Question 1

Other financing sources increase fund balance in the same manner as revenues.

Accepted Answer

Other financing sources include items such as interfund transfers and debt issue proceeds. They increase fund balance when closed.

Question 2

Interfund transfers and debt issue proceeds received by a governmental fund should be recorded as other financing sources.

Accepted Answer

GASB standards specifically classify these items as other financing sources. Revenue is simply defined as increases in a fund's financial resources other than from interfund transfers and debt proceeds.

Question 3

GASB standards require that all state and local governments present a statement of revenues,expenditures,and changes in fund balances-budget and actual for the General Fund,and major special revenue funds for which annual budgets have been legally adopted.

Accepted Answer

A budgetary comparison schedule is required supplementary information for the General Fund and major special revenue funds that have legally adopted budgets and should be placed immediately after the notes to the financial statements. This schedule may optionally take the form of the statement of revenues, expenditures, and changes in fund balances budget and actual and be included with the basic financial statements.

Question 4

Available means that a revenue or other financing source is expected to be collected during the current fiscal period or within one month of the fiscal year end.

Accepted Answer

Available means that the revenue or other financing source is expected to be collected during the current fiscal period or soon enough thereafter to pay current period obligations. In the case, of property taxes, GASB requires collection within 60 days after the end of the current period.

Question 5

Depreciation expense for assets that essentially benefit all functions,such as the city hall,may be reported as a separate line item or on the same line as the General Government or similar function.

Accepted Answer

Depreciation expense for shared assets should be allocated to functions on an appropriate basis (for example, square footage of building use); however, depreciation expense for assets that essentially benefit all functions may be reported as a separate line item or on the same line as the General Government or similar function.

Question 6

Fund-based financial statements are intended to provide detailed financial information about the governmental,business-type,and fiduciary activities of the primary government.

Accepted Answer

Government-wide financial statements provide detail of governmental activities and business-type activities; while fund-based financial statements are intended to provide detailed financial information about the governmental, business-type, and fiduciary activities of the primary government.

Question 7

An encumbrance represents the estimated future liability for goods or services resulting from placing a purchase order or signing a contract.

Accepted Answer

This is an appropriate description of an encumbrance. An appropriation is not expended, however, until goods or services are received.

Question 8

Budgetary accounts used in the General Fund include Estimated Revenues,Estimated Other Financing Sources,Appropriations,Estimated Other Financing Uses,and Encumbrances.

Accepted Answer

These are the accounts listed in Illustration 3-3 as budgetary accounts.

Question 9

Which of the following statements is not a true statement about expenses that are directly related to a government function or program?

Accepted Answer

Interest on general long-term liabilities is a financing expense and is not directly related to a government function or program. Therefore, it is not included as an expense directly related to a government function or program.

Question 10

Government-wide financial statements include financial information presented for the General Fund and major governmental funds.

Accepted Answer

Government-wide financial statements report on the governmental and business-type activities of the government as a whole, and not on the funds. Governmental-type, proprietary-type, and fiduciary-type funds are reported in the funds financial statements.

Question 11

Revenues and expenditures reported in the budgetary comparison schedule must be reported on the budget basis in the "budget" column and on the GAAP basis in the "actual" column.

Accepted Answer

The budgetary basis must be used both for the budget and actual columns to facilitate meaningful comparison.

Question 12

All decreases in fund financial resources,other than for repayment of fund liabilities,are termed "expenditures."

Accepted Answer

Expenditures is defined as all decreases in fund financial resources other than through other financing uses, such as interfund transfers out.

Question 13

Which of the following best describes the recommended format for the government-wide statement of activities?

Accepted Answer

The answer of Which of the following best describes the...

Question 14

Financial information for governmental funds must be reported on the economic resources measurement focus.

Accepted Answer

According to GASB standards, governmental funds must be reported using the current financial resources measurement focus and the modified accrual basis of accounting.

Question 15

All purchases of goods and services and all interfund transfers of the General Fund are recorded as Expenditures.

Accepted Answer

All purchases of goods and services by the General Fund are classified as expenditures; however, interfund transfers out are classified as "other financing uses," not expenditures.

Question 16

Program revenues are distinguished from general revenues on the government-wide statement of activities under GASB standards.

Accepted Answer

Program revenues appear on the top half of the statement of activities and are subtracted from expenses of each function or program in arriving at the net cost of operations for governmental services. General revenues, on the other hand, appear on the lower half of the statement of activities and are in one column as a subtraction from the net cost of government services in arriving at the change in net position for the fiscal year.

Question 17

An allotment may be described as an internal allocation of funds on a periodic basis usually agreed upon by the department heads and the chief executive.

Accepted Answer

This definition is consistent with the Chapter 3 discussion.

Question 18

Aggregate financial information for all special revenue funds is reported in a single separate column of the governmental funds statement of revenues,expenditures,and changes in fund balances.

Accepted Answer

As shown in Illustration 3-2, only those special revenue funds that are designated as major funds, or meet the GASB criteria for classification of major funds, are reported in separate columns of the basic fund statements. Financial information for all nonmajor governmental funds is reported in the aggregate in the "Other Governmental Funds" column.

Question 19

"Available appropriation" is calculated as the difference between appropriations and the sum of expenditures and encumbrances.

Accepted Answer

As shown in Illustration 3-8, available appropriations is calculated as appropriations less the sum of expenditures and open encumbrances.

Question 20

All encumbrances must be closed at year-end.

Accepted Answer

If encumbrances are still outstanding at year-end and the government's policy is to honor the encumbrances, there is no need to close the Encumbrances account at year-end. If the government will not honor the outstanding encumbrances at year-end, the Encumbrances account should be closed by debiting Encumbrances Outstanding and crediting Encumbrances.

Quiz 3: Governmental Operating Statement Accounts; Budgetary Accounting