Question 1

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 and uses, but it does not include encumbrances. Encumbrances are recorded in the budgetary comparison schedule, which is a required supplementary schedule in the financial statements.

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

User fees are not a separate classification; they are typically included under "Charges for services" in the program revenues classification.

Question 3

In what ways does the government-wide statement of net position differ from the balance sheet for governmental funds?

Accepted Answer

The answer of In what ways does the government-wide statement...

Question 4

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

Accepted Answer

Inventories are reported on governmental funds balance sheets as a current asset. Capital assets are reported in the government-wide statement of net position. Unamortized debt issuance costs and goodwill are not reported in government financial statements.

Question 5

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 6

Revenues that are legally restricted for expenditure on 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

The gasoline taxes that are collected are legally restricted for expenditure on specified operating purposes, namely the repairing of roads. Therefore, they should be accounted for in special revenue funds. The other options, such as endowments, pension trust funds, and accumulating resources for general long-term debt, may be accounted for in other types of funds.

Question 7

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 8

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. This is because these transactions involve the entity receiving resources without any corresponding obligation to provide goods or services in exchange. Examples of voluntary nonexchange transactions include donations and grants. Imposed nonexchange transactions, on the other hand, recognize revenue when the associated obligation is satisfied. Derived tax revenues and property tax revenues are both types of exchange transactions and recognize revenue when the goods or services are provided.

Question 9

If a governmental fund issues debt to finance a capital acquisition,how should the proceeds of the debt be recorded?
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

The proceeds of the debt should be recorded as an other financing source in the governmental fund. This is because the debt is being used to finance a capital acquisition, which will provide long-term benefits to the government. As such, the debt should not be recorded as revenue, as it is not a source of income for the government. It should also not be recorded as a long-term liability, as this would only reflect the amount of debt that remains outstanding, not the actual amount that was received. Finally, the debt should be reported by the governmental fund, as it is a significant source of financing for the acquisition.

Question 10

How does the use of encumbrance procedures improve budgetary control over expenditures?

Accepted Answer

The answer of How does the use of encumbrance procedures...

Question 11

Supplies recorded in the General Fund under the purchases method will initially include a
A) Debit to Inventory of Supplies.
B) Credit to Fund Balance-Restricted-Inventory of Supplies.
C) Debit to Expenditures.
D) Debit to Fund Balance-Restricted-Inventory of Supplies.

Accepted Answer

Under the purchases method, supplies are recorded as expenditures when they are purchased. Therefore, the initial entry would be a debit to Expenditures. The other options involve recording the supplies as assets or restricting fund balance, which is not appropriate under the purchases method.

Question 12

Which of the following transactions is classified as an exchange 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

An exchange transaction involves giving something of value in exchange for something else of value. In this case, the fee charged for use of the athletic field represents something of value being given by the user in exchange for the use of the field. The other options are not exchange transactions: the state grant is a non-exchange transaction (it is a voluntary transfer of resources without an expectation of receiving something of equal value in return), the bequest is a non-exchange transaction (it is a non-reciprocal transfer of resources), and personal property taxes are not a transaction at all (they are a requirement for owning property).

Question 13

Why might actual revenues and expenditures reported on the schedule of revenues,expenditures,and changes in fund balances-budget and actual differ from those reported on the GAAP-basis statement of revenues,expenditures,and changes in fund balances?

Accepted Answer

The answer of Why might actual revenues and expenditures reported...

Question 14

The following are key terms in Chapter 4 that relate to exchange and nonexchange transactions:
A.Derived tax revenues
 B.Exchange transactions
C.Nonexchange transactions
D.Imposed nonexchange transactions
E.Voluntary nonexchange transactions
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.
_____ 1. Transactions in which the donor derives no direct tangible benefits from the recipient agency
_____ 2. A classification of nonexchange transaction,such as income or sales taxes
_____ 3. A category of nonexchange transaction that includes certain grants and entitlements and most donations
_____ 4. A category of nonexchange transactions,such as property taxes and most fines and forfeitures.
B. Exchange transactions
C. Nonexchange transactions
D. Imposed nonexchange transactions
E. Voluntary nonexchange transactions
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.
_____ 1. Transactions in which the donor derives no direct tangible benefits from the recipient agency
_____ 2. A classification of nonexchange transaction, such as income or sales taxes
_____ 3. A category of nonexchange transaction that includes certain grants and entitlements and most donations
_____ 4. A category of nonexchange transactions, such as property taxes and most fines and forfeitures.

Accepted Answer

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

Question 15

The county received a $10,000,000 endowment,the terms of which indicate that earnings on the endowment are to be used by health and welfare to provide medical services to low-income children.Where would the $10,000,000 be recorded?
A) Special revenue fund.
B) Permanent fund.
C) Private-purpose trust fund.
D) Public-purpose trust fund.

Accepted Answer

The $10,000,000 endowment is intended to be permanent, meaning the principal cannot be spent and only the earnings on the endowment can be used. This type of fund represents a permanent fund and would be recorded under this category.

Question 16

At the end of the 2017 fiscal year the General Fund had $500 in encumbrances that remained opened into fiscal year 2018.In 2018 the encumbered goods were received at an invoiced cost of $520.How much would be recorded as the 2018 expenditure?
A) $0.
B) $20.
C) $500.
D) $520.

Accepted Answer

The answer of At the end of the 2017 fiscal...

Question 17

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 transfer of funds from the electric utility fund to the general fund is an example of an interfund transfer, which is recorded in the governmental activities journal as an interfund transfer in.

Question 18

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 19

The earnings on the assets of a permanent fund are to be used to support the city's library (special revenue fund).How would the earnings be recorded?
A) Revenues by the permanent fund.
B) Revenues by the library.
C) Revenues by both the permanent fund and the library.
D) Other financing source by the permanent fund.

Accepted Answer

The earnings on the assets of a permanent fund are recorded as revenues by the permanent fund itself, not directly by the fund or program that benefits from those earnings. The library, in this case, would receive transfers or other financing sources from the permanent fund, not directly record the earnings as revenue.

Question 20

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 day-to-day operations and expenses.

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

The governmental funds operating statement presents all of the following except

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?

In what ways does the government-wide statement of net position differ from the balance sheet for governmental funds?

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

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

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

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

If a governmental fund issues debt to finance a capital acquisition,how should the proceeds of the debt be recorded?

How does the use of encumbrance procedures improve budgetary control over expenditures?

Supplies recorded in the General Fund under the purchases method will initially include a

Which of the following transactions is classified as an exchange transaction?

Why might actual revenues and expenditures reported on the schedule of revenues,expenditures,and changes in fund balances-budget and actual differ from those reported on the GAAP-basis statement of revenues,expenditures,and changes in fund balances?

The county received a $10,000,000 endowment,the terms of which indicate that earnings on the endowment are to be used by health and welfare to provide medical services to low-income children.Where would the $10,000,000 be recorded?

At the end of the 2017 fiscal year the General Fund had $500 in encumbrances that remained opened into fiscal year 2018.In 2018 the encumbered goods were received at an invoiced cost of $520.How much would be recorded as the 2018 expenditure?

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

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

The earnings on the assets of a permanent fund are to be used to support the city's library (special revenue fund) .How would the earnings be recorded?

The General Fund is used to account for: