Question 1

Which of the financial statements described below is prepared by the general fund of a state or local government?
A)A statement of cash flows.
B)An income statement.
C)A statement of revenues,expenses,and changes in retained earnings.
D)A statement of revenues,expenditures,and changes in fund balance.

Accepted Answer

The general fund of a state or local government prepares a statement of revenues, expenditures, and changes in fund balance to report on its financial activities. This statement tracks the inflows (revenues) and outflows (expenditures) of resources, as well as any changes in the fund balance, which reflect the net increase or decrease in available resources at the end of the period. The statement of cash flows is a separate financial statement that tracks the cash flows in and out of an entity, while the income statement and statement of revenues, expenses, and changes in retained earnings are prepared by for-profit entities rather than governmental organizations.

Question 2

At the end of the fiscal year,uncollected property taxes in the general fund should be:
A)reclassified from current to delinquent.
B)written off as uncollectible.
C)charged against unreserved fund balance.
D)reclassified from current to noncurrent.

Accepted Answer

Uncollected property taxes at the end of the fiscal year should be reclassified from current to delinquent to accurately reflect their status in financial statements.

Question 3

Which of the following items is not recognized as revenue by a governmental unit?
A)sales tax proceeds
B)property tax levies
C)bond proceeds
D)grants received from other governmental units

Accepted Answer

Bond proceeds are not recognized as revenue by a governmental unit since they represent borrowing and therefore create a liability rather than income.

Question 4

In a statement of revenues,expenditures,and changes in fund balance,the unreserved fund balance will be increased by: I.a decrease in the fund balance reserved for inventories.
II)an excess of other financing sources over other financing uses.
A)I only
B)II only
C)Both I and II
D)Neither I nor II

Accepted Answer

A decrease in the fund balance reserved for inventories (I) and an excess of other financing sources over other financing uses (II) both contribute to an increase in the unreserved fund balance.

Question 5

Revenues from parking meters and parking fines should be reported in the general fund when:
A)received.
B)measurable and available.
C)measurable and earned.
D)available.

Accepted Answer

The answer of Revenues from parking meters and parking fines...

Question 6

According to the latest GASB exposure draft,which of the following is the only governmental fund type that may report an unassigned fund balance?
A)General fund
B)Special revenue fund
C)Capital projects fund
D)Permanent fund

Accepted Answer

The latest GASB exposure draft allows only the General fund to report an unassigned fund balance. This means that any excess of assets over liabilities in the General fund can be reported as unassigned and can be used for any lawful purpose. Other governmental fund types must specify the purpose for which any excess funds are to be used.

Question 7

Assuming there is a budget surplus,which of the following accounts are credited when the general fund records its operating budget at the beginning of the year?
A)Appropriations Control and Budgetary Fund Balance-Unreserved.
B)Estimated Revenues Control and Estimated Residual Equity Transfer Out.
C)Budgetary Fund Balance-Reserved For Encumbrances and Expenditures.
D)Estimated Residual Equity Transfer Out and Estimated Transfer In.

Accepted Answer

When recording the operating budget with a budget surplus, the Appropriations Control account is credited to reflect the planned spending, and the Budgetary Fund Balance-Unreserved is credited to show the surplus.

Question 8

Which accounts described below would have non-zero balances after the accounts are closed in the general fund of a state or local government?
A)I,II,III.
B)I,II,IV.
C)IV,V,VI.
D)III,IV,V.

Accepted Answer

IV: Encumbrances are commitments for goods or services that have not yet been received or paid for. They would still have a balance after the accounts are closed as they represent a liability for the government.
V: Property tax receivable represents the amount of property taxes that have been assessed but not yet collected. It would still have a balance after the accounts are closed.
VI: Deferred revenue represents revenue that has been received but not yet earned. It would still have a balance after the accounts are closed as it represents a liability for the government. Accounts I-III would have zero balances after being closed as they represent expenditures, revenues, and fund balance which would have been fully expended or collected.

Question 9

Due to an error,the general fund of Pueblo did not record an encumbrance for police equipment which had been ordered but not received on June 30,2009,the end of its fiscal year.Pueblo's outstanding encumbrances at year-end are nonlapsing.What was the effect of this error on the balance sheet of Pueblo's general fund?
A)Assets are overstated.
B)Liabilities are understated.
C)Total fund balance is overstated.
D)Unreserved fund balance is overstated.

Accepted Answer

Unreserved fund balance is overstated because the encumbrance was not recorded, leading to an overstatement of available funds.

Question 10

All of the following funds have a financial resources measurement focus with the exception of which fund?
A)debt service fund
B)special revenue fund
C)capital projects fund
D)private-purpose trust fund

Accepted Answer

Private-purpose trust funds have a beneficiary or trust as the primary focus, rather than a measurement of financial resources. The other three funds listed all have a focus on measuring and accounting for financial resources.

Question 11

GASB 34 established four types of interfund activities.Interfund activities are recognized as revenue in a governmental fund for an:
A)Option A
B)Option B
C)Option C
D)Option D

Accepted Answer

Interfund activities are recognized as revenue in a governmental fund for an Option A, which is "Exchange transactions." The other three types of interfund activities are "Nonexchange transactions," "Pass-through transactions," and "Internal service funds."

Question 12

The general fund of Wold Township ordered office furniture for the mayor's office on August 1,2008.The office furniture was estimated to cost $12,000.The office furniture was received on September 1,2008,with the actual cost being $11,800.Which of the following accounts decreased on September 1,2008?
A)Encumbrances only.
B)Expenditures only.
C)Encumbrances and Budgetary Fund Balance-Reserved for Encumbrances.
D)Expenditures and Budgetary Fund Balance-Reserved for Encumbrances.

Accepted Answer

When the office furniture was received, the encumbrance is reversed, decreasing both the Encumbrances account and the Budgetary Fund Balance-Reserved for Encumbrances.

Question 13

The Town of Baker reported the following items on the June 30,2009,balance sheet of its general fund: At June 30,2009,what amount should be reported for Fund Balance-Unreserved?
A)$46,000
B)$40,000
C)$30,000
D)$16,000

Accepted Answer

Fund Balance-Unreserved represents the residual amount of a funded when all liabilities and reserved fund balances are deducted from total fund balance. In this case, the liabilities and reserved fund balances add up to $16,000 ($6,000 for accounts payable and $10,000 for encumbrances). Therefore, the Fund Balance-Unreserved must be $30,000 ($46,000 - $16,000). Option C is the only possible answer.

Question 14

The general fund of Gillette levied property taxes of $400,000 on November 1,2008.However,the property taxes are not collectible until May and August of 2009.Assume Gillette reports on the calendar year.On Gillette's general fund balance sheet at December 31,2008,the property taxes levied on November 1 should:
A)be reported as an asset and as a decrease in unreserved fund balance.
B)be reported as an asset and as an increase in unreserved fund balance.
C)be reported as an asset and as a reservation of fund balance.
D)be reported as an asset and as a deferred revenue.

Accepted Answer

The property taxes levied but not yet collected are considered as deferred revenue as they are expected to be collected in the subsequent fiscal year. Hence, they should be reported as an asset and as deferred revenue on the balance sheet of the general fund of Gillette at December 31, 2008.

Question 15

At any time,the remaining appropriating authority available to the fund managers is equal to:
A)Appropriations minus Expenditures
B)Appropriations minus (Encumbrances + Expenditures)
C)Appropriations minus (Encumbrances - Expenditures)
D)Appropriations minus Encumbrances

Accepted Answer

The remaining appropriating authority available to the fund managers is the difference between the initial appropriations and the amount already obligated for goods and services (encumbrances) plus the actual expenditures made up to that point in time. This formula is represented as Appropriations - (Encumbrances + Expenditures) which is only accurately reflected in choice B.

Question 16

The general ledger of Broadway contains the following selected account balances: Broadway wants to order additional goods and services before the fiscal year end.What is the unencumbered balance of the budget that may be expended by Broadway?
A)$850,000
B)$760,000
C)$180,000
D)$130,000

Accepted Answer

The answer of The general ledger of Broadway contains the...

Question 17

GASB 31 "Accounting for Financial Reporting for Certain Investments and for External Reporting Investment Pools," establishes a general rule that government entities value investments in option contracts,open-ended mutual funds,and debt securities for balance sheet presentation at:
A)lower of cost or market.
B)fair value.
C)cost.
D)amortized cost.

Accepted Answer

GASB 31 requires investments in option contracts, open-ended mutual funds, and debt securities to be valued at fair value for balance sheet presentation. This means that the investment is reported at the current market value, regardless of the original cost of the investment or any amortization.

Question 18

Which of the following observations concerning interfund transfers is true?
A)They are expected to be repaid.
B)They are classified as fund revenues or expenditures.
C)The receiving fund recognizes these transfers as revenue.
D)These transfers are classified under "Other Financing Sources or Uses."

Accepted Answer

Interfund transfers are classified as "Other Financing Sources or Uses" because they do not represent revenues or expenses of the fund. They are transfers of resources from one fund to another and do not result in the creation or consumption of net assets.

Question 19

Which of the following items should not be included as revenue for a state government?
A)Property taxes levied in the current fiscal year.
B)Private property for which a state takes custody when the legal owner cannot be found.
C)Amounts received from other financing sources.
D)Fines and licensing fees for which amounts cannot be budgeted.

Accepted Answer

The answer of Which of the following items should not...

Question 20

When an internal service fund (ISF)enters into a capital lease the transaction is recorded in the: I.fixed assets of the ISF.
II)long-term debt of the ISF.
A)I only
B)II only
C)Both I and II
D)Neither I nor II

Accepted Answer

When an internal service fund (ISF) enters into a capital lease, the transaction is recorded both as a fixed asset and as a long-term liability (debt) in the ISF's financial statements. This reflects the acquisition of the asset and the obligation to make future lease payments.

Quiz 17: Governmental Entities: Introduction and General Fund Accounting

Which of the financial statements described below is prepared by the general fund of a state or local government?

At the end of the fiscal year,uncollected property taxes in the general fund should be:

Which of the following items is not recognized as revenue by a governmental unit?

In a statement of revenues,expenditures,and changes in fund balance,the unreserved fund balance will be increased by: I.a decrease in the fund balance reserved for inventories. II) an excess of other financing sources over other financing uses.

Revenues from parking meters and parking fines should be reported in the general fund when:

According to the latest GASB exposure draft,which of the following is the only governmental fund type that may report an unassigned fund balance?

Assuming there is a budget surplus,which of the following accounts are credited when the general fund records its operating budget at the beginning of the year?

Which accounts described below would have non-zero balances after the accounts are closed in the general fund of a state or local government?

All of the following funds have a financial resources measurement focus with the exception of which fund?

GASB 34 established four types of interfund activities.Interfund activities are recognized as revenue in a governmental fund for an:

The Town of Baker reported the following items on the June 30,2009,balance sheet of its general fund: At June 30,2009,what amount should be reported for Fund Balance-Unreserved?

At any time,the remaining appropriating authority available to the fund managers is equal to:

The general ledger of Broadway contains the following selected account balances: Broadway wants to order additional goods and services before the fiscal year end.What is the unencumbered balance of the budget that may be expended by Broadway?

GASB 31 "Accounting for Financial Reporting for Certain Investments and for External Reporting Investment Pools," establishes a general rule that government entities value investments in option contracts,open-ended mutual funds,and debt securities for balance sheet presentation at:

Which of the following observations concerning interfund transfers is true?

Which of the following items should not be included as revenue for a state government?

When an internal service fund (ISF) enters into a capital lease the transaction is recorded in the: I.fixed assets of the ISF. II) long-term debt of the ISF.