Question 1

A budgetary comparison schedule presented as required supplementary information for the general fund should report variances for the difference between: I.Original budget amounts and final budget amounts
II)Final budget amounts and actual amounts.

Accepted Answer

A budgetary comparison schedule compares the final budget amounts with the actual amounts to determine variances. While the original budget amounts may be useful for context, the final budget amounts are the most relevant for comparison purposes. Therefore, only the variances between the final budget amounts and actual amounts should be reported in the budgetary comparison schedule.

Question 2

Required financial statements of funds may include the following,among others: The financial statements that should be issued by governmental funds and by proprietary funds include the following:

Accepted Answer

Option A is the best choice since it does not provide specific financial statements and allows for flexibility in determining which financial statements are applicable to each fund. This allows governmental and proprietary funds to issue the necessary financial statements based on their unique characteristics and needs.

Question 3

An internal service fund had the following transactions during the year ended June 30,2009,its first year of existence:
(1)Received $1,000,000 contribution from the general fund.
(2)Acquired fleet of cars for $950,000,paying cash.
(3)Billed departments in other funds $500,000 for using cars.
(4)Incurred operating costs,exclusive of depreciation,of $240,000.
(5)Depreciation expense amounted to $250,000.
-Refer to the above information.On the internal service fund's balance sheet on June 30,2009,total net assets should be reported at:

Accepted Answer

Total net assets of an internal service fund are calculated as the difference between total assets and total liabilities.

Total assets: 
- $1,000,000 contribution 
- Fleet of cars worth $950,000 
- Accounts receivable of $500,000 (billed departments for car use)

Total liabilities: None given in the information provided.

Therefore, total net assets are: 
$1,000,000 + $950,000 + $500,000 - $240,000 - $250,000 = $1,010,000.

Option B is the correct answer.

Question 4

The statement of changes in fiduciary net assets includes all of the following except:

Accepted Answer

Agency funds are not included in the statement of changes in fiduciary net assets because they do not have a net position; they are custodial in nature and do not involve the government's own financial resources.

Question 5

A trust fund of Bruge City received $100,000 from a donor during the year ended June 30,2009.During the year ended June 30,2009,$94,000 of the cash received was used to provide food and clothing to the city's poor.How should the trust fund report these resource flows on its statement of changes in fiduciary net assets for the year ended June 30,2009?

Accepted Answer

The trust fund should report the $100,000 as a contribution and the $94,000 as deductions for benefits. This is because the trust fund is a fiduciary, meaning it holds assets for the benefit of others. In this case, the trust fund received a donation and used it to provide food and clothing to the city's poor. The $100,000 should be reported as a contribution, which is an increase in net assets resulting from a transfer of resources to the trust fund. The $94,000 should be reported as deductions for benefits, which are decreases in net assets resulting from the provision of goods and services to the beneficiaries of the trust fund.

Question 6

The City of Warwick received $4,000,000 from one of its most prominent citizens during the year ended June 30,2009.The donor stipulated that the $4,000,000 be invested permanently,and that interest and dividends earned on the investments be used to support the homeless people of Warwick.During the year ended June 30,2009,dividends received from stock investments amounted to $20,000,while interest received from bond investments amounted to $40,000.At June 30,2009,$10,000 of interest was earned,but it will not be received until July of 2009.The fair value of the securities in which the $4,000,000 was invested had increased $8,000 by June 30,2009.
-Refer to the above information.For the year ended June 30,2009,what amount should the trust fund report as investment earnings on the statement of revenues,expenses,and changes in fund balance?

Accepted Answer

The answer of The City of Warwick received $4,000,000 from...

Question 7

The government-wide financial statements prepared for a municipality should include assets acquired by the following funds:

Accepted Answer

The answer of The government-wide financial statements prepared for a...

Question 8

Which of the following fiduciary funds does not require a statement of changes in net assets? I.Private-purpose trust fund
II)Agency fund.

Accepted Answer

Agency funds do not require a statement of changes in net assets because they are used to hold assets temporarily and do not have a long-term interest in the assets. Private-purpose trust funds, on the other hand, must have a statement of changes in net assets because they have a longer-term purpose and the changes in net assets are important for understanding the fund's financial activity.

Question 9

On the statement of cash flows prepared for an internal service fund,cash received from customers and cash paid for operating expenses should be reported as

Accepted Answer

Cash received from customers and cash paid for operating expenses are typical transactions that fall under operating activities for an internal service fund. Operating activities refer to the principal revenue-generating activities of the fund, and these transactions represent day-to-day operations. Investing activities typically involve the acquisition or disposal of long-term assets or investments, while capital and related financing activities involve borrowing, lending, or equity transactions. Noncapital financing activities include transactions that do not involve capital, such as transfers or subsidies.

Question 10

GASB 34 specifies two criteria for determining major governmental funds to be reported separately in the Governmental Fund Balance Sheet and Statement of Revenues,Expenditures,and Changes in Fund Balances.To be considered a major governmental fund,a fund must:

Accepted Answer

According to GASB 34, a fund must either be the general fund or meet both of the criteria to be considered a major governmental fund. Therefore, the correct choice is option C.

Question 11

The City of Warwick received $4,000,000 from one of its most prominent citizens during the year ended June 30,2009.The donor stipulated that the $4,000,000 be invested permanently,and that interest and dividends earned on the investments be used to support the homeless people of Warwick.During the year ended June 30,2009,dividends received from stock investments amounted to $20,000,while interest received from bond investments amounted to $40,000.At June 30,2009,$10,000 of interest was earned,but it will not be received until July of 2009.The fair value of the securities in which the $4,000,000 was invested had increased $8,000 by June 30,2009.
-Refer to the above information.On the statement of fiduciary net assets at June 30,2009,the nonexpendable trust fund should report investments and interest receivable of:

Accepted Answer

The nonexpendable trust fund should report the investments at their fair value, which increased by $8,000 to $4,008,000. Additionally, interest earned but not received at June 30, 2009, should be reported as interest receivable, which is $10,000. Therefore, the nonexpendable trust fund should report investments and interest receivable of $4,008,000 + $10,000 = $4,018,000, which is only presented in option B.

Question 12

Revenue and expense on a government-wide statement of activities for a municipality should be measured on a(n)

Accepted Answer

Revenue and expense on a government-wide statement of activities should be measured on an accrual basis, which recognizes revenue when earned and expenses when incurred, regardless of when cash is received or paid. This provides a more accurate depiction of the municipality's financial position and performance over time. The cash basis (A) and modified accrual basis (B) are not appropriate for government-wide financial statements. The reconciliation basis (D) is not a commonly used accounting method.

Question 13

At June 30,2009,total assets for the various funds of a local municipality were as follows: Applying GASB 34 criteria,which of the above are major funds for reporting purposes?

Accepted Answer

According to GASB 34 criteria, a major fund is one whose total assets, liabilities, revenues, or expenditures are at least 10% of the respective total for all funds of the governmental entity. In this case, the Governmental Funds (GF) have total assets of $10 million, which is more than 10% of the total assets of all funds ($90 million). Similarly, the Capital Projects Fund (CPF) and Enterprise Fund (EF) also have total assets greater than 10% of the respective total for all funds. Therefore, only options A (GF, CPF, EF) meet the criteria for major funds.

Question 14

Which presentation method combines the component unit's results into the primary government's financial results?

Accepted Answer

Blended presentation combines the financial results of component units with those of the primary government, treating them as if they were part of the primary government itself.

Question 15

Government-wide financial statements prepared for a municipality include the following:

Accepted Answer

The answer of Government-wide financial statements prepared for a municipality...

Question 16

An internal service fund had the following transactions during the year ended June 30,2009,its first year of existence:
(1)Received $1,000,000 contribution from the general fund.
(2)Acquired fleet of cars for $950,000,paying cash.
(3)Billed departments in other funds $500,000 for using cars.
(4)Incurred operating costs,exclusive of depreciation,of $240,000.
(5)Depreciation expense amounted to $250,000.
-Refer to the above information.On the internal service fund's balance sheet at June 30,2009,net assets-unrestricted should be reported at:

Accepted Answer

The answer of An internal service fund had the following...

Question 17

In accordance with the Single Audit Act of 1984,external auditors issue the standard audit report on the governmental unit's financial statements and must also issue: I.a special report on the effectiveness with which the governmental unit is achieving its social objectives.
II)a special report on the governmental unit's internal control system.
III)a special report on the governmental unit's compliance with laws and regulations.

Accepted Answer

Under the Single Audit Act, external auditors must issue a special report on the governmental unit's compliance with laws and regulations, as well as a special report on the effectiveness of the internal control system. There is no requirement for a special report on the achievement of social objectives. Therefore, choice III is correct and choice I is incorrect. Choice II is partially correct, but it must be combined with choice III to be fully accurate. Therefore, the best choice is C, II and III.

Question 18

Carlisle established a motor vehicle service and maintenance fund to service and maintain all cars and trucks owned by the town.Revenues of the fund will only come from billings to the funds which use the motor vehicle service and maintenance fund.What type of fund is the motor vehicle service and maintenance fund?

Accepted Answer

The motor vehicle service and maintenance fund is an internal service fund because it is established to provide goods or services to other departments and agencies of the government on a cost-reimbursement basis. The revenues of the fund will come from billings to the funds which use the motor vehicle service and maintenance fund, making it an internal charge fund.

Question 19

Agency funds report:

Accepted Answer

Agency funds report only assets and liabilities because they are fiduciary funds that do not support the government's own programs but rather are acting as an agent to collect or distribute resources to others.

Question 20

Which of the following characteristics best describes an enterprise fund?

Accepted Answer

Enterprise funds are used by governments to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis are financed or recovered primarily through user charges.

Quiz 18: Governmental Entities: Special Funds and Government-Wide Financial Statements

A budgetary comparison schedule presented as required supplementary information for the general fund should report variances for the difference between: I.Original budget amounts and final budget amounts II) Final budget amounts and actual amounts.