Question 1

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

Accepted Answer

This is true according to generally accepted accounting principles. Revenues must be both measurable and available in order to be recognized in the General Fund. Measurable means the amount of revenue can be reasonably estimated, and available means the revenue is expected to be collected within the current fiscal year or shortly thereafter.

Question 2

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

Accepted Answer

When the General Fund purchases water from an enterprise fund, it is considered an expenditure for the General Fund and is recorded as a debit to the expenditure account.

Question 3

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

Accepted Answer

Interfund transfers are eliminated in the government-wide statements to present a consolidated view of the government's financial position and performance. This is in contrast to fund-based statements, where interfund transfers are recorded as both a credit and debit on separate funds.

Question 4

Every general purpose government will have a single General Fund.

Accepted Answer

The General Fund is the primary operating fund of the government and is used to account for all financial resources except those required to be accounted for in another fund. Therefore, every general purpose government will have a single General Fund.

Question 5

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

Special revenue funds are often used to account for intergovernmental grants, which are resources provided by federal or state governments to local governments for specific purposes such as education, public health, or transportation. These grants are usually noncapital in nature, meaning they are used to support ongoing operations rather than to acquire long-term assets. Special revenue funds are ideal for tracking and managing such grants because they require the funds to be used for the specific purposes outlined in the grant agreements and restrict the use of those funds for other purposes.

Question 6

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

Accepted Answer

Special revenue funds account for the proceeds of specific revenue sources that are earmarked for particular purposes. Revenues are recognized when they are both available and measurable, meaning that they have been collected or are expected to be collected soon and that their amount can be reasonably estimated. This is different from other funds, such as capital projects funds, which recognize revenue only when it is actually received.

Question 7

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

Accepted Answer

The General Fund is designed to account for all resources not accounted for in any other fund, making it the primary fund for most governments.

Question 8

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 9

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

This statement is true. Special revenue funds are set up to account for resources that have restrictions or commitments for specific purposes other than debt service or capital projects. They are used for activities such as grants or taxes with designated uses, and they provide separate reporting for these restricted funds.

Question 10

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

Accepted Answer

The answer of When closing the books for the General...

Question 11

Resources appropriately reported within proprietary or fiduciary funds are excluded from special revenue funds.

Accepted Answer

Resources reported in proprietary or fiduciary funds are not considered special revenue funds, so they would not be included.

Question 12

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 13

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

Accepted Answer

This is true. Governmental fund financial statements are prepared using the current financial resource measurement focus, which means that the statements focus on current assets, liabilities, and inflows/outflows of resources that are available to use in the near future. This focus differs from the long-term economic resource measurement focus used in other types of financial statements.

Question 14

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

Fund accounting is specifically designed to track and report on funds that have specific restrictions on their use, such as donations or government grants. By separating these funds from general operating funds, organizations can demonstrate compliance with the restrictions and ensure that the funds are used appropriately.

Question 15

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

When grants are awarded on a reimbursement basis, revenues are recognized only after the qualified expenditures have been recognized. This is because the reimbursement reflects the actual expenses incurred, rather than an advance payment. Therefore, it is necessary to recognize the expenses before the corresponding revenues can be recognized.

Question 16

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 17

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 18

Transactions between funds of the same government are assumed to be arm's length in nature because there is no private inurement.

Accepted Answer

Transactions between funds of the same government are not necessarily arm's length because they may not be subject to the same market forces or competitive pressures as transactions between independent entities.

Question 19

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 involve the transfer of resources between two different funds, and failure to properly report these transactions can result in both funds being misstated. As such, it is important for financial statement preparers to accurately report these transactions in order to ensure the integrity of the financial statements.

Question 20

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

Accepted Answer

Governmental fund financial statements are prepared using the modified accrual basis of accounting, which is a combination of cash and accrual basis. The accrual basis of accounting is used in the preparation of financial statements for proprietary and fiduciary funds.

Quiz 4: Accounting for the General and Special Revenue Funds

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

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

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

Every general purpose government will have a single General Fund.

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

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

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

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

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.

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

Resources appropriately reported within proprietary or fiduciary funds are excluded from special revenue funds.

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.

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

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.

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.

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

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

Transactions between funds of the same government are assumed to be arm's length in nature because there is no private inurement.

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.

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