Question 1

Expenditure classifications by function includes all of the following except

Accepted Answer

Within the General Fund, expenditures are typically classified by character and function. Functional classification reflects major activities or programs of the government such as public safety, general government or highway & streets. Debt service would be a character classification.

Question 2

Define the term "Revenue" and distinguish between that term and "Other Financing Sources."

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Question 3

Define and give an example of each of the following categories of Fund Balance outlined in GASB Statement No.54:
Nonspendable
Restricted
Committed
Assigned
Unassigned

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Question 4

Briefly discuss how governmental budgeting differs from budgeting for businesses.

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Question 5

At year-end,the balance of Expenditures,Revenues and Other Financing Sources and Uses accounts are closed to:

Accepted Answer

The balance of Expenditures, Revenues and Other Financing Sources and Uses accounts are closed to Fund Balance. This is because Fund Balance represents the residual equity of a governmental fund and includes any amounts not already classified in other fund balance categories, such as the budgetary fund balance.

Question 6

What are the revenue and expenditure recognition criteria under modified accrual accounting?
 Include in your answer specifically the recognition of property tax revenue.

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Question 7

To record the budget for the General Fund

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Question 8

What are the four classes of nonexchange revenues?

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Question 9

Define the term "Expenditure" and distinguish between that term and each of the following terms:
1.Expense2.Disbursement3.Encumbrance

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Question 10

Which of the following results in a decrease in fund balance on a governmental fund's Balance Sheet?

Accepted Answer

Expenditures decrease the fund balance on a governmental fund's Balance Sheet because they represent outflows of resources. Transfers received do not affect fund balance because they represent inflows of resources from other funds within the government. Encumbrances do not affect fund balance because they represent commitments to spend funds in the future but do not represent actual spending.

Question 11

When a liability is incurred as authorized by an appropriation,the appropriation is said to be:

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Question 12

What is the difference between an exchange and a nonexchange transaction?

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Question 13

At what point would the General Fund account "Budgetary Fund Balance -- Reserve for Encumbrances" be debited?

Accepted Answer

The General Fund account "Budgetary Fund Balance -- Reserve for Encumbrances" is debited when an authorized liability is incurred or when the government receives the order. This represents the amount of funds that have been set aside and encumbered for a specific purchase or expense, but have not yet been paid out in cash. Once the liability is incurred, the encumbrance is released and the appropriate expenditure account is debited. Therefore, option B is the correct answer.

Question 14

Distinguish between the Encumbrances Control account and the Budgetary Fund Balance -- Reserve for Encumbrances account

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Question 15

With respect to reporting for the General Fund,what is the difference between GAAP basis and budgetary basis reporting?

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Question 16

The Village of Lake George's General Fund has the following net resources at December 31,2014
• $5,000 of prepaid insurance
• $ 25,000 of property taxes receivable - currently due and expected to be collected within 60 days
• $300,000 rainy day fund approved by the township governing board
• $82,500 of supplies inventory
• $33,000 government grant for city park maintenance
• $10,000 contractual obligations for the purchase of park fixtures
• $200,000 to be used to fund government operations in the future
Required:
 Prepare the fund balance section of the Balance Sheet

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Question 17

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

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Question 18

The difference between an expenditure and an encumbrance is?

Accepted Answer

An expenditure represents the actual amount of an authorized liability that has been paid, while an encumbrance is an estimate of funds that have been set aside for a future liability. Encumbrances are typically used to ensure that funds are not overspent in a particular budget area.

Question 19

Which of the following is true regarding the final appropriations budget?

Accepted Answer

The final appropriations budget is a legal and binding document, which means it cannot be changed by anyone without proper authority. It is based on estimates of expected expenditures and revenues for a certain period and should be followed to ensure financial stability and accountability. Exceeding the final appropriations budget without approval is a violation of financial laws and can lead to serious consequences. Therefore, option A and B are incorrect.

Question 20

List the four eligibility requirements for a government to record revenue from a nonexchange transaction.Provide a brief explanation for each.

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