Question 1

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

Accepted Answer

Government fund statements are prepared using the modified accrual basis, while government-wide, proprietary fund, and fiduciary fund statements are prepared using the accrual basis.

Question 2

A Special Revenue Fund may not have a positive Unassigned Fund Balance

Accepted Answer

The answer of A Special Revenue Fund may not have...

Question 3

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

Accepted Answer

Intergovernmental services provided and used are recognized as indirect increases and decreases in fund balance, meaning they impact the overall financial position of the government entity as a whole rather than a specific fund.

Question 4

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 5

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 6

Under the purchases 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

Under the purchases method, expenditures are debited when supplies are received. Expenditures are charged for purchases made during the year and at the end of the year the supplies inventory and Nonspendable Fund Balance are adjusted to reflect actual supplies on hand.

Question 7

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

Question 8

Expenditures for claims and judgments and landfill post-closure 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 post-closure care costs of governmental funds should be recognized to the extent that the liabilities are going to be paid with available resources. This means that if there are available resources to pay for these liabilities, the expenditures should be recognized in the governmental funds.

Question 9

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

GASB requires that both extraordinary and special items be reported separately after other financing sources and uses in the General and Special Revenue fund financial statements. This requirement is outlined in GASB Statement No. 54, which provides guidance on fund balance reporting and governmental fund type definitions. Separating these items from other financing sources and uses helps ensure that they are clearly identified and not mixed in with other items that may not have the same level of significance or impact on the financial statements.

Question 10

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

The balances of the operating statement accounts and budgetary accounts are closed when the General Fund and Special Revenue Funds of a state or local governmental unit are closed.

Question 11

The fund balance represents the excess of fund assets over fund liabilities.

Accepted Answer

The fund balance is the amount of money left in a fund after all liabilities have been paid off. It represents the excess of fund assets over fund liabilities. Therefore, the statement is true.

Question 12

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 13

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

Accepted Answer

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

Question 14

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 15

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. This balance includes any revenues earned and expenses incurred during the accounting period. The balance can be carried forward to future years, subject to any legal or contractual restrictions on its use.

Question 16

Interfund services provided and used are recognized directly as Revenues and Expenditures.

Accepted Answer

Interfund services provided and used are reported as revenues and expenditures in the respective funds that provide and use the services, without being eliminated in the financial statements. This is in accordance with generally accepted accounting principles.

Question 17

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 a source of funds and would be closed at year end as it is a nonrecurring source of revenue.

Question 18

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

Accepted Answer

A special item is defined as a significant transaction that is both unusual and infrequent, but it is within the control of management.

Question 19

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

Governments should strive to have a clear and simple fund structure, avoiding unnecessary fragmentation of funds. Using functional classification can provide the necessary financial and operational detail needed while avoiding the confusion of too many specific funds.

Question 20

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

When establishing funds, governments should avoid having a large number of special revenue and other funds as it can make the financial information difficult to understand for the public. Instead, they should strive for simplicity and provide clear and concise information about their transactions.

Quiz 4: Accounting for the General and Special Revenue Funds