Question 1

Which of the following would be reported on the operating statement of a governmental fund?
A) The liability for the annual obligation to the employee retirement plan.
B) Depreciation expense.
C) Resources received for services to be provided in future periods.
D) Revenue related to prior periods.

Accepted Answer

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

Question 2

Which of the following is not a program revenues classification used in the governmental activities journal and reported in the government-wide statement of activities?
A) User fees.
B) Operating grants and contributions.
C) Charges for services.
D) Capital grants and contributions.

Accepted Answer

The answer of Which of the following is not a...

Question 3

Revenues that are legally restricted to be expended for specified operating purposes should be accounted for in special revenue funds,including
A) Endowment where the investment earnings are to be used for public purposes.
B) Pension trust fund revenues.
C) Accumulation of resources for payment of general long-term debt principal and interest.
D) Gasoline taxes to finance road repairs.

Accepted Answer

Gasoline taxes that are legally restricted to funding road repairs should be accounted for in a special revenue fund. This is because the revenue is restricted and can only be used for a specific operating purpose. The other options listed do not necessarily need to be accounted for in special revenue funds. Endowment earnings may be accounted for in an endowment fund, pension trust fund revenues may be accounted for in a pension trust fund, and resources for payment of long-term debt may be accounted for in a debt service fund. However, none of these options are legally restricted to specific operating purposes like gasoline taxes for road repairs are.

Question 4

The following are key terms in Chapter 4 that relate to exchange and nonexchange transactions:
A.Derived tax revenues
B.Exchange-like transactions
C.Nonexchange transactions
D.Nonexchange revenue
E.Voluntary nonexchange transactions
F.Imposed nonexchange revenue
 G.Exchange transactions
 H.Time restrictions
 I.Purpose restrictions
 J.Eligibility requirements
 For each of the following definitions,indicate the key term from the list above that best matches by placing the appropriate letter in the blank space next to the definition.

Accepted Answer

The answer of The following are key terms in Chapter...

Question 5

All revenue and interfund transfers of the City of Fenton are accounted for on the modified accrual basis.Below is shown a list of Fenton's General Fund transactions of a revenue or transfer nature.State which ones should be recognized by the General Fund as a revenue or interfund transfer in the year of occurrence.If any item is neither a current revenue nor interfund transfer,state the proper treatment for that item.
1)Receipt of money from issue of tax anticipation notes.
2)Charge to a special revenue fund for supplies transferred to it at cost.
3)Collection of current-year property taxes.
4)Collection of prior years' taxes.
5)Receipt of money in prepayment of a property owner's next-year taxes.
6)Collection of taxes applicable to prior year that,due to an assessor's error,had not been recorded as receivable in that year.
7)Receipt of refund on prior year's expenditures.
8)Refund of current year's expenditures.
9)Collection of accounts receivable for charges for services.
10)Collection of taxes that had been written off in prior year.

Accepted Answer

The answer of All revenue and interfund transfers of the...

Question 6

Which of the following is properly reported as an other financing source by the General Fund?
A) Sales taxes.
B) Interfund transfers in.
C) Parking fines.
D) Sale of zoning maps.

Accepted Answer

Interfund transfers in are reported as other financing sources in the General Fund, as they represent inflows of resources not derived from revenues.

Question 7

Under the modified accrual basis of accounting,revenues should be recognized when
A) Realizable.
B) Earned.
C) Available.
D) Spent.

Accepted Answer

The answer of Under the modified accrual basis of accounting,revenues...

Question 8

Distinguish between interfund loans and interfund transactions that recognize a flow of financial resources in governmental fund operating statements.

Accepted Answer

The answer of Distinguish between interfund loans and interfund transactions...

Question 9

Which of the following types of nonexchange transactions recognize revenue when all the eligibility requirements are met?
A) Voluntary nonexchange transactions.
B) Imposed nonexchange transactions.
C) Derived tax revenues.
D) Property tax revenues.

Accepted Answer

Voluntary nonexchange transactions recognize revenue when all eligibility requirements are met, such as when a grant is awarded and compliance is confirmed. This is unlike imposed nonexchange transactions, which recognize revenue when the resource provider imposes the requirement and the recipient complies, and derived tax revenues and property tax revenues, which are both exchange transactions and recognize revenue when the exchange takes place.

Question 10

When an enterprise fund pays the General Fund an amount in lieu of taxes,the account to be credited in the General Fund is
A) Cash.
B) Operating Transfer in.
C) Revenues.
D) Fund Balance--Unassigned.

Accepted Answer

The General Fund should credit "Revenues" when it receives an amount in lieu of taxes from an enterprise fund, as this represents income to the General Fund.

Question 11

If a government issues debt to finance capital acquisition,how should the related long-term debt be reported by the governmental fund that receives the proceeds of the debt?
A) Long-term liability.
B) Revenue.
C) Other financing source.
D) Not reported by the governmental fund; only reported at the government-wide level.

Accepted Answer

In governmental accounting, the proceeds from issuing long-term debt are reported as "Other financing sources" in the governmental fund financial statements, not as a liability.

Question 12

The General Fund is used to account for:
A) Revenues and expenditures legally restricted to a specific purpose.
B) The accumulation of resources to pay for principal and interest on the current portion of long-term debt.
C) Construction of major capital assets.
D) General administration of the government.

Accepted Answer

The General Fund is used to account for the general administration of the government, including the day-to-day operations and expenses such as salaries, supplies, and maintenance. The other options refer to more specific funds that have a designated purpose.

Question 13

Under the consumption method for recording supplies that are maintained on a perpetual inventory system,the adjusting entry made at year end would affect which of the following accounts?
A) Fund Balance-Nonspendable-Inventory of Supplies.
B) Fund Balance-Restricted-Inventory of Supplies.
C) Expenditures.
D) Inventory of Supplies.

Accepted Answer

The answer of Under the consumption method for recording supplies...

Question 14

The following are key terms in Chapter 4 that relate to governmental operating activities and transfers:
A.Inter-activity transactions
B.Internal exchange transactions
C.Interfund loans
D.Intra-entity transactions
E.Interfund transfers
 For each of the following definitions,indicate the key term from the list above that best matches by placing the appropriate letter in the blank space next to the definition.

Accepted Answer

The answer of The following are key terms in Chapter...

Question 15

Which of the following assets would appropriately be reported on the governmental funds balance sheet?
A) Capital assets.
B) Inventories.
C) Deferred charges for debt issuance costs.
D) Goodwill.

Accepted Answer

Inventories are typically reported on the governmental funds balance sheet. Capital assets would be reported on the government-wide financial statements. Deferred charges for debt issuance costs would be reported as a long-term asset on the government-wide financial statements. Goodwill is not generally applicable to governmental accounting and reporting.

Question 16

The city's electric utility fund sent $700,000 to the General Fund to help cover the city's operating costs.This transaction would be recorded in the governmental activities journal as
A) Interfund transfer in.
B) Internal balance.
C) Revenue.
D) It would not be recorded since the transaction involves two funds of the same government.

Accepted Answer

The transaction involves an interfund transfer where money is transferred from one fund to another within the same government. Therefore, it would be recorded in the governmental activities journal as an interfund transfer in.

Question 17

In which fund would a government most likely account for the assets confiscated in drug arrests and legally required to be used for drug prevention education?
A) General Fund.
B) Permanent fund.
C) Special revenue fund.
D) Enterprise fund.

Accepted Answer

The assets confiscated in drug arrests and legally required to be used for drug prevention education would most likely be accounted for in a special revenue fund. Special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or designated for a particular purpose, such as the assets confiscated from drug arrests that are required to be used for drug prevention education.

Question 18

The governmental funds operating statement presents all of the following except
A) Expenditures.
B) Other financing sources.
C) Revenues.
D) Encumbrances.

Accepted Answer

The governmental funds operating statement presents revenues, expenditures, and other financing sources, but does not include encumbrances. Encumbrances are not considered actual expenditures, but rather commitments for future expenditures.

Question 19

At the end of the 2014 fiscal year the General Fund had $500 in encumbrances that remained opened into fiscal year 2015.In 2015 the encumbered goods were received at an invoiced cost of $520.How much would be recorded as the 2015 expenditure?
A) $0.
B) $20.
C) $500.
D) $520.

Accepted Answer

The answer of At the end of the 2014 fiscal...

Question 20

Which of the following transactions is classified as an exchange transaction rather than a nonexchange transaction?
A) Fees charged for use of an athletic field at a city park.
B) State grant to conduct a smoking cessation program for middle school-aged youth.
C) Bequest left to the city by a former mayor.
D) Personal property taxes.

Accepted Answer

Fees charged for use of an athletic field at a city park is an exchange transaction as there is a direct exchange of goods or services (use of the athletic field) for a fee.

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

Which of the following would be reported on the operating statement of a governmental fund?

Which of the following is not a program revenues classification used in the governmental activities journal and reported in the government-wide statement of activities?

Revenues that are legally restricted to be expended for specified operating purposes should be accounted for in special revenue funds,including

Which of the following is properly reported as an other financing source by the General Fund?

Under the modified accrual basis of accounting,revenues should be recognized when

Distinguish between interfund loans and interfund transactions that recognize a flow of financial resources in governmental fund operating statements.

Which of the following types of nonexchange transactions recognize revenue when all the eligibility requirements are met?

When an enterprise fund pays the General Fund an amount in lieu of taxes,the account to be credited in the General Fund is

If a government issues debt to finance capital acquisition,how should the related long-term debt be reported by the governmental fund that receives the proceeds of the debt?

The General Fund is used to account for:

Under the consumption method for recording supplies that are maintained on a perpetual inventory system,the adjusting entry made at year end would affect which of the following accounts?

Which of the following assets would appropriately be reported on the governmental funds balance sheet?

The city's electric utility fund sent $700,000 to the General Fund to help cover the city's operating costs.This transaction would be recorded in the governmental activities journal as

In which fund would a government most likely account for the assets confiscated in drug arrests and legally required to be used for drug prevention education?

The governmental funds operating statement presents all of the following except

At the end of the 2014 fiscal year the General Fund had $500 in encumbrances that remained opened into fiscal year 2015.In 2015 the encumbered goods were received at an invoiced cost of $520.How much would be recorded as the 2015 expenditure?

Which of the following transactions is classified as an exchange transaction rather than a nonexchange transaction?