Question 1

A government incurred expenses for its infrastructure as follows: $20 million for general repairs; $15 million to extend the life for existing infrastructure; and $18 million for additions and betterments.The government chooses to use the modified approach to record infrastructure.The infrastructure has a basis of $400 million and would be depreciated over a 40 year life,if depreciation were charged.The amount that would be shown as expense in the Statement of Activities would be:

Accepted Answer

The answer of A government incurred expenses for its infrastructure...

Question 2

The City of Charlotte levied property taxes in 2012 in the amount of $10 million.It is estimated that 2% will be uncollectible.During 2012,$9,000,000 was collected,and it is anticipated that $400,000 will be collected during the next 60 days.When moving from the changes in fund balances in the Statement of Revenues,Expenditures,and Changes in Fund Balances to the changes in net assets in the Statement of Activities,what will be the adjustment? (ignore any possible effect resulting from the previous year's deferral)

Accepted Answer

The adjustment will be an increase of $400,000 because this is the amount that is anticipated to be collected in the next 60 days. The uncollectible amount was already accounted for in the initial property tax levy of $10 million, and the $9,000,000 collected already is reflected in the Statement of Revenues, Expenditures, and Changes in Fund Balances. Therefore, the only adjustment needed is for the $400,000 that will be collected in the next 60 days.

Question 3

With respect to government-wide statement,which of the following statements is correct?

Accepted Answer

GASB Statement No. 34 requires that general capital assets should not be reported as assets in governmental funds, but should be reported in the governmental activities column of the government-wide statement of net assets. This is because the government-wide statements are prepared on the accrual basis using the economic resources measurement focus, while governmental funds are prepared on the modified accrual basis using the current financial resources measurement focus.

Question 4

A governmental fund Statement of Revenues,Expenditures,and Changes in Fund Balances reported expenditures of $30 million,including capital outlay expenditures of $5 million.Capital assets for that government cost $90 million,including land of $10 million.Depreciable assets are amortized over 20 years,on average.The reconciliation from governmental changes in fund balances to governmental activities changes in net assets would reflect a(an):

Accepted Answer

The answer of A governmental fund Statement of Revenues,Expenditures,and Changes...

Question 5

A local government recorded the sale of a capital asset by recording a debit to cash and credit to proceeds of sale of capital asset.What is the worksheet entry when preparing the government-wide statements?

Accepted Answer

When preparing government-wide statements, the sale of a capital asset needs to be recorded by debiting Proceeds of Sale of Capital Asset and crediting Capital Asset (Net) and Gain/Loss on Sale of Capital Asset. This ensures that the impact of the sale is properly reflected in both the statement of net position and statement of activities. Option A is incorrect because it does not record the change in the carrying value of the capital asset on the statement of net position. Option B is incorrect because it double-counts the impact of the sale on the statement of activities.

Question 6

A local government purchased a building and recorded the event by debiting Expenditures - Capital Outlay and crediting Cash.What would be the worksheet entry to prepare the government-wide statements?

Accepted Answer

The purchase of a capital asset is recorded as a debit to Capital Assets and a credit to Cash. The Expenditures - Capital Outlay account is used to track the government's spending on capital assets. When the government-wide statements are prepared, the Expenditures - Capital Outlay account is closed out and the balance is transferred to the Capital Assets account.

Question 7

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

Accepted Answer

Choice A is true, as balances from enterprise funds are reported in the business-type activities section of the government-wide statements without adjustment. 
Choice B is incorrect, as government-wide statements are not consolidated within columns, but rather they present the activities of the government as a whole. Therefore, choice D is also incorrect. As both A and B are not true, the correct answer is C.

Question 8

Which of the following statements is not correct?

Accepted Answer

Worksheet entries are not posted to the general ledger when preparing the government-wide statements and then reversed at the beginning of the next fiscal year. This statement is not correct because the worksheet entries are used to make adjusting entries to the government-wide statements, and they are not posted to the general ledger. Once the adjusting entries are made, they become part of the government-wide financial statements and are not reversed at the beginning of the next fiscal year.

Question 9

Which of the following statements is not correct with respect to the year-end adjustments for the government wide-statements?

Accepted Answer

Depreciation expense is not eliminated when preparing government-wide statements; it is recorded to reflect the consumption of capital assets over time.

Question 10

Which of the following statements is not correct with respect to the preparation of government-wide statements?

Accepted Answer

Enterprise funds are self-supporting and their operating profits are not eliminated in government-wide statements; they are reported in the business-type activities column.

Question 11

A government's Statement of Revenues,Expenditures,and Changes in Fund Balances reflected proceeds of bonds in the amount of $1,000,000.That statement also reflected expenditures for debt service in the amount of $3,000,000,including $2,600,000 for principal payments.Assuming no other changes,the effect,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 assets for governmental activities in the Statement of Activities would be a:

Accepted Answer

The answer of A government's Statement of Revenues,Expenditures,and Changes in...

Question 12

When preparing government-wide financial statements,the modified accrual based governmental funds are adjusted for which of the following events?

Accepted Answer

Government-wide financial statements are prepared using the accrual basis of accounting, so the modified accrual basis of accounting used in governmental funds needs to be adjusted for any events that affect the financial position of the government as a whole. These events include capital asset related events, long-term debt related events, and internal service fund activities. Therefore, choice D, "All of the above" is the best answer.

Question 13

In its Statement of Net Assets,a government reported:
The government also reported $10 million of net assets were restricted for payment of debt service.The government's unrestricted net assets would be reported as:

Accepted Answer

Unrestricted net assets are total net assets minus restricted net assets. Therefore, the government's unrestricted net assets would be $20 million ($30 million - $10 million).

Question 14

A local government recorded the payment of bond principal by debiting Expenditure: Bond principal and crediting cash.What is the worksheet entry when preparing the government-wide statements?

Accepted Answer

The answer of A local government recorded the payment of...

Question 15

A government had the following transfers reported in its governmental funds Statement of Revenues,Expenditures,and Changes in Fund Balances: (1)a transfer from the General Fund to a debt service fund in the amount of $l,100,000; (2)a transfer from the General Fund to an enterprise fund in the amount of $1,300,000; and (3)a transfer from the General Fund to an internal service fund in the amount of $500,000.The amount that would be shown as a transfer out in the governmental activities column in the Statement of Activities would be:

Accepted Answer

The answer of A government had the following transfers reported...

Question 16

When preparing government-wide financial statements,the modified accrual based governmental funds are adjusted for all of the following events except:

Accepted Answer

Government-wide financial statements are prepared using the accrual basis of accounting, which requires adjustments for long-term debt, internal service fund activities, and interfund activities. However, changes in current assets and current liabilities are already captured in the modified accrual basis and do not require adjustment.

Question 17

Which of the following would not be an adjustment for long-term debt when preparing government-wide financial statements?

Accepted Answer

Recording the cash received from a debt issue is not an adjustment for long-term debt when preparing government-wide financial statements as it is a straightforward transaction that does not require adjusting the amounts reported for long-term debt. Options A, B, and C are all adjustments that need to be made when preparing government-wide financial statements for long-term debt.

Question 18

A local government issued bonds and recorded the event by debiting cash and crediting Other Financing Source - Proceeds of Bonds and Other Financing Source - Premium on Bonds.What is the worksheet entry when preparing the government-wide statements?

Accepted Answer

In government-wide financial statements, the issuance of bonds is recorded by debiting Other Financing Sources and crediting Bonds Payable and Premium on Bonds to reflect the liability.

Question 19

A government reported an "other financing source" in the amount of $750,000,related to the sale of land in its governmental funds Statement of Revenues,Expenditures,and Changes in Fund Balances.The land had a cost of $275,000.The adjustment in the reconciliation,when moving from the governmental Funds Statement of Revenues,Expenditures,and Changes in Fund Balances to the change in net assets for governmental activities in the Statement of Activities would be a(an):

Accepted Answer

The answer of A government reported an "other financing source"...

Question 20

The total amount of indebtedness of specified kinds that is allowed by law to be outstanding at any time is known as:

Accepted Answer

The term "debt limit" refers to the maximum amount of debt that is allowed to be outstanding at any time, as determined by law. This limit is set to prevent excessive borrowing by the government and to maintain financial stability.

Quiz 8: Government-Wide Statements, capital Assets, long-Term Debt