Question 1

Governmental-type funds report on financial assets, capital assets, and near-term liabilities.

Accepted Answer

Governmental-type funds do not report on capital assets. The governmental fund accounting equation includes financial assets, deferred outflows of resources, near-term liabilities, deferred inflows of resources and fund balance.

Question 2

The complete governmental fund accounting equation is: Financial Assets + Deferred Outflows of Resources $ = $ Near-term Liabilities + Deferred Inflows of Resources + Fund Balance

Accepted Answer

The governmental fund accounting equation includes financial assets, deferred outflows, near-term liabilities, deferred inflows, and fund balance, reflecting the resources and obligations of the fund.

Question 3

Unmatured long-term debt arising from the issuance of general obligation bonds is not reported in governmental-type funds, but noncurrent liabilities associated with compensated absences or claims and judgments are reported in governmental-type funds.

Accepted Answer

Unmatured long-term indebtedness of the government is general long-term debt and not reported in governmental funds. General long-term debt includes not only debt arising from issuing general obligation bonds, but also noncurrent liabilities for compensated absences or claims and judgments.

Question 4

In the General Fund, property tax revenues are recognized in the fiscal period for which the tax is levied, if the taxes are measurable and available.

Accepted Answer

In governmental-type funds (including the General Fund), revenues are only recognized when specific recognition criteria are met and the resources are measurable and available. For property taxes to be recognized, the property tax must be levied and the taxes must be available and measurable.

Question 5

In the General Fund, property taxes collected in the period before the taxes are levied are reported as revenue.

Accepted Answer

Property taxes collected in the period before the taxes are levied are reported as deferred inflows-not revenue.

Question 6

If property taxes levied for the current fiscal year are not collected until after the first 60 days of the next fiscal year, they should be reported as deferred inflows of resources in the current fiscal year balance sheet. (Assume this is accounted for in the General Fund.)

Accepted Answer

Such property taxes are not available to pay liabilities of the current period and should be reported as deferred inflows of resources. Deferred inflows of resources refer to a government's acquisition of net assets that is applicable to a future reporting period.

Question 7

A government levies property taxes for general government activities of $800,000 for the current year and it expects to not be able to collect $80,000 of the property taxes. The government should credit Revenues-property taxes for $800,000.

Accepted Answer

The government would debit Property taxes receivable for $800,000, It would credit Allowance for refunds and uncollectible taxes for $80,000 and credit Revenues-property taxes for $720,000.

Question 8

Derived tax revenues (such as sales taxes or personal income taxes) reported in governmental-type funds are recognized in the period the underlying exchange occurs if the resources are measurable and available.

Accepted Answer

According to GASB Statement No. 33, derived tax revenues are recognized in the period the underlying exchange occurs and the resources are available.

Question 9

GASB standards require that grant recipients recognize revenues in governmental-type funds in the period that all applicable eligibility requirements are met.

Accepted Answer

In addition to meeting all grant eligibility requirements, the resources must also be measurable and available.

Question 10

A city receives a grant with only a time requirement that is accounted for in a Special Revenue Fund. The city receives $200,000 in the current fiscal year, but the grant proceeds cannot be used until the next fiscal year. The city would recognize $200,000 as intergovernmental grant revenues in the next fiscal year.

Accepted Answer

The grant proceeds received in the current fiscal year initially are reported as a deferred inflow of resources. In the next fiscal year, the Deferred inflow of resources would be debited and Intergovernmental revenues would be credited for $200,000.

Question 11

A school district is the recipient of an expenditure-driven grant of $40,000 from the state that is to pay for teacher training on new technologies. The school district spends the $40,000 for the teacher training in the current fiscal year but does not receive the $40,000 until the fourth day of the school district's next fiscal year. The school district should report $40,000 as intergovernmental grant revenue in its current fiscal year-end statement of revenues, expenditures, and changes in fund balance for its Special Revenue Fund.

Accepted Answer

Revenue is recognized for an expenditure-driven grant when the eligibility requirements are met and the resources are available. In this case, the school district spent the money on the required teacher training in the current fiscal year and the resources should be available as they are collected only four days into the next fiscal year. Therefore, intergovernmental grant revenue should be recognized in the current fiscal year.

Question 12

In governmental-type funds, salaries not paid at year-end are reported as expenditures along with the related liability.

Accepted Answer

Items that, once incurred, normally are paid in a timely manner and in full from current financial resources-such as salaries or utilities-should be reported as expenditures of the current year. Such liabilities are considered as claims against current financial resources, and if not paid at year-end, expenditures are accrued and liabilities are reported in the governmental funds

Question 13

Governments recognize expenditures and liabilities for compensated absences in governmental-type funds when the employee earns the benefits-regardless of when the benefits are paid.

Accepted Answer

Governments recognize expenditures and liabilities for compensated absences in governmental-type funds as the liabilities mature (i.e., as they come due for payment) each year on the occurrence of relevant events, such as when claims are settled or an employee resigns. Any portion of the liability that has not matured is considered general long-term debt, rather than fund debt.

Question 14

An interfund reimbursement occurs when a fund provides cash to another fund without equivalent flows of assets in return and without a requirement of repayment.

Accepted Answer

An interfund transfer occurs when a fund provides cash to another fund without equivalent flows of assets in return and without a requirement of repayment.

Question 15

An interfund loan occurs when one fund lends cash to another fund with a requirement for repayment.

Accepted Answer

By definition, an interfund loan occurs when one fund lends cash to another fund with a requirement for repayment.

Question 16

When a fund repays another fund for expenditures or expenses initially paid by for by a fund other than the one that should have paid for the transaction, it is referred to as interfund services provided and used.

Accepted Answer

An interfund reimbursement occurs when a fund repays another fund for expenditures or expenses initially paid by for by a fund other than the one that should have paid for the transaction.

Question 17

The General Fund receives $5,000 from the sale of equipment that originally cost $4,000 and had accumulated depreciation associated with it of $3,000. The government should report a $4,000 on sale of equipment in the General Fund.

Accepted Answer

Capital assets are not reported in the General Fund. Therefore, capital assets used in the General Fund are not written off. The General Fund must account for the receipt of the cash-a financial asset-by debiting Cash for $5,000 and crediting Other financing sources-proceeds from the sale of general capital assets for $5,000.

Question 18

The GASB allows two methods of accounting for inventories in governmental-type funds-the consumption method and the purchases method.

Accepted Answer

The statement is correct. The GASB allows governments to use either the purchases method or the consumption method to account for inventories

Question 19

Under the consumption method of accounting for inventories, a debit is made to Supplies inventory and a credit is made to Nonspendable fund balance if year-end inventory is greater than the beginning of the year inventory in governmental-type funds.

Accepted Answer

A debit is made to Supplies inventory and a credit is made to Nonspendable fund balance if year-end inventory is greater than the beginning of the year inventory only under the purchases method of accounting for inventory.

Question 20

The financial statements required for the General Fund or a Special Revenue Fund are a balance sheet and a statement of revenues, expenditures, and changes in fund balance.

Accepted Answer

A balance sheet and a statement of revenues, expenditures, and changes in fund balance are the required financial statements for the General Fund or a Special Revenue Fund. In addition, a budgetary comparison schedule or statement is required for the General Fund and each major Special Revenue Fund for which there is a legally adopted budget.

Quiz 5: General and Special Revenue Funds Continued

Governmental-type funds report on financial assets, capital assets, and near-term liabilities.

The complete governmental fund accounting equation is: Financial Assets + Deferred Outflows of Resources $=$ Near-term Liabilities + Deferred Inflows of Resources + Fund Balance

Unmatured long-term debt arising from the issuance of general obligation bonds is not reported in governmental-type funds, but noncurrent liabilities associated with compensated absences or claims and judgments are reported in governmental-type funds.

In the General Fund, property tax revenues are recognized in the fiscal period for which the tax is levied, if the taxes are measurable and available.

In the General Fund, property taxes collected in the period before the taxes are levied are reported as revenue.

If property taxes levied for the current fiscal year are not collected until after the first 60 days of the next fiscal year, they should be reported as deferred inflows of resources in the current fiscal year balance sheet. (Assume this is accounted for in the General Fund.)

A government levies property taxes for general government activities of $800,000 for the current year and it expects to not be able to collect $80,000 of the property taxes. The government should credit Revenues-property taxes for $800,000.

Derived tax revenues (such as sales taxes or personal income taxes) reported in governmental-type funds are recognized in the period the underlying exchange occurs if the resources are measurable and available.

GASB standards require that grant recipients recognize revenues in governmental-type funds in the period that all applicable eligibility requirements are met.

In governmental-type funds, salaries not paid at year-end are reported as expenditures along with the related liability.

Governments recognize expenditures and liabilities for compensated absences in governmental-type funds when the employee earns the benefits-regardless of when the benefits are paid.

An interfund reimbursement occurs when a fund provides cash to another fund without equivalent flows of assets in return and without a requirement of repayment.

An interfund loan occurs when one fund lends cash to another fund with a requirement for repayment.

When a fund repays another fund for expenditures or expenses initially paid by for by a fund other than the one that should have paid for the transaction, it is referred to as interfund services provided and used.

The General Fund receives $5,000 from the sale of equipment that originally cost $4,000 and had accumulated depreciation associated with it of $3,000. The government should report a $4,000 on sale of equipment in the General Fund.

The GASB allows two methods of accounting for inventories in governmental-type funds-the consumption method and the purchases method.

Under the consumption method of accounting for inventories, a debit is made to Supplies inventory and a credit is made to Nonspendable fund balance if year-end inventory is greater than the beginning of the year inventory in governmental-type funds.

The financial statements required for the General Fund or a Special Revenue Fund are a balance sheet and a statement of revenues, expenditures, and changes in fund balance.

Quiz 5: General and Special Revenue Funds Continued

Governmental-type funds report on financial assets, capital assets, and near-term liabilities.

The complete governmental fund accounting equation is: Financial Assets + Deferred Outflows of Resources = = = Near-term Liabilities + Deferred Inflows of Resources + Fund Balance

Unmatured long-term debt arising from the issuance of general obligation bonds is not reported in governmental-type funds, but noncurrent liabilities associated with compensated absences or claims and judgments are reported in governmental-type funds.

In the General Fund, property tax revenues are recognized in the fiscal period for which the tax is levied, if the taxes are measurable and available.

In the General Fund, property taxes collected in the period before the taxes are levied are reported as revenue.

If property taxes levied for the current fiscal year are not collected until after the first 60 days of the next fiscal year, they should be reported as deferred inflows of resources in the current fiscal year balance sheet. (Assume this is accounted for in the General Fund.)

A government levies property taxes for general government activities of $800,000 for the current year and it expects to not be able to collect $80,000 of the property taxes. The government should credit Revenues-property taxes for $800,000.

Derived tax revenues (such as sales taxes or personal income taxes) reported in governmental-type funds are recognized in the period the underlying exchange occurs if the resources are measurable and available.

GASB standards require that grant recipients recognize revenues in governmental-type funds in the period that all applicable eligibility requirements are met.

In governmental-type funds, salaries not paid at year-end are reported as expenditures along with the related liability.

Governments recognize expenditures and liabilities for compensated absences in governmental-type funds when the employee earns the benefits-regardless of when the benefits are paid.

An interfund reimbursement occurs when a fund provides cash to another fund without equivalent flows of assets in return and without a requirement of repayment.

An interfund loan occurs when one fund lends cash to another fund with a requirement for repayment.

When a fund repays another fund for expenditures or expenses initially paid by for by a fund other than the one that should have paid for the transaction, it is referred to as interfund services provided and used.

The General Fund receives $5,000 from the sale of equipment that originally cost $4,000 and had accumulated depreciation associated with it of $3,000. The government should report a $4,000 on sale of equipment in the General Fund.

The GASB allows two methods of accounting for inventories in governmental-type funds-the consumption method and the purchases method.

Under the consumption method of accounting for inventories, a debit is made to Supplies inventory and a credit is made to Nonspendable fund balance if year-end inventory is greater than the beginning of the year inventory in governmental-type funds.

The financial statements required for the General Fund or a Special Revenue Fund are a balance sheet and a statement of revenues, expenditures, and changes in fund balance.

The complete governmental fund accounting equation is: Financial Assets + Deferred Outflows of Resources $=$ Near-term Liabilities + Deferred Inflows of Resources + Fund Balance