Question 1

The General Fund accounts for any resources not reported in one of the other funds.

Accepted Answer

The General Fund accounts for any resources not reported in one of the other, limited-use, funds.

Question 2

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 3

Every general purpose government may have more than one General Fund.

Accepted Answer

Every general -purpose government will have one, and only one, General Fund.

Question 4

In special revenue funds, revenues are recognized when available and measurable.

Accepted Answer

Special Revenue Funds use modified accrual accounting. Revenues are recognized when they are both measurable and available to finance expenditures of the current period.

Question 5

When closing the books for the General Fund, an excess of revenues over expenditures and transfers out would be credited to Fund Balance.

Accepted Answer

The journal entry would be a debit to Revenues Control and a credit to Expenditures Control. If the revenue accounts) exceeded the Expenditure accounts), the Fund balance account would be credited.

Question 6

Most interfund transfers are not eliminated in the government-wide statements.

Accepted Answer

Most interfund transactions are eliminated in the government-wide statements.

Question 7

A common use of special revenue funds is to account for noncapital) intergovernmental grants when federal or state governments provide resources to local governments

Accepted Answer

Commonly, special revenue funds are used for intergovernmental grants in which the federal or state government provides resources to local governments.

Question 8

Special Revenue Funds may be used whenever a government wishes to segregate income for specific purposes.

Accepted Answer

GASB standards require that special revenue funds be used only if a substantial portion of the resources are provided by one or more restricted or committed revenue source. Special revenue funds are not used if resources are required to be used to acquire capital assets or for the payment of interest and principle on long-term debt.

Question 9

Governmental fund financial statements are prepared using the current financial resource measurement focus.

Accepted Answer

Governmental funds use modified accrual accounting and the current financial resources measurement focus.

Question 10

Special revenue funds are used if the resources are required to be used to acquire capital assets or for the payment of interest and principal on long-term debt.

Accepted Answer

GASB standards require that special revenue funds be used only if a substantial portion of the resources are provided by one or more restricted or committed revenue source. Special revenue funds are not used if resources are required to be used to acquire capital assets or for the payment of interest and principle on long-term debt.

Question 11

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

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 12

When a special revenue fund accounts for grants that are awarded on a reimbursement basis, revenues are recognized only after qualified expenditures have been recognized.

Accepted Answer

As expenditures are incurred and recognized, grant revenues and receivables are recognized. Funds are released after expenditures are made to fulfill grant requirements.

Question 13

Receivables from sales taxes are recorded in the period that the retailer submits the taxes to the government.

Accepted Answer

Sales taxes are a derived tax revenue. Under modified accrual accounting, revenues are recognized in the same year that the underlying transaction the sale) takes place.

Question 14

When the General Fund purchases water from an enterprise fund, the General Fund would credit expenditure.

Accepted Answer

The journal entry would be a debit to Expenditures Control and a credit to a Due to Water Utility Fund.

Question 15

Transactions between funds of the same government are not assumed to be arm's length in nature.

Accepted Answer

An arm's-length transaction is one in which both parties act in their own self-interest and are not subject to pressure or influence. Transactions between funds of the same government may not be assumed to be arm's length in nature.

Question 16

The purpose of fund accounting is to segregate those financial resources that have constraints or limitations on their use to demonstrate compliance with those limitations.

Accepted Answer

The purpose of fund accounting is to segregate those financial resources that have constraints or limitations on their use to demonstrate compliance with those limitations.

Question 17

Governmental fund financial statements are prepared using the accrual basis of accounting.

Accepted Answer

Governmental funds use modified accrual accounting and the current financial resources measurement focus.

Question 18

Interfund transactions are of particular interest to financial statement preparers and users since failure to properly report these transactions will result in two funds being misstated.

Accepted Answer

Interfund transactions are of particular interest to financial statement preparers and users because failure to properly report these transactions results in two funds being misstated.

Question 19

Special revenue funds are used when it is desirable to provide separate reporting of resources that are restricted or committed to expenditure for purposes other than debt service or capital projects.

Accepted Answer

GASB standards require that special revenue funds be used only if a substantial portion of the resources are provided by one or more restricted or committed revenue source. Special revenue funds are not used if resources are required to be used to acquire capital assets or for the payment of interest and principle on long-term debt.

Question 20

Resources appropriately reported within proprietary or fiduciary funds are included in special revenue funds.

Accepted Answer

Special revenue funds are used when it is desirable to provide separate reporting of resources that are restricted or committed to expenditure for a specified purpose other than debt service or capital projects. Resources appropriately reported within proprietary or fiduciary funds are also excluded from special revenue funds.

Quiz 4: Accounting for the General and Special Revenue Funds

The General Fund accounts for any resources not reported in one of the other funds.

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

Every general purpose government may have more than one General Fund.

In special revenue funds, revenues are recognized when available and measurable.

When closing the books for the General Fund, an excess of revenues over expenditures and transfers out would be credited to Fund Balance.

Most interfund transfers are not eliminated in the government-wide statements.

A common use of special revenue funds is to account for noncapital) intergovernmental grants when federal or state governments provide resources to local governments

Special Revenue Funds may be used whenever a government wishes to segregate income for specific purposes.

Governmental fund financial statements are prepared using the current financial resource measurement focus.

Special revenue funds are used if the resources are required to be used to acquire capital assets or for the payment of interest and principal on long-term debt.

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

When a special revenue fund accounts for grants that are awarded on a reimbursement basis, revenues are recognized only after qualified expenditures have been recognized.

Receivables from sales taxes are recorded in the period that the retailer submits the taxes to the government.

When the General Fund purchases water from an enterprise fund, the General Fund would credit expenditure.

Transactions between funds of the same government are not assumed to be arm's length in nature.

The purpose of fund accounting is to segregate those financial resources that have constraints or limitations on their use to demonstrate compliance with those limitations.

Governmental fund financial statements are prepared using the accrual basis of accounting.

Interfund transactions are of particular interest to financial statement preparers and users since failure to properly report these transactions will result in two funds being misstated.

Special revenue funds are used when it is desirable to provide separate reporting of resources that are restricted or committed to expenditure for purposes other than debt service or capital projects.

Resources appropriately reported within proprietary or fiduciary funds are included in special revenue funds.