Question 1

Recording the annual budget is optional in the General Fund.

Accepted Answer

Recording the annual budget is mandatory in the General Fund as per governmental accounting standards.

Question 2

Under GASB standards,Revenues must be credited for the total amount of the property tax levy.

Accepted Answer

False

Question 3

A payment made by the General Fund to a debt service fund would not be recorded in the governmental activities journal.

Accepted Answer

A payment made by the General Fund to a debt service fund is an internal transaction within the governmental activities and would not be recorded as a revenue or expense in the journal.

Question 4

Property tax revenue is an example of a nonexchange revenue-one in which the government receives value without directly giving equal value in exchange.

Accepted Answer

Property tax revenue is not an exchange of services or goods between the taxpayer and the government; rather, it is a tax that the government levies on property owners to fund public services and programs. Therefore, it is an example of a nonexchange revenue.

Question 5

Encumbrances Outstanding is shown on the balance sheet as a restriction on fund balance.

Accepted Answer

The answer of Encumbrances Outstanding is shown on the balance...

Question 6

The account Budgetary Fund Balance can have either a debit or credit balance.

Accepted Answer

The Budgetary Fund Balance account can have either a debit or credit balance depending on whether the budget has a surplus or a deficit. If the budget has a surplus, the Budgetary Fund Balance account will have a credit balance; if the budget has a deficit, the Budgetary Fund Balance account will have a debit balance.

Question 7

A contribution was received by the city for the purchase of playground equipment.The contribution would not be recognized as revenue by the permanent fund until the playground equipment has been purchased.

Accepted Answer

The contribution should be recognized as revenue in the period it is received by the permanent fund, not when the playground equipment is purchased. Revenue recognition does not depend on the timing of the purchase of assets it is intended to fund.

Question 8

Whenever a significant revenue source is restricted for a specific operating purpose,a special revenue fund should be established.

Accepted Answer

This is true as per Generally Accepted Accounting Principles (GAAP) and Governmental Accounting Standards Board (GASB). Establishing a special revenue fund ensures that the restricted revenue can only be used for the intended purpose and provides transparency and accountability in financial reporting.

Question 9

If the actual liability for goods received in the current year differs from the estimated liability recorded when the goods were ordered in the prior year,the Encumbrances account should be credited in the amount of the estimated liability.

Accepted Answer

The answer of If the actual liability for goods received...

Question 10

Estimated uncollectible tax amounts are recorded in the General Fund general journal as a reduction in revenues and in the governmental activities journal as a bad debt expense.

Accepted Answer

Estimated uncollectible tax amounts are recorded in the General Fund general journal as a reduction in revenues, but for governmental activities in the government-wide financial statements, the accrual basis of accounting is used, and uncollectible amounts are directly reduced from the receivables, not recorded as a bad debt expense.

Question 11

Under the modified accrual basis of accounting applicable to governmental fund types,property tax revenue is accrued and recorded at net realizable value.

Accepted Answer

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

Question 12

Property taxes due 75 days after the end of the 2017 fiscal year would be recognized in 2017 as revenues in the General Fund general journal.

Accepted Answer

Property taxes due 75 days after the end of the 2017 fiscal year would be recognized as revenue in the 2018 fiscal year, not 2017.

Question 13

The Governmental Activities column of the statement of net position includes financial information for all funds of a government.

Accepted Answer

The Governmental Activities column of the statement of net position includes only the financial information related to governmental activities at the government-wide level, not for all individual funds.

Question 14

A tourist tax that is restricted for use on maintenance projects in the historic downtown district should be recorded as general revenues in the governmental activities journal.

Accepted Answer

The tourist tax is considered a general revenue because it is not restricted for a specific purpose. However, the restrictions on its use for downtown maintenance projects should be noted in the financial statements and footnotes.

Question 15

Vehicles used by the Culture and Recreation Department should be reported in the governmental fund financial statements.

Accepted Answer

The answer of Vehicles used by the Culture and Recreation...

Question 16

Governments that are temporarily short of cash but that have levied taxes expected to be collectible during the fiscal year are generally able to borrow on short-term notes known as "tax anticipation notes payable."

Accepted Answer

Tax anticipation notes payable are a common way for governments to bridge temporary cash flow gaps by borrowing against future tax revenues.

Question 17

Current financial resources include cash and items such as marketable securities and receivables expected to be converted into cash in the current period or soon enough thereafter to pay current period obligations.

Accepted Answer

Current financial resources are those that are readily available to pay off current period obligations, and include cash as well as marketable securities and receivables that are expected to be converted into cash soon enough to meet those obligations.

Question 18

Under current GASB standards the revenue from property taxes should be recorded in the amounts collected during the current period.

Accepted Answer

Under GASB standards, property tax revenue should be recognized in the period for which the taxes are levied, not necessarily when they are collected.

Question 19

The government-wide statement of net position is prepared using the same measurement focus and basis of accounting as the General Fund balance sheet.

Accepted Answer

The government-wide statement of net position is prepared using the accrual basis of accounting and economic resources measurement focus, whereas the General Fund balance sheet is prepared using the modified accrual basis of accounting and current financial resources measurement focus.

Question 20

The Governmental Activities column of the government-wide statement of net position reports both current and noncurrent assets and liabilities.

Accepted Answer

The Governmental Activities column of the government-wide statement of net position includes both current and noncurrent assets and liabilities, as it reports on the overall financial position of the governmental entity.

Quiz 4: Accounting for Governmental Operating Activitiesillustrative Transactions and Financial Statements