Question 1

Match between columns Premises: Enterprise Funds provide services primarily to governmental departments and agencies. As a general rule,Internal Service Funds sell goods and services to governmental agencies,and Enterprise Funds sell goods and services to the general public.This means an Enterprise Fund cannot sell some goods and services to the government itself.
Enterprise Funds are financed primarily through user charges. Enterprise Funds use a different basis of accounting than Internal Service Funds. Enterprise Funds may receive subsidies from the General Fund for operating purposes.

Accepted Answer

The Answer of False and True is...

Question 2

A local government sells bonds having a face value of $1,000,000 at par.The bond proceeds will be accounted for in a Capital Projects Fund.What account will be credited to offset the debit to cash?
A)other financing sources
B)citizens' equity
C)fund balance
D)bonds payable

Accepted Answer

The account credited to offset the debit to cash would be "other financing sources", as the proceeds from the bond issuance are considered financing and not revenue.

Question 3

A government will prepare a statement of cash flows for which of the following funds?
A)General Fund
B)Enterprise Fund
C)Debt Service Fund
D)Agency Fund

Accepted Answer

Enterprise Funds, which operate in a manner similar to private businesses, are required to prepare a statement of cash flows as part of their financial reporting. This is because they focus on the total economic resources measurement focus and use the accrual basis of accounting, making the statement of cash flows relevant for assessing their financial condition.

Question 4

Which measurement focus and basis of accounting should be used in an Internal Service Fund?

Accepted Answer

The answer of Which measurement focus and basis of accounting...

Question 5

Match between columns
                        Premises: All funds report both financial resources and capital resources.
All the long-term debt of a government,including the long-term debt that will be financed by Enterprise Fund revenues,is reported in the fund-level financial statements.
For financial reporting purposes,operating transfers from one fund to another are generally reported in a separate section of the operating statements for each of the funds.
For financial reporting,current assets and liabilities are separated from long-term assets and liabilities in the balance sheets of Enterprise Funds.
Long-term liabilities resulting from the operating activities of a General Fund,such as accrued vacation leave,are reported in the fund-level financial statements.Long-term liabilities resulting from the capital acquisition activities of a Capital Projects Fund,however,are not.

Accepted Answer

The Answer of True and False is...

Question 6

Match between columns
                        Premises: To determine whether they have obtained sufficient revenues to cover their expenses,funds that account for governmental business-type activities use the modified accrual basis of accounting.
Basis of accounting refers to the timing of the recognition of assets,liabilities,revenues and expenses or expenditures.The basis of accounting facilitates what one is trying to measure.
Depreciation of capital assets is not recognized as an expense in a Special Revenue Fund,but it is recognized as an expense in an Internal Service Fund.
Property taxes are recognized as revenues in governmental type funds to the extent that they are collected in the year for which they are levied.
Under the modified accrual basis of accounting,expenditures are generally recognized in the period that goods and services are received,but there are a number of exceptions to that rule.

Accepted Answer

The Answer of False and True is...

Question 7

Which of the following financial statements would be prepared for enterprise funds?
A)a statement of net position
B)a statement of cash flows
C)a statement of revenues,expenses,and changes in net position
D)All of the above would be prepared.
E)Only a and c would be prepared.

Accepted Answer

Enterprise funds, which are used by government entities to account for operations financed in a manner similar to private business enterprises, prepare all of the listed financial statements: a statement of net position, a statement of cash flows, and a statement of revenues, expenses, and changes in net position. These statements provide a comprehensive view of the fund's financial activities and health.

Question 8

(Comparative computations of expenditures and expenses based on the same underlying transactions)
A department of a local government began operations at the beginning of the current fiscal year with $250,000 cash.During the fiscal year,the department made cash disbursements for the following:
-Salaries and other personnel costs,$100,000
-Office rent and utilities,$24,000
-Retirement of debt principal,$10,000;payment of interest,$2,200
-Purchased equipment at the beginning of the fiscal year for $30,000;the equipment is expected to last 6 years and have a salvage value of $6,000
-Photocopier rental,$10,500
Based on the preceding transactions,compute total annual expenditures for this department assuming it performs governmental-type activities and is accounted for in the General Fund.
Then compute total annual expenses for this department assuming it performs activities within an Enterprise Fund.

Accepted Answer

The answer of (Comparative computations of expenditures and expenses based...

Question 9

Which of the following is true regarding a statement of cash flows prepared by a government?
A)the statement of cash flows will be identical to one prepared by a business
B)the statement of cash flows will be prepared using the indirect method
C)the statement of cash flows will have no more than three cash flow classifications
D)the statement of cash flows will be prepared using the direct method

Accepted Answer

Governmental entities typically prepare the statement of cash flows using the direct method, as recommended by the Governmental Accounting Standards Board (GASB), which differs from many businesses that often use the indirect method.

Question 10

Match between columns
                        Premises: Pension Trust Funds use the modified accrual basis of accounting.
Agency Funds are different from other Fiduciary Funds because Agency Funds have no liabilities;that is,the assets of Agency Funds are always equal to the equity of the Funds.
A Private-Purpose Trust Fund is used when a donor provides resources to a state that the state can use for any purpose agreed upon by the governor and the legislature.
The external portion of an investment pool should be reported in a Fiduciary Fund.

Accepted Answer

The Answer of True and False is...

Question 11

Which of the following accounts is associated with the current financial resources measurement focus but not with the economic resources measurement focus?
A)assets
B)expenditures
C)revenues
D)liabilities

Accepted Answer

Expenditures are associated with the current financial resources measurement focus because they represent outflows of resources during a reporting period. However, under the economic resources measurement focus, expenditures would be capitalized as assets and recognized over their useful lives, rather than expensed immediately. Therefore, expenditures are not associated with the economic resources measurement focus. The other options, assets, revenues, and liabilities, are associated with both measurement focuses.

Question 12

The information generated from the accounting system of a governmental-type fund
A)is budget oriented
B)measures profitability
C)measures operational efficiency
D)is intended for use only by legislators

Accepted Answer

The accounting system of a governmental-type fund has a budgetary focus, meaning that its purpose is to help manage and track financial resources in accordance with the fund's approved budget. It is not designed to measure profitability or operational efficiency, nor is it intended solely for the use of legislators.

Question 13

A long-term loan from the General Fund to another fund is reported in the General Fund as:
A)due from other fund
B)due to other fund
C)advance to other fund
D)advance from other fund

Accepted Answer

A long-term loan from the General Fund to another fund is reported in the General Fund as an advance to the other fund. This indicates that the General Fund has provided funds, which will be repaid in the future, to another fund. It is not considered a receivable (due from), as the other fund has not yet received the funds.

Quiz 2: The Use of Funds in Governmental Accounting

State whether these statements are true or false.Discuss why the false statements are false.

A local government sells bonds having a face value of $1,000,000 at par.The bond proceeds will be accounted for in a Capital Projects Fund.What account will be credited to offset the debit to cash?

A government will prepare a statement of cash flows for which of the following funds?

Which measurement focus and basis of accounting should be used in an Internal Service Fund?

State whether these statements are true or false.Discuss why the false statements are false.

State whether these statements are true or false.Discuss why the false statements are false.

Which of the following financial statements would be prepared for enterprise funds?

Which of the following is true regarding a statement of cash flows prepared by a government?

State whether these statements are true or false.Discuss why the false statements are false.

Which of the following accounts is associated with the current financial resources measurement focus but not with the economic resources measurement focus?

The information generated from the accounting system of a governmental-type fund

A long-term loan from the General Fund to another fund is reported in the General Fund as: