Question 1

At any point in time,a government will be able to spend an amount equal to

Accepted Answer

Appropriations minus expenditures minus encumbrances represents the amount of money that a government can spend at any point in time.

Question 2

Taxes which were billed,but are not paid by the due date,require which of the following entries at the fiscal close?

Accepted Answer

Taxes that are billed but not paid by the due date are considered delinquent, so they should be recorded as a debit to Taxes Receivable - Delinquent. This represents the amount of taxes that are still owed to the government.

Question 3

The proper sequence of events is

Accepted Answer

The correct sequence of events is appropriation (budgeting for expenses), purchase order (requesting goods or services), encumbrance (setting aside funds for payment), and expenditure (actually making payment). Therefore, appropriation must come before the purchase order, and the encumbrance must be established before the expenditure.

Question 4

Which of the following represents the recording of a budget in the accounts of the General Fund?

Accepted Answer

When a budget is recorded in the accounts of the General Fund, the estimated revenues for the budget period are debited, and the appropriations for the budget period are credited. In addition, if there are any estimated other financing uses, they are also credited. Finally, the Fund Balance - Unassigned account is credited to reflect the budget surplus. Therefore, option C is the correct answer as it includes all of these transactions.

Question 5

The General Fund transfers $50,000 cash to the Debt Service Fund to meet annual interest payments.What entry did the Debt Service Fund prepare?

Accepted Answer

The Debt Service Fund would debit Cash $50,000 to record the receipt of the transfer from the General Fund, and credit Other Financing Sources-Transfer from General Fund $50,000 to record the source of the revenue. This entry reflects the transfer of resources from one fund to another, rather than revenue earned by the Debt Service Fund.

Question 6

Use the following information to answer the question(s) below.

The town of Mayberry receives a gift of $500,000 in bonds. The contributor instructs that the principal should remain intact, but the annual interest income of $50,000 can be used for the maintenance of the zoo animals.

-When the donation of bonds is received,what account should be debited?

Accepted Answer

When a donation of bonds is received, the Investment account should be debited as it represents the increase in the value of the entity's investments.

Question 7

Assume you are preparing journal entries for the General Fund under the consumption method.What account should be debited when office supplies are ordered?

Accepted Answer

When office supplies are ordered, an encumbrance should be recorded in the General Fund. An encumbrance is a commitment to purchase goods or services, and is used to reserve a portion of the budget for the purchase. Once the supplies are received and paid for, the encumbrance is reversed and an expenditure is recorded.

Question 8

When recording an approved budget into the accounts of the general fund,which of the following accounts would be credited?

Accepted Answer

When recording an approved budget into the accounts of the general fund, the appropriations account would be credited. This is because appropriations represent the amount of money that the organization is authorized to spend during a particular period, so the credit to the appropriations account reflects the budgeted amount available for spending. Encumbrances are used to reserve funds for a specific purpose, estimated revenues are debited to reflect the expectation of income, and revenue collected in advance is credited when funds are received prior to the delivery of goods or services. None of these accounts would be appropriate for recording the approved budget.

Question 9

Governments must record a liability for uncollected taxes instead of revenues for uncollected taxes if the taxes are going to be collected

Accepted Answer

According to generally accepted accounting principles (GAAP), uncollected taxes should be recorded as a liability if they are expected to be collected within 60 days after the fiscal year end. This is because the government has a legal claim to these taxes and they are considered earned during the fiscal year they relate to, even if they are collected after the fiscal year end. If the taxes are not expected to be collected within 60 days, then they should not be recorded as a liability, but rather written off as a loss.

Question 10

What statements are required for Government-wide financial statements?

Accepted Answer

The Government-wide financial statements require a Statement of Net Position (similar to Balance Sheet) and a Statement of Activities. The Statement of Cash Flows may also be included but it is not required. The Operating Statement is not a required statement for Government-wide financial statements.

Question 11

When a city enters into a capital lease for a fixed asset for the general government,

Accepted Answer

When a city enters into a capital lease for a fixed asset for the general government, government-wide statements will report the asset and liability for the leased asset. This is because capital leases are treated as assets and liabilities on the government-wide financial statements, as they are considered long-term obligations. Therefore, Choice B and Choice D can be eliminated. Furthermore, governmental fund statements do not report long-term assets or liabilities, so Choice C can also be eliminated.

Question 12

Goodwill County had the following transactions for their General Fund in the first month of their fiscal 2014 year,which ends June 30,2014.
1.The budget was approved,with $1,200,000 expected from property taxes,and another $5,000,000 expected from sales taxes.The budget showed these funds were expected to be spent on Salaries and Wages,$3,100,000; Utilities,$1,800,000; Rent,$900,000; and Supplies,$200,000.
2.Supplies were ordered in the amount of $33,000.
3.The electric bill was paid upon receipt in the amount of $75,000.
4.Property taxes were billed in the amount of $1,200,000,due on December 31.Bad debts are estimated at 1% of receivables.
5.Supplies were received,but the invoice amount was $35,000 and will be paid in 35 days.Supplies are used quickly and are not inventoried.
6.Property tax payments were received amounting to $100,000.
7.Payment was received from merchants for sales tax collections amounting to $400,000.
Required:
Prepare the journal entries for the General Fund that would be required for these transactions.

Accepted Answer

The answer of Goodwill County had the following transactions for...

Question 13

A Capital Projects Fund awards the construction of a building to a construction contractor at a contract cost of $1,000,000.What entry is prepared by the Capital Projects Fund?

Accepted Answer

When a Capital Projects Fund awards a construction contract, it records an encumbrance for the amount of the contract, which is an entry to recognize a commitment to spend funds. The correct entry is to debit Encumbrances and credit Reserve for Encumbrances, reflecting the commitment without recognizing an expenditure until the funds are actually disbursed.

Question 14

Use the following information to answer the question(s) below.

The town of Mayberry receives a gift of $500,000 in bonds. The contributor instructs that the principal should remain intact, but the annual interest income of $50,000 can be used for the maintenance of the zoo animals.

-What type of fund should be used to account for the gift of bonds and the interest income?

Accepted Answer

A Permanent Fund is used to account for situations where the principal amount is to remain intact indefinitely, but the interest income can be used for specific purposes, such as the maintenance of zoo animals in this scenario.

Question 15

Which statement below is incorrect with respect to the Government-wide financial statements?

Accepted Answer

Only the governmental funds use the modified accrual basis of accounting, while the government-wide financial statements must use the full accrual basis of accounting. Therefore, not all governmental fund categories can convert to the modified accrual basis on the government-wide financial statements.

Question 16

Match between columns
                        Premises: Amounts can only be spent for the specific purposes stipulated by constitution, external resource provider or enabling legislation.
Amounts intended to be used by the government for specific purposes but do not meet the criteria of restricted or committed.
Dollar amount of Ending Inventory.
Dollar amount of endowment principal.
Residual classification of funds for the General Fund.
Amounts can only be spent for the specific purposes determined by a formal action of the government's highest level of decision-making authority.

Accepted Answer

The Answer of Assigned Fund Balance and Unassigned Fund Balance is...

Question 17

Which of the following funds has similar accounting and reporting to the special revenue fund?

Accepted Answer

The special revenue fund and the general fund are both used to account for specific revenue sources and have similar accounting and reporting requirements. The proprietary fund is used for government business-like activities, the trust fund is used for trust activities, and the agency fund is used to account for resources held by the government in a custodial capacity.

Question 18

The proceeds from a bond issuance for the construction of a new public school should be recorded in the ________ fund at the time the bonds are sold.At the time of the bond issue,the debit is to cash and the credit is to ________.

Accepted Answer

The proceeds from a bond issuance for the construction of a new public school should be recorded in the capital projects fund at the time the bonds are sold. At the time of the bond issue, the debit is to cash and the credit is to other financing sources. So, option D is the correct answer.

Question 19

When the interest income of $50,000 is received,what account should be credited?

Accepted Answer

Interest income is a revenue account and should be credited to the Revenue account.

Question 20

When a capital lease is used to lease fixed assets for the general government,the governmental fund acquiring the fixed assets debits ________ at the ________.

Accepted Answer

The answer of When a capital lease is used to...

Quiz 20: Accounting for State and Local Governmental Units - Governmental Funds