Question 1

Government and Fiduciary fund statements use the modified accrual basis, while government-wide, and proprietary funds use accrual basis.

Accepted Answer

Governmental funds use modified accrual accounting and the current financial resources measurement focus. Government-wide statements and proprietary and fiduciary funds use accrual accounting and the economic resources measurement focus.

Question 2

Only the General Fund may have a positive Unassigned Fund Balance

Accepted Answer

Only the General Fund is permitted to have an Unassigned Fund Balance.

Question 3

A Special Revenue Fund may not have a positive Unassigned Fund Balance.

Accepted Answer

A Special Revenue Fund is designed to account for specific revenue sources that are restricted or committed to specific purposes, so it typically does not have an unassigned fund balance, which is used for general purposes.

Question 4

When establishing funds, governments should attempt to minimize the number of special revenue and other funds, instead using functional classification to record transaction detail.

Accepted Answer

When establishing funds, governments should attempt to minimize the number of special revenue and other funds, instead using functional classification to record transaction detail.

Question 5

A special item is a significant transaction that is unusual or infrequent, but within the control of management.

Accepted Answer

Special items are significant transactions or other events that are either unusual or infrequent but within the control of management.

Question 6

The Debt Service Fund would record the receipt of money from the General Fund as nonoperating revenue on the activities Statement of Revenues, Expenditures, and Changes in Fund Balance.

Accepted Answer

Transfers are not an exchange of interfund services and should not be recorded as revenues by the fund receiving the transfer

Question 7

When closing the General Fund and Special Revenue Funds of a state or local governmental unit, the balance of the operating statement accounts and the balances of the budgetary accounts are closed

Accepted Answer

The operating statement accounts and the budgetary accounts are closed at year end.

Question 8

Special revenue funds are used when it is desirable to provide separate reporting of resources that are assigned to expenditure for purposes other than debt service or capital projects.

Accepted Answer

Special revenue funds are used when it is desirable to provide separate reporting of resources that are restricted or committed to expenditure for a specified purpose other than debt service or capital projects. Resources appropriately reported within proprietary or fiduciary funds are also excluded from special revenue funds.

Question 9

Under the purchases method to account for supplies inventory, an asset is recorded when inventories are acquired, and the expenditure is recorded when the supplies are consumed.

Accepted Answer

Under the purchases method, expenditures are debited when supplies are received. Expenditures are charged for purchases made during the year and at the end of the year the supplies inventory and Nonspendable Fund Balance are adjusted to reflect actual supplies on hand.

Question 10

Government fund statements use the modified accrual basis, while government-wide, proprietary fund and fiduciary funds use accrual basis.

Accepted Answer

Governmental funds use modified accrual accounting and the current financial resources measurement focus. Government-wide statements and proprietary and fiduciary funds use accrual accounting and the economic resources measurement focus.

Question 11

Expenditures for claims and judgments of governmental funds should be recognized to the extent that the liabilities are going to be paid with available resources.

Accepted Answer

Expenditures for claims and judgments, compensated absences, pensions and land-fill closure and postclosure care costs should be recognized in the General Fund to the extent that the liabilities are to be paid with available resources.

Question 12

Interfund services provided and used are recognized directly as Revenues and Expenditures.

Accepted Answer

Interfund services provided and used represent transactions involving sales and purchases of goods and services between funds. One fund records a revenue and the other fund records an expenditure or expense.

Question 13

Interfund services provided and used are recognized as direct Increases and Decreases in Fund Balance

Accepted Answer

Interfund services provided and used represent transactions involving sales and purchases of goods and services between funds. One fund records a revenue and the other fund records an expenditure or expense.

Question 14

Expenditures for claims and judgments, compensated absences, and special termination benefits should be recognized in the General Fund whether or not the liabilities are to be paid with available resources.

Accepted Answer

Expenditures for claims and judgments, compensated absences, pensions and land-fill closure and postclosure care costs should be recognized in the General Fund to the extent that the liabilities are to be paid with available resources.

Question 15

Proceeds from the Sale of Land in the General Fund is a source of funds and would be closed at year end.

Accepted Answer

The sale of land would be recorded as a special item and closed with other sources of funds to Fund Balance.

Question 16

Governmental fund financial statements are to be prepared on the accrual basis of accounting.

Accepted Answer

Governmental fund financial statements are prepared using the modified accrual basis of accounting.

Question 17

GASB requires both extraordinary and special items to be reported separately after other financing sources and uses in the General and Special Revenue fund financial statements

Accepted Answer

Extraordinary and special items are reported separately after other financing sources and uses on the Statement of Revenues, Expenditures and Changes in Fund Balance. Extraordinary items are significant transactions or other events that are both unusual and infrequent. Special items are significant transactions or other events that are either unusual or infrequent but within the control of management.

Question 18

When establishing funds, governments should attempt to have a large number of special revenue and other funds to provide the user with maximum detail to understand the transactions.

Accepted Answer

When establishing funds, governments should attempt to minimize the number of special revenue and other funds, instead using functional classification to record transaction detail.

Question 19

After closing entries, a special revenue fund's Fund Balance account represents the net amount of resources available for future appropriation.

Accepted Answer

After closing entries, a special revenue fund's Fund Balance account represents the net amount of resources available for future appropriation.

Question 20

The fund balance represents the excess of fund assets and deferred outflows over fund liabilities and deferred inflows.

Accepted Answer

Fund assets minus fund liabilities = fund balance.

Quiz 4: Accounting for the General and Special Revenue Funds

Government and Fiduciary fund statements use the modified accrual basis, while government-wide, and proprietary funds use accrual basis.

Only the General Fund may have a positive Unassigned Fund Balance

A Special Revenue Fund may not have a positive Unassigned Fund Balance.

When establishing funds, governments should attempt to minimize the number of special revenue and other funds, instead using functional classification to record transaction detail.

A special item is a significant transaction that is unusual or infrequent, but within the control of management.

The Debt Service Fund would record the receipt of money from the General Fund as nonoperating revenue on the activities Statement of Revenues, Expenditures, and Changes in Fund Balance.

When closing the General Fund and Special Revenue Funds of a state or local governmental unit, the balance of the operating statement accounts and the balances of the budgetary accounts are closed

Special revenue funds are used when it is desirable to provide separate reporting of resources that are assigned to expenditure for purposes other than debt service or capital projects.

Under the purchases method to account for supplies inventory, an asset is recorded when inventories are acquired, and the expenditure is recorded when the supplies are consumed.

Government fund statements use the modified accrual basis, while government-wide, proprietary fund and fiduciary funds use accrual basis.

Expenditures for claims and judgments of governmental funds should be recognized to the extent that the liabilities are going to be paid with available resources.

Interfund services provided and used are recognized directly as Revenues and Expenditures.

Interfund services provided and used are recognized as direct Increases and Decreases in Fund Balance

Expenditures for claims and judgments, compensated absences, and special termination benefits should be recognized in the General Fund whether or not the liabilities are to be paid with available resources.

Proceeds from the Sale of Land in the General Fund is a source of funds and would be closed at year end.

Governmental fund financial statements are to be prepared on the accrual basis of accounting.

GASB requires both extraordinary and special items to be reported separately after other financing sources and uses in the General and Special Revenue fund financial statements

When establishing funds, governments should attempt to have a large number of special revenue and other funds to provide the user with maximum detail to understand the transactions.

After closing entries, a special revenue fund's Fund Balance account represents the net amount of resources available for future appropriation.

The fund balance represents the excess of fund assets and deferred outflows over fund liabilities and deferred inflows.