Question 1

The General Fund of the City of Plymouth purchased a police car in the amount of $28,000.Which of the following would be true?

Accepted Answer

The General Fund Statement of Revenues, Expenditures, and Changes in Fund Balances is only concerned with the activities of the General Fund, and would report the $28,000 purchase as an expenditure. The government-wide Statement of Activities would report the total expense of the police department, which includes more than just the General Fund, so it would not report an expense of $28,000. Therefore, choice (A) is incorrect. Choice (C) is incorrect because the government-wide Statement of Activities does not report an expense of $28,000. Choice (D) is incorrect because one of the statements would report an expenditure of $28,000.

Question 2

Which of the following is true regarding the government-wide financial statements?

Accepted Answer

The required financial statements are the Statement of Net Position and the Statement of Activities. Government-wide statements are prepared using the economic resources focus and accrual basis of accounting.

Question 3

The following data applies to the next three questions:
The City of Charlestown levied property taxes in the amount of $10,000,000. It is estimated that 2% will not be collected. The taxes were levied July 1, 2014 for the fiscal year ended June 30, 2015. During the year ended June 30, 2015, $8,900,000 in property taxes were collected from this levy. It is estimated that $620,000 will be collected during the next 60 days, $300,000 will be collected more than 60 days after June 30, 2015, and $180,000 will never be collected.
-When preparing the General Fund financial statements,how much property tax revenue should be recognized from this levy for the year ended June 30,2015?

Accepted Answer

The total amount of taxes levied is $10,000,000, but it is estimated that 2% ($200,000) will not be collected. Therefore, the total amount of revenue that can be recognized is $9,800,000. Of this amount, $8,900,000 was collected during the fiscal year, $620,000 is estimated to be collected within 60 days after June 30, and $300,000 is estimated to be collected more than 60 days after June 30. Therefore, the total amount of revenue recognized for the year ended June 30, 2015 is $9,520,000 ($8,900,000 + $620,000 + $300,000). The $180,000 that will never be collected should be written off as a bad debt expense.

Question 4

Which of the following is considered a source of general revenue in the Government-wide Statement of Activities?

Accepted Answer

Sales tax is considered a source of general revenue in the Government-wide Statement of Activities. Charges for services and operating grants are considered program revenue. Therefore, option A and B are incorrect. Option D is incorrect because there is at least one source of general revenue, which is sales tax.

Question 5

The following data applies to the next three questions:
The City of Charlestown levied property taxes in the amount of $10,000,000. It is estimated that 2% will not be collected. The taxes were levied July 1, 2014 for the fiscal year ended June 30, 2015. During the year ended June 30, 2015, $8,900,000 in property taxes were collected from this levy. It is estimated that $620,000 will be collected during the next 60 days, $300,000 will be collected more than 60 days after June 30, 2015, and $180,000 will never be collected.
-When preparing the government-wide financial statements,how much property tax revenue should be recognized for the year ended June 30,2015?

Accepted Answer

The property taxes levied were $10,000,000, but it is estimated that 2% will not be collected, which is $200,000. Therefore, the amount expected to be collected is $9,800,000 ($10,000,000 - $200,000). Of this, $8,900,000 was collected during the fiscal year and $620,000 is estimated to be collected in the next 60 days, totaling $9,520,000. However, there is an additional $480,000 ($300,000 more than 60 days + $180,000 never to be collected) that is not expected to be collected within the next fiscal year. Therefore, the recognized revenue for the year ended June 30, 2015 should be $9,800,000 - $480,000 = $9,320,000.

Question 6

On April 1,2015,a local government issued bonds in the amount of $2,000,000. The bonds were issued at par and carried an interest rate of 5%,payable October 1 and April 1. When moving from the change in fund balances in the governmental funds Statement of Revenues,Expenditures,and Changes in Fund Balances to the change in Net Position in the governmental funds column of the Statement of Activities,both for the fiscal year ended June 30,2015,the effect for the interest accrual only would be:

Accepted Answer

Since the bonds were issued on April 1 and the interest is payable on October 1 and April 1, only three months of interest would have accrued by June 30. Therefore, the interest accrual for the fiscal year ended June 30, 2015 would be $2,000,000 x 5% x 3/12 = $25,000. This would be a decrease in fund balances in the governmental funds Statement of Revenues, Expenditures, and Changes in Fund Balances. When transferring this change to the governmental funds column of the Statement of Activities, it would also result in a decrease of $25,000 in the change in net position since both statements represent the same set of transactions.

Question 7

Where in the basic financial statements,in most cases,would one find internal service activities reported?

Accepted Answer

Internal service activities are typically reported in the proprietary funds statements, as they are usually financed and operated similarly to business enterprises. They are not considered governmental activities, so they would not be included in the governmental activities column of the government-wide statements.

Question 8

Under which of the following circumstances would an asset be considered impaired?

Accepted Answer

An asset is considered impaired when its carrying amount exceeds its recoverable amount. In all the given scenarios, the assets have lost value or utility: A) the equipment is obsolete, B) the bridge is damaged, and C) the airport expansion is halted due to reduced demand.

Question 9

The following data applies to the next three questions:
The City of Charlestown levied property taxes in the amount of $10,000,000. It is estimated that 2% will not be collected. The taxes were levied July 1, 2014 for the fiscal year ended June 30, 2015. During the year ended June 30, 2015, $8,900,000 in property taxes were collected from this levy. It is estimated that $620,000 will be collected during the next 60 days, $300,000 will be collected more than 60 days after June 30, 2015, and $180,000 will never be collected.
-How much will the city report as Deferred Inflow - Property Taxes in its June 30,2015 government-wide Statement of Net Position?

Accepted Answer

The answer of The following data applies to the next...

Question 10

The governmental funds report a total of $2,000,000 Transfers In and $1,500,000 Transfers Out.To consolidate governmental activities what amount will be eliminated from the Transfers In and Transfers Out accounts among the governmental funds?

Accepted Answer

The amount that will be eliminated from the Transfers In and Transfers Out accounts among the governmental funds is the difference between the two, which is $500,000 ($2,000,000 - $1,500,000). Therefore, the correct answer is choice B, $1,500,000.

Question 11

Where in the basic financial statements would one find fiduciary activities reported?

Accepted Answer

Fiduciary activities would be found in the fiduciary funds statements only. Fiduciary activities are not included in the government-wide statements.
The following data applies to the next three questions:
The City of Charlestown levied property taxes in the amount of $10,000,000. The taxes were levied July 1, 2016 for the fiscal year ended June 30, 2017. During the year ended June 30, 2017, $8,900,000 in property taxes were collected from this levy. It is estimated that $620,000 will be collected during the next 60 days, $300,000 will be collected more than 60 days after June 30, 2017, and $180,000 will never be collected.

Question 12

A government reported,in its government-wide Statement of Net Position:
•assets of $82 million,including $40 million in capital assets (cost),with $12 million in accumulated depreciation,and
•liabilities of $50 million,including long-term debt of $15 million related to capital asset acquisition.
In addition,$4 million of cash was restricted for payment of debt service. The government's Unrestricted Net Position would be reported as:

Accepted Answer

The answer of A government reported,in its government-wide Statement of...

Question 13

Which of the following is not true regarding infrastructure assets?

Accepted Answer

This statement is false. Although infrastructure assets have long useful lives, they still need to be depreciated over time.

Question 14

What would be the appropriate journal entry to adjust to the accrual basis of accounting for depreciation on general capital assets related to prior years?

Accepted Answer

To adjust for prior years' depreciation, the entry should reduce net position and increase accumulated depreciation, reflecting the accumulated expense over time.

Question 15

The difference between the amount of debt limit calculated as prescribed by law and the net amount of outstanding indebtedness subject to limitation,is known as:

Accepted Answer

The difference between the amount of debt limit calculated as prescribed by law and the net amount of outstanding indebtedness subject to limitation is known as debt margin. This represents the amount of additional debt that can be incurred before reaching the debt limit.

Question 16

For the depreciation of infrastructure…

Accepted Answer

The answer of For the depreciation of infrastructure…
...

Question 17

The difference between assets and liabilities in the government-wide statements is called_________.

Accepted Answer

The difference between assets and liabilities in the government-wide statements is called "Net Position." This term represents the government's overall financial position and is similar to equity in the private sector. "Fund Balance" is a term used in the fund financial statements to represent the excess of assets over liabilities in a specific fund. "Net Equity" and "Accrued Equity" are not commonly used terms in government accounting.

Question 18

When using the modified approach to account for infrastructures,expenditures to extend the life of the infrastructure assets are:

Accepted Answer

Expenditures to extend the life of the infrastructure assets are expensed when using the modified approach.

Question 19

Which of the following adjustments would be made when moving from the governmental funds balance sheet to the governmental activities column in the government-wide Statement of Net Position?

Accepted Answer

Moving from the governmental funds balance sheet to the governmental activities column in the government-wide Statement of Net Position involves converting the fund financial statements to the economic resources measurement focus and full accrual accounting. This requires adding all capital assets, net of depreciation, and the assets and liabilities of internal service funds. Therefore, both options (A and B) are correct adjustments that need to be made.

Question 20

Which of the following is true concerning infrastructure assets?

Accepted Answer

Capitalization of infrastructure is required under GAAP for governmental entities. Governments must capitalize and depreciate infrastructure assets such as roads, bridges, and buildings. Option A and D are incorrect statements.

Quiz 8: Government-Wide Statements: Capital Assets; Long-Term Debt