Question 1

All amounts due to or from other funds should be eliminated in both the government-wide and fund financial statements.

Accepted Answer

In government-wide financial statements, inter-fund activities (amounts due to or from other funds) are eliminated to present a consolidated view of the government's financial position. However, in fund financial statements, these amounts are not eliminated because each fund is reported separately to show its own fiscal condition and the results of its operations.

Question 2

A properly prepared schedule of revenues, expenditures, and changes in fund balances-budget and actual will include which of the following columns?
A) Actual revenue and expenditure amounts on the GAAP basis.
B) Actual revenue and expenditure amounts on the budget basis.
C) Encumbrances outstanding at year-end.
D) Unexpended appropriations.

Accepted Answer

A properly prepared schedule of revenues, expenditures, and changes in fund balances - budget and actual, will include actual revenue and expenditure amounts on the budget basis to compare with the original and final budgeted amounts. This allows for an analysis of how well the entity adhered to its budget.

Question 3

Encumbrance accounts need not be closed at year-end if the government is required or intends to honor the encumbrances outstanding at year-end.

Accepted Answer

Encumbrances represent commitments made for goods and services that have not yet been received or paid for. If the government intends to honor these commitments, the encumbrance accounts do not need to be closed at year-end. However, if the government chooses to cancel or reduce the encumbrances, the accounts must be adjusted accordingly.

Question 4

Grant funds received before time requirements are met, but after all other eligibility requirements have been met, should be reported as an asset and a deferred inflow of resources by the recipient.

Accepted Answer

This statement is true. Grant funds received before time requirements are met but after all other eligibility requirements have been met are considered as revenue and should be reported as an asset and a deferred inflow of resources by the recipient. This is because the funds have not been earned yet and should not be recognized as revenue until the time requirements are met.

Question 5

The Town of Loveland levied property taxes in the amount of $1,600,000. The town estimates that 1 percent will be uncollectible. The journal entry to record the tax levy will include
A) A debit to Cash for $1,584,000.
B) A credit to Revenues for $1,584,000.
C) A debit to Allowance for Uncollectible Current Taxes for $16,000.
D) A debit to Estimated Revenues for $1,600,000.

Accepted Answer

The answer of The Town of Loveland levied property taxes...

Question 6

Which of the following should not be reported on the balance sheet of the General Fund?
A) Equipment.
B) Vouchers payable.
C) Tax anticipation notes payable.
D) Due from federal government.

Accepted Answer

Equipment is not reported on the balance sheet of the General Fund because it is considered a capital asset, and capital assets are not accounted for in governmental funds under the modified accrual basis of accounting.

Question 7

Permanent funds use the modified accrual basis of accounting.

Accepted Answer

Permanent funds are a type of governmental fund and are required to use the modified accrual basis of accounting, which means that they recognize revenues when measurable and available, and recognize expenditures when they are incurred. This is different from the full accrual basis used by proprietary funds.

Question 8

Some governments choose to sell the collection rights to unpaid property taxes in tax lien public auctions and therefore will not have property tax balances reported within the financial statements.

Accepted Answer

When a government sells the collection rights to unpaid property taxes in tax lien public auctions, it means that they are transferring the right to collect future property tax payments to a third-party investor. As a result, the government will not have these outstanding property tax balances reported within their financial statements.

Question 9

Year-end interfund receivable or payable balances will appear in the line item internal balances within their respective columns on the government-wide statement of net position.

Accepted Answer

Year-end interfund receivable or payable balances will be reported in the internal balances line item on the government-wide statement of net position within their respective columns.

Question 10

At the end of the fiscal year, the purchases method of recording inventory adjusts the Expenditures account to reflect the amount of inventory actually used during the period.

Accepted Answer

The purchases method of recording inventory adjusts the Inventory account to reflect the amount of inventory purchased during the period, not the amount actually used. The cost of goods sold and inventory adjustments are made separately at the end of the period.

Question 11

A payment made by a city-owned utility to the General Fund of the city in lieu of taxes is an example of a transaction that is recorded in the governmental activities journal.

Accepted Answer

Payments made by a city-owned utility to the General Fund of the city in lieu of taxes are considered revenue for the government, and thus are recorded in the governmental activities journal. This is because the city-owned utility is a component unit of the government and its financial activities are included in the government's financial statements.

Question 12

When equipment is ordered by a department of the government, the purchase order should be recorded in the General Fund as a debit to:
A) Appropriations.
B) Equipment.
C) Encumbrances.
D) Expenditures.

Accepted Answer

When equipment is ordered by a department of the government, the purchase order should be recorded as an encumbrance until the equipment is received. Encumbrances represent commitments that have been made but not yet paid for. Therefore, the purchase order should be recorded as a debit to Encumbrances in the General Fund. Once the equipment is received and paid for, the encumbrance is released and the payment is recorded as a debit to Expenditures.

Question 13

An interfund transfer occurs when one fund of government pays another fund of the same government for services provided.

Accepted Answer

An interfund transfer refers to the movement of resources between funds within the same government entity without a direct exchange of goods or services. It is different from transactions where one fund pays another for services provided, which would typically be classified as interfund services provided and used.

Question 14

The receipt of equipment that had previously been ordered should be recorded in the General Fund as a debit to
A) Appropriations.
B) Equipment.
C) Encumbrances.
D) Expenditures.

Accepted Answer

When equipment is received, it is recorded as an expenditure in the General Fund, reflecting the outflow of resources.

Question 15

Which of the following financial statement(s) reports both current and noncurrent assets and liabilities?               
A-                              
B-                                
C-                             
D-

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

Accepted Answer

The answer of Which of the following financial statement(s) reports...

Question 16

An interfund transfer in should be reported in a governmental fund operating statement as a(an):
A) Revenue.
B) Due from other funds.
C) Other financing source.
D) Other financing use.

Accepted Answer

Interfund transfers in represent resources that are provided by other funds of the government, and they do not meet the definition of revenues. Instead, they should be reported as other financing sources, which is a non-operating activity that increases the availability of resources for a fund.

Question 17

Dover City has calculated that General Fund property tax revenues of $5,640,000 are required for the current fiscal year. Over the past several years, the city has collected 94 percent of all property taxes levied. The city levied property taxes in the amount that will generate the required $5,640,000. Which of the following general journal entries would correctly record the property tax levy?
A) 
 
B) 
 
C) 
 
D)

Accepted Answer

The entry should be a debit to Property Tax Receivable for $5,640,000, representing the amount of property taxes levied for the year. This should be balanced by a credit to Property Tax Revenue for the same amount. Choice B provides the correct accounts and amounts.

Question 18

Fines and forfeits are reported as charges for services on the government-wide statement of activities.

Accepted Answer

Fines and forfeits are considered revenue and are reported as charges for services on the government-wide statement of activities.

Question 19

The General Fund has transferred cash to the appropriate fund for eventual retirement of term bonds maturing in 10 years. Which funds would record this transaction? 
A- 
B-
C- 
D-
A) Choice A.
B) Choice B.
C) Choice C.
D) Choice D.

Accepted Answer

The answer of The General Fund has transferred cash to...

Question 20

The City of Pringle purchased a vehicle for the police department. If the operations of the police department are financed by general revenues, an asset would be recorded in which journal(s)?

A-                  $\text { Yes }$                                        $\text { No }$

B-
                        $\text {  No}$                                        $\text { No }$

C-                        $\text {  No}$                                        $\text { Yes }$

D-                        $\text { Yes}$                                        $\text {Yes }$
A) Choice A.
B) Choice B.
C) Choice C.
D) Choice D.

Accepted Answer

The answer of The City of Pringle purchased a vehicle...

Quiz 4: Accounting for Governmental Operating Activities–Illustrative Transactions and Financial Statements

All amounts due to or from other funds should be eliminated in both the government-wide and fund financial statements.

A properly prepared schedule of revenues, expenditures, and changes in fund balances-budget and actual will include which of the following columns?

Encumbrance accounts need not be closed at year-end if the government is required or intends to honor the encumbrances outstanding at year-end.

Grant funds received before time requirements are met, but after all other eligibility requirements have been met, should be reported as an asset and a deferred inflow of resources by the recipient.

The Town of Loveland levied property taxes in the amount of $1,600,000. The town estimates that 1 percent will be uncollectible. The journal entry to record the tax levy will include

Which of the following should not be reported on the balance sheet of the General Fund?

Permanent funds use the modified accrual basis of accounting.

Some governments choose to sell the collection rights to unpaid property taxes in tax lien public auctions and therefore will not have property tax balances reported within the financial statements.

Year-end interfund receivable or payable balances will appear in the line item internal balances within their respective columns on the government-wide statement of net position.

At the end of the fiscal year, the purchases method of recording inventory adjusts the Expenditures account to reflect the amount of inventory actually used during the period.

A payment made by a city-owned utility to the General Fund of the city in lieu of taxes is an example of a transaction that is recorded in the governmental activities journal.

When equipment is ordered by a department of the government, the purchase order should be recorded in the General Fund as a debit to:

An interfund transfer occurs when one fund of government pays another fund of the same government for services provided.

The receipt of equipment that had previously been ordered should be recorded in the General Fund as a debit to

Which of the following financial statement(s) reports both current and noncurrent assets and liabilities? A- B- C- D-

An interfund transfer in should be reported in a governmental fund operating statement as a(an) :

Fines and forfeits are reported as charges for services on the government-wide statement of activities.

The General Fund has transferred cash to the appropriate fund for eventual retirement of term bonds maturing in 10 years. Which funds would record this transaction? A- B- C- D-