Question 1

A payment made by a city-owned utility to the General Fund of the city in lieu of taxes is an example of an "internal exchange transaction."

Accepted Answer

An internal exchange transaction refers to a transaction between different units or departments of the same government entity. A payment made by a city-owned utility to the General Fund of the city in lieu of taxes would be considered an internal exchange transaction as both entities belong to the same government.

Question 2

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 at the end of the fiscal year to reflect the amount of inventory actually on hand, not the amount used during the period.

Question 3

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 4

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, they will not have the outstanding taxes reported on their financial statements because they have essentially transferred the responsibility of collecting the taxes to the buyer of the tax lien.

Question 5

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 as it compares the actual results with the budgeted amounts. Encumbrances outstanding at year-end and unexpended appropriations may also be included, but they are not necessary columns for the schedule to be complete. Actual revenue and expenditure amounts on the GAAP basis are not relevant to this schedule.

Question 6

Which of the following would properly be reported in the operating statement of a governmental fund?
A) Interest on a tax anticipation note issued and repaid during the period.
B) Amortization expense.
C) Depreciation expense.
D) A grant that is intended to finance activities of the following period.

Accepted Answer

Interest on a tax anticipation note issued and repaid during the period would be reported as revenue in the operating statement of a governmental fund because it represents a current inflow of financial resources. Amortization expense and depreciation expense would be reported on the statement of activities or government-wide financial statements, not in the operating statement of a governmental fund. A grant that is intended to finance activities of the following period would not be reported in the operating statement of a governmental fund because it does not represent a current inflow of financial resources.

Question 7

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, a purchase order is created which encumbers a portion of the department's budget. This means that the funds are reserved and cannot be used for other purposes. Therefore, the purchase order should be recorded in the General Fund as a debit to Encumbrances. Once the equipment is received and payment is made, the encumbrance is liquidated and the expenditure is recorded.

Question 8

Using the information below,what amount should be accounted for in a special revenue fund or funds? Warehouse equipment used to store supplies for delivery to all city departments and agencies on a cost-reimbursement basis
$300,000
Equipment used for supplying electric power to residents
$1,750,000
Receivables for completed sidewalks to be paid for in installments by affected property owners. Construction was financed by special assessment bonds for which the town has no liability
$1,500,000
Cash received from federal government,dedicated to highway maintenance,that must be accounted for in a separate fund
$1,800,000
A) $1,800,000.
B) $2,100,000.
C) $3,300,000.
D) $5,350,000.

Accepted Answer

The cash received from the federal government dedicated to highway maintenance must be accounted for in a special revenue fund, as it is restricted for a specific purpose.

Question 9

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

The answer of The receipt of equipment that had previously...

Question 10

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

This statement is true. Encumbrance accounts may remain open if the government still intends to fulfill the commitments represented by the encumbrances. However, if the encumbrances are not expected to be fulfilled, they should be closed out at year-end.

Question 11

Permanent funds use the modified accrual basis of accounting.

Accepted Answer

Permanent funds use the modified accrual basis of accounting. This means that revenues are recognized when they become measurable and available to finance current-year expenditures, and expenditures are recognized when the related liability is incurred.

Question 12

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 journal entry to record the tax levy will include a credit to Revenues for $1,584,000 ($1,600,000 - 1% uncollectible). This is because property taxes are considered a revenue for the government entity collecting them. The other options (A, C, and D) are not correct because they do not accurately reflect the accounting treatment for property taxes.

Question 13

Which of the following financial statement(s)reports both current and noncurrent assets and liabilities? Government-wide Statement
Of Net Position
General Fund Balance Sheet
a)No,Yes
b) No,No
c) Yes,No
d) Yes,Yes
A) Choice A
B) Choice B
C) Choice C
D) Choice D

Accepted Answer

The Government-wide Statement of Net Position reports both current and noncurrent assets and liabilities for the entire government entity. The General Fund Balance Sheet only reports current assets and liabilities for the General Fund, which is just one fund within the government entity.

Question 14

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 are included in the internal balances line item of the government-wide statement of net position.

Question 15

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

Accepted Answer

In fund financial statements, amounts due to or from other funds are reported, but in government-wide financial statements, they are eliminated to avoid double-counting.

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

An interfund transfer in represents an inflow of resources into the recipient fund, originating from another fund. It is not a revenue, nor a due from other funds. Instead, it is considered an other financing source for the recipient fund, as it increases the fund's available financial resources.

Question 17

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 is correct according to the guidelines set out by the Governmental Accounting Standards Board (GASB). Grant funds that are received before the criteria for their use are fulfilled are considered as deferred inflows of resources and should be reported as an asset until the requirements have been met.

Question 18

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) Taxes Receivable - Current…………………… 5,640,000 Estimated Uncollectible Current Taxes………………… 338,400
Revenues……………………………………………… 5,301,600
B) Taxes Receivable - Current …………………… 6,000,000 Estimated Uncollectible Current Taxes………………… 360,000
Revenues……………………………………………… 5,640,000
C) Taxes Receivable - Current…………………… 5,640,000 Deferred Inflow of Taxes.……………………………… 338,400
Revenues……………………………………………… 5,301,600
D) Taxes Receivable - Current…………………… 6,000,000 Deferred Inflow of Taxes………………………………. 360,000
Revenues……………………………………………… 5,640,000

Accepted Answer

Option B records the correct amount of property tax levy and estimated uncollectible current taxes, as well as the resulting revenue. Option A records an incorrect amount for estimated uncollectible current taxes, while options C and D incorrectly record deferred inflow of taxes.

Question 19

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 20

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.

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

A payment made by a city-owned utility to the General Fund of the city in lieu of taxes is an example of an "internal exchange transaction."

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.

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

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.

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

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

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

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

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

Permanent funds use the modified accrual basis of accounting.

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 financial statement(s) reports both current and noncurrent assets and liabilities? Government-wide Statement Of Net Position General Fund Balance Sheet a) No,Yes b) No,No c) Yes,No d) Yes,Yes

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.

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

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

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.

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

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