Question 1

Which of the following funds should use the accrual basis of accounting?
A)Enterprise and private-purpose trust funds.
B)Permanent funds and internal service funds.
C)Debt service and agency funds.
D)Special revenue and capital projects funds.

Accepted Answer

The answer of Which of the following funds should use...

Question 2

In a town's general fund operating budget for the year,the amount of its estimated revenues exceeded the amount of its appropriations.This excess should be:
A)credited to Budgetary Fund Balance-Unassigned.
B)debited to Budgetary Fund Balance-Unassigned.
C)credited to Fund Balance-Unassigned.
D)debited to Fund Balance-Unassigned.

Accepted Answer

According to accounting principles, when a town's estimated revenues exceed its appropriations, it creates a surplus. This surplus is credited to Budgetary Fund Balance-Unassigned. This fund balance represents the amount available for future appropriations or to offset future revenue shortfalls. Therefore, option A is the correct choice.

Question 3

The City of Ames uses the consumption method to report its inventory of supplies on its general fund balance sheet.What account is debited in the general fund when Ames acquires supplies?
A)Expenditures
B)Inventory of Supplies
C)Supplies Expense
D)Fund Balance-Nonspendable

Accepted Answer

When using the consumption method for reporting inventory of supplies in the general fund, the acquisition of supplies is recorded as an expenditure. This method recognizes the cost of supplies as an expense when they are consumed, not when they are purchased.

Question 4

The general fund of Park City acquired computer equipment at a cost of $50,000 on May 18,20X9.To record acquisition of this equipment,the general fund of Park City should debit:
A)expenditures.
B)encumbrances.
C)equipment.
D)vouchers payable.

Accepted Answer

In governmental accounting, when a general fund acquires a capital asset like computer equipment, the expenditure is recorded by debiting the expenditures account, reflecting the outflow of resources.

Question 5

The general fund of Caldwell had the following operating budget for the fiscal year beginning July 1,20X9:
When the general fund records its operating budget on July 1,20X9,Budgetary Fund Balance-Unassigned should be
A)credited for $600,000.
B)debited for $900,000.
C)debited for $600,000.
D)credited for $900,000.

Accepted Answer

When the general fund records its operating budget, Budgetary Fund Balance-Unassigned is credited for the amount of the excess of estimated revenues over estimated expenditures. In this case, the estimated revenues are $900,000 and the estimated expenditures are $600,000, so the excess is $300,000. Therefore, Budgetary Fund Balance-Unassigned should be credited for $300,000.

Question 6

The general fund of the City of Atlanta received a check for $10,000 from an Atlanta resident on July 1,20X8.Of the amount received,$4,800 represented full payment of property taxes for 20X8,and the remaining $5,200 represented an advance payment for property taxes of 20X9.On July 1,20X8,the general fund should record the receipt by debiting Cash for $10,000 and by crediting
A)Revenue-Property Tax for $10,000.
B)Property Taxes Receivable-Current for $4,800 and Deferred Revenue for $5,200.
C)Revenue-Property Tax for $4,800 and Deferred Revenue for $5,200.
D)Property Taxes Receivable-Current for $4,800 and Revenue- Property Tax for $5,200.

Accepted Answer

The answer of The general fund of the City of...

Question 7

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 governmental units as they are considered a liability and not a source of revenue.

Question 8

What amount should be reported as expenditures for the current fiscal year when accounting for inventories of supplies under the purchase method and under the consumption method?
A)Option A
B)Option B
C)Option C
D)Option D

Accepted Answer

The answer of What amount should be reported as expenditures...

Question 9

Under the modified accrual basis of accounting,revenue should be recognized when it is:
A)measurable and earned.
B)received in cash.
C)available and earned.
D)measurable and available.

Accepted Answer

The answer of Under the modified accrual basis of accounting,revenue...

Question 10

Which of the following observations concerning encumbrances is NOT true?
A)Their purpose is to ensure that the expenditures within a period do not exceed the budgeted appropriations.
B)They provide a control system and safeguard for governmental unit administrators.
C)They are a unique element of governmental accounting.
D)They are recognized only at the time disbursements are made.

Accepted Answer

This statement is false as encumbrances are recognized at the time a commitment is made, not at the time disbursements are made. Encumbrances are a unique element of governmental accounting that provide a control system and safeguard for governmental unit administrators, ensuring that expenditures within a period do not exceed the budgeted appropriations.

Question 11

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 12

Which combination of fund and measurement basis is correct?
A)Option A
B)Option B
C)Option C
D)Option D

Accepted Answer

The answer of Which combination of fund and measurement basis...

Question 13

Under the modified accrual basis of accounting for the general fund,expenditures should be recognized in the period in which the related liability is:
A)I only
B)II only
C)Both I and II
D)Neither I nor II

Accepted Answer

The answer of Under the modified accrual basis of accounting...

Question 14

The Town of Pasco has no supplies inventory in its general fund on January 1,20X8.During 20X8,Pasco incurred expenditures of $200,000 for the acquisition of supplies.On December 31,20X8,Pasco's inventory of supplies amounted to $30,000.Assume Pasco uses the purchase method of accounting for supplies in its general fund and that the village reports on the calendar year.On December 31,20X8,the general fund of Pasco should credit:
A)Expenditures for $170,000.
B)Fund Balance-Unassigned for $170,000.
C)Fund Balance-Nonspendable for $30,000.
D)Expenditures for $30,000.

Accepted Answer

The answer of The Town of Pasco has no supplies...

Question 15

Which of the following funds should use the modified accrual basis of accounting?
A)Private-purpose trust and agency funds.
B)Capital projects and special revenue funds.
C)Internal service and enterprise funds.
D)Debt service and private-purpose trust funds.

Accepted Answer

Capital projects and special revenue funds should use the modified accrual basis of accounting. The modified accrual basis of accounting is used for funds that focus on short-term financial activities and resources. Both capital projects and special revenue funds are short-term in nature and focus on specific purposes or projects. Private-purpose trust and agency funds are typically long-term in nature and should use the full accrual basis of accounting, while debt service and private-purpose trust funds should use either the full accrual or cash basis of accounting. Internal service and enterprise funds should also use the full accrual basis of accounting as they focus on the long-term financial sustainability of the government entity.

Question 16

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-Unassigned.
B)Estimated Revenues Control and Estimated Residual Equity Transfer Out.
C)Budgetary Fund Balance-Assigned For Encumbrances and Expenditures.
D)Estimated Residual Equity Transfer Out and Estimated Transfer In.

Accepted Answer

When the general fund records its operating budget at the beginning of the fiscal year, the accounts credited are Appropriations Control, which represents the authority to incur obligations for expenditures, and Budgetary Fund Balance-Unassigned, which reflects the portion of fund balance that is not constrained for a specific purpose and can be used for any general government purpose. This entry reflects the establishment of the budgetary authority for the year.

Question 17

The general fund of Gillette levied property taxes of $400,000 on November 1,20X8.However,the property taxes are not collectible until May and August of 20X9.Assume Gillette reports on the calendar year.On Gillette's general fund balance sheet at December 31,20X8,the property taxes levied on November 1 should:
A)be reported as an asset and as a decrease in unassigned fund balance.
B)be reported as an asset and as an increase in unassigned 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 on November 1, 20X8 are not yet collectible until May and August of 20X9, so they should be reported as a deferred revenue on Gillette's general fund balance sheet at December 31, 20X8. This means that the funds are not available for use until they are collected, and therefore cannot be reported as an asset or an increase in unassigned fund balance or fund reservation. Only when they are collected in 20X9 can they be recognized as revenue and increase available funds.

Question 18

The general fund of the Town of Dean levied property taxes of $3,000,000 for the fiscal year beginning on January 1,20X8.It was estimated that 1% of the levy would be uncollectible.During the period January 1,20X8,through December 31,20X8,$2,960,000 of the property tax levy was collected.At December 31,20X8,Dean estimated that $10,000 of property taxes levied in 20X8 would be collected during the first 60 days of 20X9.What amount of property tax revenue should be reported by the general fund for the year ended December 31,20X8?
A)$2,960,000
B)$3,000,000
C)$2,970,000
D)$2,990,000

Accepted Answer

The estimated uncollectible amount is 1% of the levy, which is $30,000 ($3,000,000 x 1%). Therefore, the expected amount to be collected is $2,970,000 ($3,000,000 - $30,000). At the end of the fiscal year, $2,960,000 was collected, so the remaining amount to be collected is $10,000 ($2,970,000 - $2,960,000). This amount is expected to be collected within the first 60 days of 20X9, so it should still be recorded as revenue for the year ended December 31, 20X8. Therefore, the total property tax revenue that should be reported for the year ended December 31, 20X8 is $2,970,000 + $10,000 = $2,980,000. However, this answer choice is not available, so the closest option is C, which is $2,970,000.

Question 19

On July 25,20X8,the city of Pullman,which reports on a calendar-year basis,ordered five police cars at an estimated cost of $200,000.On August 26,20X8,the police cars were received,and the actual cost amounted to $197,000.Pullman encumbered the appropriation for police cars in its general fund when the cars were ordered.When the police cars were received,the general fund of Pullman should:
A)Credit Budgetary Fund Balance Assigned for Encumbrances for $197,000.
B)Debit Encumbrances for $200,000.
C)Debit Expenditures for $197,000.
D)Credit Budgetary Fund Balance Assigned for Expenditures for $200,000.

Accepted Answer

When the police cars were received, Pullman should debit Expenditures for the actual cost incurred, which is $197,000. The initial estimated cost of $200,000 is no longer relevant and should not be used. The encumbrance would have already been recorded when the appropriation was encumbered, so no further entry is necessary for the encumbrance. Similarly, the budgetary fund balance assigned for encumbrances is not needed since the encumbrance has already been recorded. The budgetary fund balance assigned for expenditures is not applicable as the expenditure has already been recorded.

Question 20

What is the correct sequence in the expenditure process in governmental accounting?
A)Appropriation,Encumbrance,Expenditure,and Disbursement.
B)Encumbrance,Expenditure,Disbursement,and Appropriation.
C)Expenditure,Encumbrance,Disbursement,and Appropriation.
D)Appropriation,Expenditure,Encumbrance,and Disbursement.

Accepted Answer

The correct sequence in the expenditure process in governmental accounting is as follows: 
1. Appropriation: the legal authorization granted by a legislative body to make expenditures for specific purposes. 
2. Encumbrance: the reservation of a portion of the appropriation for a specific purchase or expenditure. 
3. Expenditure: the actual spending of funds for the authorized purpose. 
4. Disbursement: the payment of funds for the expenditure. Therefore, choice A is the correct sequence.

Quiz 17: Governmental Entities: Introduction and General Fund Accounting

Which of the following funds should use the accrual basis of accounting?

In a town's general fund operating budget for the year,the amount of its estimated revenues exceeded the amount of its appropriations.This excess should be:

The City of Ames uses the consumption method to report its inventory of supplies on its general fund balance sheet.What account is debited in the general fund when Ames acquires supplies?

The general fund of Park City acquired computer equipment at a cost of $50,000 on May 18,20X9.To record acquisition of this equipment,the general fund of Park City should debit:

The general fund of Caldwell had the following operating budget for the fiscal year beginning July 1,20X9: When the general fund records its operating budget on July 1,20X9,Budgetary Fund Balance-Unassigned should be

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

What amount should be reported as expenditures for the current fiscal year when accounting for inventories of supplies under the purchase method and under the consumption method?

Under the modified accrual basis of accounting,revenue should be recognized when it is:

Which of the following observations concerning encumbrances is NOT true?

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

Which combination of fund and measurement basis is correct?

Under the modified accrual basis of accounting for the general fund,expenditures should be recognized in the period in which the related liability is:

Which of the following funds should use the modified accrual basis of accounting?

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?

What is the correct sequence in the expenditure process in governmental accounting?