Question 1

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

Accepted Answer

When establishing funds, governments should aim to reduce the number of special revenue and other funds to simplify the budgeting and financial reporting process for users.

Question 2

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

Accepted Answer

Governmental fund financial statements are to be prepared on the modified accrual basis of accounting, which recognizes revenues when they are both measurable and available and expenses when they are incurred.

Question 3

Under the purchases method to account for supplies inventory, the expenditures account is debited when the supplies are received and the inventory account is adjusted at year end if significant.

Accepted Answer

This statement is correct. Under the purchases method, the expenditure account is debited when supplies are received, and the inventory account is adjusted at year-end if there are any significant changes in the inventory levels.

Question 4

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. Under the consumption method, supplies inventory is recorded as an asset when acquired and the expenditure is recorded when supplies are consumed.

Question 5

In the General Fund, revenues are recognized when measurable and available.

Accepted Answer

Revenues are recognized when they are both measurable and available to be used to finance government services and programs in the current period or soon after. This principle is part of the generally accepted accounting principles (GAAP) followed by governmental entities in the United States.

Question 6

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

Accepted Answer

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

Question 7

Under the consumption method to account for supplies inventory, the expenditures account is debited when the supplies are received and the inventory account is adjusted at year end if significant.

Accepted Answer

The answer of Under the consumption method to account for...

Question 8

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 is a revenue in the General Fund and would be closed at year end along with other revenues and expenses.

Question 9

A Fair Exchange transaction is one in which a government gives or receives value without directly receiving or giving equal value in exchange.

Accepted Answer

A nonexchange transaction is one where a government receives resources without directly giving equal value in exchange

Question 10

After closing entries, the Unreserved Fund Balance account represents the net amount of resources available for appropriation

Accepted Answer

After closing entries, the Unreserved Fund Balance account shows the net amount of resources available for appropriation. This is because all revenues, expenses, gains, and losses have been closed to their respective accounts, and the Unreserved Fund Balance remains as the residual equity account that represents the difference between assets and liabilities. Therefore, it reflects the available resources that can be used for future expenditures or other purposes.

Question 11

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

Accepted Answer

This is a correct statement. Government fund statements only recognize revenue when it becomes available and measurable, and expenses when they are incurred, while government-wide, proprietary fund, and fiduciary funds use accrual basis accounting which recognizes revenue when earned and expenses when incurred.

Question 12

Non-exchange transactions are transactions in which one party gives or receives value without directly receiving or giving equal value in return.

Accepted Answer

Non-exchange transactions involve giving or receiving value without necessarily receiving or giving equal value in return. This can include gifts, donations, and other transfers of value.

Question 13

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

Accepted Answer

This is true as transfers from the General Fund to the Debt Service Fund are considered other financing sources and would be recorded as such on the activities Statement of Revenues, Expenditures and Changes in Fund Balance.

Question 14

In the General Fund, revenues are recognized when earned and available

Accepted Answer

The General Fund uses modified accrual accounting. Revenues are recognized when they are both measurable and available to finance expenditures of the current period.

Question 15

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

Minimizing the number of funds and using functional classification improves transparency and accountability, making it easier for stakeholders to understand and evaluate government spending.

Question 16

A Non-exchange transaction is one in which a government gives or receives value without directly receiving or giving equal value in exchange.

Accepted Answer

A non-exchange transaction does not involve a direct exchange of equal value, but rather one party giving or receiving value without receiving or giving anything in return.

Question 17

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 Statement No. 54 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.

Question 18

Fines and Forfeits are typically recognized as revenue when the fines are levied and or monies forfeited

Accepted Answer

The answer of Fines and Forfeits are typically recognized as...

Question 19

In the General Fund, revenues are recognized when earned and measurable.

Accepted Answer

In the General Fund, revenues are recognized when they are both measurable and available, not just when earned.

Question 20

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, the expenditure is recorded when supplies are acquired, not when they are consumed.

Quiz 4: Accounting for the General and Special Revenue Funds