Question 1

After closing entries,a special revenue fund's Fund Balance account represents the net amount of resources available for future appropriation

Accepted Answer

After closing entries, the Fund Balance account of a special revenue fund represents the net amount of resources available for future appropriation.

Question 2

Special revenue funds are used when it is desirable to provide separate reporting of resources that are assigned to expenditure for purposes other than debt service or capital projects.

Accepted Answer

Special revenue funds are used when it is desirable to provide separate reporting of resources that are restricted or committed to expenditure for a specified purpose other than debt service or capital projects. Resources appropriately reported within proprietary or fiduciary funds are also excluded from special revenue funds.

Question 3

Government and Fiduciary fund statements use the modified accrual basis,while government-wide,and proprietary funds use accrual basis.

Accepted Answer

Governmental funds use modified accrual accounting and the current financial resources measurement focus. Government-wide statements and proprietary and fiduciary funds use accrual accounting and the economic resources measurement focus.

Question 4

Government fund statements use the modified accrual basis,while government-wide,proprietary fund and fiduciary funds use accrual basis.

Accepted Answer

This is true. Government fund statements use the modified accrual basis, while government-wide, proprietary fund and fiduciary funds use accrual basis.

Question 5

Only the General Fund may have a positive Unassigned Fund Balance

Accepted Answer

Only the General Fund is permitted to have an Unassigned Fund Balance.

Question 6

Interfund services provided and used are recognized directly as Transfers In and Transfers Out.

Accepted Answer

Interfund services provided and used are typically recognized as revenues and expenditures/expenses, not as transfers. Transfers In and Transfers Out are used for reallocating resources between funds without equivalent exchange of services.

Question 7

When closing the General Fund and Special Revenue Funds of a state or local governmental unit,the balance of the operating statement accounts and the balances of the budgetary accounts are closed

Accepted Answer

When closing the General Fund and Special Revenue Funds of a state or local governmental unit, the balance of the operating statement accounts and the balances of the budgetary accounts are closed. This is done through the process of accounting closing entries, which involves transferring the balances from these accounts to appropriate balance sheet accounts.

Question 8

Governmental fund financial statements are to be prepared on the accrual basis of accounting.

Accepted Answer

Governmental fund financial statements are prepared using the modified accrual basis of accounting, not the accrual basis.

Question 9

Expenditures for claims and judgments and landfill postclosure care costs of governmental funds should be recognized to the extent that the liabilities are going to be paid with available resources.

Accepted Answer

Expenditures for claims and judgments and landfill postclosure care costs of governmental funds should be recognized to the extent that the liabilities are going to be paid with available resources, as per the accounting principles.

Question 10

A Special Revenue Fund may have a positive Unassigned Fund Balance

Accepted Answer

A Special Revenue Fund typically does not have an Unassigned Fund Balance, as it is used to account for specific revenue sources that are restricted or committed for specific purposes. Unassigned Fund Balances are generally found in the General Fund.

Question 11

When establishing funds,governments should attempt to have a large number of special revenue and other funds to provide the user with maximum detail to understand the transactions.

Accepted Answer

Governments should actually strive to have fewer special revenue and other funds, as having too many can make it difficult for users to understand the transactions and can lead to inefficiencies in managing the funds. Instead, governments should aim to have a smaller number of broad-based funds that can be easily understood and managed.

Question 12

Proceeds from the Sale of Land in the General Fund is a source of funds and would be closed at year end.

Accepted Answer

Proceeds from the Sale of Land in the General Fund is considered a revenue source and would be closed at year end to properly reflect the net income or loss for the period.

Question 13

GASB requires both extraordinary and special items to be reported separately after other financing sources and uses in the General and Special Revenue fund financial statements

Accepted Answer

This is because GASB wants to highlight unique and infrequent transactions that are not related to the entity's normal operations and to provide transparency to financial statement users.

Question 14

A special item is a significant transaction that is unusual and infrequent,but within the control of management

Accepted Answer

The answer of A special item is a significant transaction...

Question 15

The fund balance represents the amount of resources in the fund.

Accepted Answer

The answer of The fund balance represents the amount of...

Question 16

Interfund services provided and used are recognized as direct Increases and Decreases in Fund Balance

Accepted Answer

Interfund services provided and used represent transactions involving sales and purchases of goods and services between funds. One fund records a revenue and the other fund records an expenditure or expense.

Question 17

Expenditures for claims and judgments,compensated absences,and special termination benefits should be recognized in the General Fund whether or not the liabilities are to be paid with available resources.

Accepted Answer

Expenditures for claims and judgments, compensated absences, pensions and land-fill closure and postclosure care costs should be recognized in the General Fund to the extent that the liabilities are to be paid with available resources.

Question 18

When establishing funds,governments should attempt to minimize the number of special revenue and other funds,instead using functional classification to record transaction detail.

Accepted Answer

Functional classification allows for a more streamlined and efficient system of organizing and recording transactions, whereas too many special revenue and other funds can lead to confusion and inefficiency.

Question 19

Under the consumption method to account for supplies inventory,an asset is recorded when inventories are acquired,and the Expenditure is recorded when the supplies are consumed.

Accepted Answer

This statement is true for the consumption method of accounting for supplies inventory. The asset is initially recorded when the inventory is acquired, and the corresponding expenditure is recorded when the supplies are consumed. This method helps to ensure that the expenses are matched with the revenue they generate, which provides a more accurate view of a company's financial performance.

Question 20

The Debt Service Fund would record the receipt of money from the General Fund as nonoperating revenue on the activities Statement of Revenues,Expenditures,and Changes in Fund Balance.

Accepted Answer

Transfers are not an exchange of interfund services and should not be recorded as revenues by the fund receiving the transfer

Quiz 4: Accounting for the General and Special Revenue Funds