of the following worksheet adjustments would not be made for the balance sheet?

Which of the following items would be subtracted from the change in fund balances in reconciling the governmental funds operating statement information to the change in net position in the government-wide statement?