Reference no: EM131812761

Questions -

Q1. Under the modified accrual basis of accounting, derived nonexchange revenues are recognized when: Choose one answer.

a. they are earned.

b. they are measurable and available to finance the expenditures of the current period.

c. the underlying exchange transaction occurs.

d. the underlying exchange transaction occurs and they are measurable and available to finance the expenditures of the current period.

Q2. The debt service fund of a governmental entity is accounted for using which of the following bases of accounting? Choose one answer.

a. Budgetary basis.

b. Cash basis.

c. Modified accrual basis.

d. Accrual basis.

Q3. A City issued bonds for the purpose of financing a major capital improvement. Which fund is the most appropriate fund in which to record the receipt of the bond proceeds? Choose one answer.

a. General Fund

b. Special Revenue Fund

c. Capital Projects Fund

d. Debt Service Fund.

Q4. The City of St. Joe had outstanding $5 million of 6% bonds with a call provision. Due to changes in the prevailing interest rates, the City issued new bonds at 4.5% and used the proceeds to call the 6% bonds. This is an example of: Choose one answer.

a. Debt retirement.

b. Debt refunding.

c. In-substance defeasance.

d. Economic defeasance.

 

Q5. Characteristics of capital projects include: Choose one answer.

a. Involves long-lived assets

b. Usually requires long-range planning and extensive financing

c. Usually has a year-to-year focus

d. All of the above

e. A & B only

Q6. General fixed assets are excluded from governmental funds because: Choose one answer.

a. The measurement focus of governmental funds is on financial resources

b. They are not used to used generate revenues.

c. The basis of accounting is accrual.

d. None of the above.

Q7. The City of Shiloh sold a used police car. The police car had a historical cost of $17,000, a fair value of $12,000, and was sold for $5,000. Assuming that the City maintains its books and records in a manner to facilitate the preparation of the fund financial statements, what is the appropriate entry in the General Fund to record this sale? Choose one answer.

a. Debit Cash $5,000; Credit Revenue $5,000.

b. Debit Cash $5,000 and Loss on Sale $7,000; Credit Automotive Equipment $12,000.

c. Debit Cash $5,000; Credit Other Financing Sources-Sale of Asset $5,000.

d. Debit Cash $5,000; Credit Automotive Equipment $5,000.

Q8. Which of the following costs will NOT be included in the cost of fixed assets on the government-wide financial statements? Choose one answer

a. Purchase price (invoice amount).

b. Cost of demolishing existing structures that cannot be used.

c. Interest on self-constructed items.

d. Engineering costs.

Q9. Donated assets are reported in the government-wide financial statements as: choose one answer

a. Historical cost to the donor.

b. Book value in the hands of the donor.

c. Fair value on date of donation.

d. Zero value because they were not purchased.

Q10. Which of the following is NOT an infrastructure asset? Choose one answer.

a. Roads.

b. Sidewalks.

c. Buildings.

d. Bridges.

Q11. GASB standards require that depreciation be reported on all capital assets except: Choose one answer.

a. Infrastructure accounted for using the standard approach.

b. Infrastructure assets accounted for using the modified approach.

c. Donated assets.

d. Capitalized works of art.

Q12. Under the modified accrual basis of accounting, imposed nonexchange revenues (such as fines) should be recognized: Choose one answer

a. when assessed.

b. when the government has an enforceable legal claim.

c. when collected.

d. when the government has an enforceable legal claim and when the collected within the current period or soon enough thereafter to be used to pay the liabilities of the current period.

Q13. Under the modified accrual basis of accounting, license fees, permits, and other miscellaneous revenue are generally recognized for practical purposes: Choose one answer.

a. when cash is received.

b. when the exchange takes place.

c. over the period during which the government obtains an enforceable legal claim.

d. when related expenditures are incurred.

Q14. Under GAAP, income tax revenues should be recognized in the governmental fund financial statements in the accounting period: Choose one answer

a. when collected in cash by the taxing authority.

b. in which the underlying income was earned, regardless of when collected.

c. in which the underlying income was earned, if collected in the current period or soon enough thereafter to pay liabilities of the current period.

d. when earned.

Q15. As used in governmental accounting, expenditures are decreases in: Choose one answer.

a. Net Assets.

b. Net Financial Resources.

c. Net Cash.

d. Net Economic Resources.

Q16. Assume that the City of Juneau maintains its books and records to facilitate the preparation of its fund financial statements. The City pays its employees bi-weekly on Friday. The fiscal year ended on Wednesday, June 30. Employees had been paid on Friday, June 25. The employees paid from the General Fund had earned $120,000 on Monday, Tuesday, and Wednesday (June 28, 29, and 30). What entry, if any, should be made in the City's General Fund? Choose one answer.

a. Debit Expenditures; Credit Wages and Salaries Payable.

b. Debit Expenses; Credit Wages and Salaries Payable.

c. Debit Expenditures; Credit Encumbrances.

d. No entry is required.

Q17. Bay City uses the purchases method to account for supplies. At the beginning of the year the City had no supplies on hand. During the year the City purchased $600,000 of supplies for use by activities accounted for in the General Fund. The City used $400,000 of those supplies during the year. Assuming that the city maintains its books and records in a manner that facilitates the preparation of its fund financial statements, at fiscal year-end the appropriate account balances related to supplies expenditures and supplies inventory would be: Choose one answer.

a. Expenditures $600,000; Supplies Inventory $200,000.

b. Expenditures $600,000; Supplies Inventory $0.

c. Expenditures $400,000; Supplies Inventory $200,000.

d. Expenditures $400,000; Supplies Inventory $0.

Q18. The amount of pension expenditures that should be recognized in the government-wide financial statements during the current year is: Choose one answer

a. The amount paid.

b. The amount paid plus the amount that will be paid with available expendable financial resources.

c. The amount paid so long as it does not exceed the actuarially determined amount.

d. The actuarially determined amount.

19. In which fund type would a governmental entity's capital projects fund be found? Choose one answer.

a. Governmental fund type.

b. Proprietary fund type.

c. Fiduciary fund type.

d. Governmental activities.

20. Six years ago Hill City issued $10 million of 6% term bonds, due 30 years from the date of issue. Interest on the bonds is payable semi-annually on January 1 and July 1. Hill City has a September 30 fiscal year end. The amount of interest payable that would be included on the balance sheet for the debt service fund of Hill City at September 30 would be Choose one answer.

a. $ -0-.

b. $150,000.

c. $300,000.

d. $600,000.