Question 1

The General Fund paid $195,000 related to compensated absences during the year. If the beginning balance of long-term compensated absences payable for the governmental activities was $65,000 and the ending balance was $55,000, then the expenses related to compensated absences in the governmental activities column would be

Accepted Answer

The expenses related to compensated absences in the governmental activities column can be calculated as follows:

Beginning balance of long-term compensated absences payable + Compensation expense during the year - Ending balance of long-term compensated absences payable = Expenses related to compensated absences in governmental activities

$65,000 + $195,000 - $55,000 = $185,000

Therefore, the correct answer is B.

Question 2

Which of the following items would be subtracted from changes in fund balance in reconciling the governmental funds operating statement information to the changes in net position in the government-wide statement?

Accepted Answer

The answer of Which of the following items would be...

Question 3

Depreciation expense for the current year was $366,750 in the Water Enterprise Fund. Depreciation expense will be reported at the government-wide level as

Accepted Answer

Depreciation expense for the Water Enterprise Fund is reported as part of the business-type activities expenses for the water activity at the government-wide level. The Water Enterprise Fund is a proprietary fund type used to account for providing goods or services to the public on a user-fee basis. Therefore, its activities are considered business-type activities, and its expenses are reported as such in the government-wide financial statements.

Question 4

Depreciation expense on assets of the public safety function totaled $195,000 for the year. What is the effect on the operating statement conversion worksheet in the two-worksheet approach of this event?

Accepted Answer

Depreciation expense is a non-cash expense that needs to be added back to operating expenses to arrive at the operating income. Therefore, this event will increase the operating expenses of the public safety function by $195,000.

Question 5

Business-type activities typically include

Accepted Answer

The answer of Business-type activities typically include
...

Question 6

In the two-worksheet approach, what type of adjustment will be necessary for interest expenditure/expense on the operating statement conversion worksheet?

Accepted Answer

An adjustment to the interest expenditure reported on the governmental funds operating statement will be necessary for the net change in accrued interest payable on long-term debt from the beginning of the year to the end of the year. This adjustment is necessary to convert from the modified accrual basis used in governmental funds to the accrual basis used in the government-wide financial statements. It reflects the fact that interest expense is recognized when it is incurred, not when it is paid. Therefore, the accrued interest payable on long-term debt must be included in the government-wide financial statements to match the actual interest expense incurred during the period.

Question 7

In the two-worksheet approach, each of the following worksheet adjustments would be made for the operating statement except

Accepted Answer

In the two-worksheet approach, one worksheet is used for the balance sheet and the other worksheet is used for the operating statement. The purpose of the operating statement worksheet is to adjust the accounts on the financial statements to their economic or cash flow basis. Therefore, adding depreciation expense (A), converting interest expenditures to interest expenses (C), and eliminating other financing sources or uses (D) are adjustments that would be made on the operating statement worksheet. However, accumulated depreciation (B) is a contra asset account that is already reflected on the balance sheet, so it would not be adjusted on the operating statement worksheet.

Question 8

The Capital Projects Fund issued general long-term debt at a premium. The balance sheet conversion worksheet of the two-worksheet approach would include

Accepted Answer

The answer of The Capital Projects Fund issued general long-term...

Question 9

Which of the following items would be added to changes in fund balance in reconciling the governmental funds operating statement information to the changes in net position in the government-wide statement?

Accepted Answer

The answer of Which of the following items would be...

Question 10

In the two-worksheet approach, which of the following worksheet adjustments would not be made for the balance sheet?

Accepted Answer

Depreciation expenses are included in the income statement, not the balance sheet. The other options listed would be adjustments made on the balance sheet.

Question 11

Which of the following items would be added to changes in fund balance in reconciling the governmental funds operating statement information to the changes in net position in the government-wide statement?

Accepted Answer

Capital outlay expenditures are added back to reconcile the governmental funds operating statement to the government-wide statement because they are recorded as expenditures in the fund statements but are capitalized in the government-wide statements.

Question 12

A county's Central Warehouse Internal Service Fund provides 65% of its services to governmental funds, 30% of its services to Enterprise Funds, and the remaining 5% to a local municipality. If there was a $10,000 loss in the Internal Service Fund during 20X9, the expenses in the governmental activities column would

Accepted Answer

Since 65% of the services are provided to governmental funds, the loss of $10,000 will be allocated to these funds. 65% of $10,000 is $6,500. However, since governmental funds use the modified accrual basis of accounting, expenses are recognized when they are incurred, not necessarily when they are paid. Therefore, the expenses in the governmental activities column will increase by $7,000 ($6,500 + $500 from the remaining 5% allocated to the municipality) to reflect the loss incurred during the year.

Question 13

In the two-worksheet approach, what type of adjustment will be necessary for interest payable on the balance sheet conversion worksheet?

Accepted Answer

Interest on long-term debt that has not been paid by the end of the reporting period needs to be recognized as interest payable in the government-wide financial statements, even though it may not be recognized as such in the fund financial statements due to the use of the modified accrual basis of accounting in governmental funds. This adjustment ensures that all liabilities, including accrued interest, are accurately reported on the government-wide financial statements, which are prepared on the full accrual basis of accounting.

Question 14

The required reconciliation of the governmental fund balance sheet to the governmental activities statement of net position does not include adjustments related to

Accepted Answer

Interfund charges for services are eliminated in the process of consolidation and do not require adjustments in the reconciliation between the governmental fund balance sheet and the governmental activities statement of net position. Adjustments for capital assets, deferred revenue, and long-term liabilities are necessary to transition from the modified accrual basis of accounting used in the fund financial statements to the full accrual basis used in the government-wide financial statements.

Question 15

The required reconciliation of the governmental fund financial statement information to the governmental activities information in the corresponding government-wide financial statements

Accepted Answer

The reconciliation of the governmental fund financial statement information to the governmental activities information in the corresponding government-wide financial statements may be presented either at the bottom of the fund financial statements or in separate schedules. It is not required to be presented at the bottom of the government-wide financial statements, and it is also allowed to present it separately rather than on the face of the financial statements.

Question 16

Which of the following items is NOT included in reconciling the governmental funds operating statement information to the changes in net position in the government-wide statement?

Accepted Answer

Increase in salaries payable is a liability account and does not affect the changes in net position, which is the difference between assets and liabilities in the government-wide statement. Depreciation, amortization of bond premiums, and expenditures for retirement of general long-term debt principal are all items that are adjusted when reconciling the governmental funds operating statement information to the changes in net position in the government-wide statement.

Question 17

Which of the following items would be subtracted from changes in fund balance in reconciling the governmental funds operating statement information to the changes in net position in the government-wide statement?

Accepted Answer

Depreciation is not recorded in governmental funds but is recognized in the government-wide financial statements, so it needs to be subtracted when reconciling the two.

Question 18

Internal Service Funds, classified as a proprietary fund type, are reported in the government-wide statements as

Accepted Answer

The answer of Internal Service Funds, classified as a proprietary...

Question 19

If a county sells a capital asset with a net book value of $35,000 for $27,000, how will this transaction be recorded on the operating statement conversion worksheet of the two-worksheet conversion approach?

Accepted Answer

The sale of the capital asset resulted in a loss of $8,000 ($35,000 - $27,000). This loss should be recorded as a deduction from an other financing source since the county will need to use other funds to cover the loss. Therefore, choice D is the correct answer. Since the asset was sold for less than its net book value, there is no addition to an other financing use.

Question 20

Net investment in capital assets would not include

Accepted Answer

Net investment in capital assets refers to the amount of money that a company spends on purchasing or improving its capital assets. Capital assets are long-term assets that are used in the production of goods or services and have a useful life of more than one year. Inventory is not considered a capital asset because it is a short-term asset that is meant to be sold or used up within a year. Therefore, it is not included in the calculation of net investment in capital assets. Accounts payable and notes payable that are capital related are included because they represent the funds that a company has borrowed to finance its capital asset purchases. Accumulated depreciation is also included because it represents the portion of the asset's cost that has been allocated to expense over its useful life.

Quiz 14: Financial Reporting Deriving Governmentwide Financial Statements and Required Reconciliations

Which of the following items would be subtracted from changes in fund balance in reconciling the governmental funds operating statement information to the changes in net position in the government-wide statement?

Depreciation expense for the current year was $366,750 in the Water Enterprise Fund. Depreciation expense will be reported at the government-wide level as

Depreciation expense on assets of the public safety function totaled $195,000 for the year. What is the effect on the operating statement conversion worksheet in the two-worksheet approach of this event?

Business-type activities typically include

In the two-worksheet approach, what type of adjustment will be necessary for interest expenditure/expense on the operating statement conversion worksheet?

In the two-worksheet approach, each of the following worksheet adjustments would be made for the operating statement except

The Capital Projects Fund issued general long-term debt at a premium. The balance sheet conversion worksheet of the two-worksheet approach would include

Which of the following items would be added to changes in fund balance in reconciling the governmental funds operating statement information to the changes in net position in the government-wide statement?

In the two-worksheet approach, which of the following worksheet adjustments would not be made for the balance sheet?

Which of the following items would be added to changes in fund balance in reconciling the governmental funds operating statement information to the changes in net position in the government-wide statement?

In the two-worksheet approach, what type of adjustment will be necessary for interest payable on the balance sheet conversion worksheet?

The required reconciliation of the governmental fund balance sheet to the governmental activities statement of net position does not include adjustments related to

The required reconciliation of the governmental fund financial statement information to the governmental activities information in the corresponding government-wide financial statements

Which of the following items is NOT included in reconciling the governmental funds operating statement information to the changes in net position in the government-wide statement?

Which of the following items would be subtracted from changes in fund balance in reconciling the governmental funds operating statement information to the changes in net position in the government-wide statement?

Internal Service Funds, classified as a proprietary fund type, are reported in the government-wide statements as

If a county sells a capital asset with a net book value of $35,000 for $27,000, how will this transaction be recorded on the operating statement conversion worksheet of the two-worksheet conversion approach?

Net investment in capital assets would not include