Question 1

Examples of budgetary accounts include Estimated Revenues,Appropriations,and Estimated Other Financing Uses.

Accepted Answer

Budgetary accounts are used to track and manage the financial resources of a government or organization. Estimated revenues, appropriations, and estimated other financing uses are some of the most common types of budgetary accounts used in financial management.

Question 2

The GASB has created four "eligibility requirements" that must be met before revenue can be recognized:
 (1)required characteristics of recipients,(2)timing,(3)reimbursements,and (4)contingencies.

Accepted Answer

The GASB has indeed created four eligibility requirements that must be met before revenue can be recognized, which are (1) required characteristics of recipients, (2) timing, (3) reimbursements, and (4) contingencies.

Question 3

With respect to Governmental Funds,Fund Balance must be broken down into assigned and unassigned.

Accepted Answer

The Fund Balance categories are nonspendable, restricted, committed, assigned and unassigned.

Question 4

The category "other financing sources" includes transfers from other funds and bond issue proceeds.

Accepted Answer

The category "other financing sources" includes transfers from other funds and bond issue proceeds, among other sources.

Question 5

Sales taxes,income taxes,and motor fuel taxes are examples of government-mandated nonexchange transactions

Accepted Answer

Government-mandated nonexchange transactions are grants from higher levels of government given to support a program. Since the program is required, the lower-level government has no choice but to participate. Sales taxes, income taxes and motor fuel taxes are derived tax revenues.

Question 6

An example of an imposed nonexchange revenue is the property tax.

Accepted Answer

A property tax is a form of imposed nonexchange revenue collected by a government entity, usually based on the value of real estate or other property owned by an individual or business. The taxpayer does not receive anything in direct exchange for paying the tax; it is simply a requirement of ownership.

Question 7

Under modified accrual accounting,property tax revenue should be recognized when measurable and available; available means collected no more than 60 days after year-end.

Accepted Answer

This statement is true. Under modified accrual accounting, property tax revenue should be recognized when measurable and available, with available meaning collected no more than 60 days after year-end.

Question 8

The GASB has categorized nonexchange transactions into two categories:
 (1)imposed nonexchange revenues and (2)voluntary nonexchange transactions.

Accepted Answer

Nonexchange transactions are separated into four categories; imposed nonexchange revenues, derived tax revenues, government mandated nonexchange transactions and voluntary nonexchange transactions.

Question 9

The only difference between modified accrual accounting and accrual accounting is the difference in the recognition of long-term assets and liabilities.

Accepted Answer

The difference between modified accrual accounting and accrual accounting goes beyond just the recognition of long-term assets and liabilities. Modified accrual accounting also includes more restrictions on when revenue and expenses can be recognized, and only recognizes assets and liabilities that have a current financial impact on the government's budget. Accrual accounting, on the other hand, recognizes revenue and expenses when earned/incurred regardless of whether or not they have an impact on the current budget, and recognizes all long-term assets and liabilities.

Question 10

Modified accrual accounting is essentially equivalent to cash basis accounting

Accepted Answer

Modified accrual accounting is a hybrid between cash basis accounting and accrual accounting, and therefore is not equivalent to cash basis accounting alone. Modified accrual accounting includes some elements of accrual accounting, such as recognizing certain revenues and expenses when they are earned/incurred, but also includes some elements of cash basis accounting, such as only recognizing revenue when it is received and only recognizing expenses when they are paid out.

Question 11

A donation received is considered a voluntary nonexchange transaction only if it is unrestricted.

Accepted Answer

Voluntary nonexchange transactions are donations and grants given to support a program. Since the program is not required, the receiving government voluntarily agrees to participate.

Question 12

A Fair Exchange transaction is one in which a government gives or receives value without directly receiving or giving equal value in exchange.

Accepted Answer

A nonexchange transaction is one where a government receives resources without directly giving equal value in exchange

Question 13

Under the modified accrual basis,property taxes are recognized in the period in which cash is received,regardless of when the taxes were levied.

Accepted Answer

Property taxes collected within 60 days after the end of the fiscal year may be deemed to be available and recorded as revenue in the year assessed rather than the year collected. Amounts expected to be collected after the 60 days would be recorded as deferred revenue.

Question 14

The budgetary account used to record budgeted revenues is called "Estimated Revenues Control."

Accepted Answer

This is true. The Estimated Revenues Control account is used to track budgeted revenues, which are then compared to actual revenues in order to monitor and analyze the financial performance of an organization.

Question 15

Under GASB Statement 33 requirements for accrual accounting,property tax revenue should be recognized in the period that the tax is collected.

Accepted Answer

Under GASB Statement 33, property tax revenue should be recognized in the fiscal period for which the taxes are levied, regardless of when the taxes are collected. This is a form of accrual accounting known as the modified accrual basis.

Question 16

When a purchase order or contract is issued as authorized by an appropriation,it is known as an expenditure.

Accepted Answer

An appropriation is considered to be expended when authorized liabilities are incurred.

Question 17

A Non-exchange transaction is one in which a government receives value without directly giving equal value in exchange.

Accepted Answer

A non-exchange transaction involves the government receiving value without directly exchanging value of equal worth. Examples include taxes, grants, and donations.

Question 18

When recording the budget,an excess of estimated revenues over appropriations would be credited to Budgetary Fund Balance.

Accepted Answer

When estimated revenues exceed appropriations in the budget, it creates a surplus which is credited to the Budgetary Fund Balance. This helps in ensuring that the fund balance stays within control and the resources are utilized efficiently in the future. Therefore, the statement is true.

Question 19

When liabilities authorized by an appropriation have been incurred,the appropriation is said to be expended.

Accepted Answer

When liabilities authorized by an appropriation have been incurred, it means that the funds allocated for the purpose have been used and the appropriation is considered expended.

Question 20

GASB requires that the budgetary basis of accounting for the General Fund used in the Budget-Actual Comparison Schedule be on the same modified accrual basis as the governmental fund Statement of Revenues,Expenditures and Changes in Fund Balance.

Accepted Answer

The Budgetary Comparison Schedule must provide the original budget, the final budget and the actual amounts of revenues, expenditures and other financing sources and uses. The amounts in the actual column are to be reported on the basis required by law for budget preparation, even if that basis differs from the basis provided in the GASB standards.

Quiz 3: Modified Accrual Accounting: Including the Role of Fund Balances and Budgetary Authority