14. The General Fund reported a beginning balance of inventory of materials and supplies of
$122,000. The ending balance was $150,000. Supplies purchased during the year totaled
$600,000. The county uses the consumption method. The General Fund should report
expenditures for materials and supplies for the year of
A. $450,000.
B. $572,000.
C. $600,000.
D. $628,000.
15. The General Fund reported a beginning balance of inventory of materials and supplies of
$122,000. The ending balance was $150,000. Supplies received during the year (purchases)
totaled $600,000. The county uses the purchases method. The General Fund should report
expenditures for materials and supplies for the year of
A. $450,000.
B. $572,000.
C. $600,000.
D. $628,000.
16. A county uses the consumption method in accounting for insurance premium prepayments.
At the beginning of the fiscal year, the county paid a $24,000 insurance premium to cover the
current year and the subsequent fiscal year. At the end of the current year, the county will
report in its General Fund
A. Expenditures of $24,000.
B. Expenditures of $12,000 and a $12,000 prepaid asset.
C. A $24,000 prepaid asset.
D. Other financing use of $24,000.
17. In the year a city enters into a capital lease to finance a new sanitation truck, the General
Fund will report
A. An increase in capital assets.
B. A decrease in fund balance equal to the cost of the new sanitation truck.
C. An other financing use.
D. A decrease in fund balance equal to the amount of any down payment required.
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18. Interest expenditures of a governmental fund should include
A. Interest paid during the year, only.
B. Interest paid during the year plus any interest that matured but was not paid during the
year.
C. Interest paid during the year, any interest that matured but was not paid during the year
and accrued interest on short-term debt recorded as a fund liability.
D. Interest paid during the year, any interest that matured but was not paid during the year
and accrued interest on all general long-term liabilities.
19. As payments are being made for debt service payments related to a capital lease, a General
Fund will report
A. An increase in capital assets equal to the amount of principal retired.
B. Expenditures for interest only.
C. Expenditures for principal reduction only.
D. Expenditures for the full amount of the debt service payment.
20. A county accounts for its debt service payments in the General Fund. The amount of
unmatured, unpaid interest on general long-term liabilities at the beginning of the year was
$122,000. The ending balance was $165,000. The General Fund also made principal
payments of $600,000 and interest payments of $150,000 during the year. The General Fund
should report expenditures for debt service for the year of
A. $150,000.
B. $722,000.
C. $750,000.
D. $793,000.
21. A city entered into a general government capital lease for equipment on July 1, 20X7. The
capitalizable cost of the equipment was $400,000. A down payment of $40,000 was made.
The next lease payment of $100,000 is due July 1, 20X8. The implicit rate of interest on the
lease agreement is 10%. The amount of expenditures that the city should report in its General
Fund statement of revenues, expenditures, and changes in fund balance for the year ended
December 31, 20X7 is
A. $40,000.
B. $58,000.
C. $400,000.
D. $418,000.
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22. A government entered into a general government capital lease for equipment during the year.
The capitalizable cost of the equipment was $400,000. A down payment of $40,000 was
made. The General Fund should report in its statement of revenues, expenditures, and
changes in fund balance an
A. Other financing use of $400,000.
B. Expenditure of $360,000.
C. Other financing source of $400,000.
D. Other financing source of $360,000.
23. The General Fund borrowed $10,000 on a six-month note, with 5.0% interest, on April 1. As
of the June 30 fiscal year end, the General Fund would report accrued interest payable in the
amount of
A. $0.
B. $125.
C. $250.
D. $500.
24. Carter County entered into capital lease to finance an Emergency-911 telecommunications
system. The capitalizable cost of the equipment was $185,000. The county made a required
down payment of $25,000. The first debt service payment will not be due until the next fiscal
year. The entry to record the inception of this lease in the General Fund would be
Debit Credit
A. Expenditures
Cash
$185,000
25,000
B. Expenditures
Cash
$185,000
25,000
C. Capital Asset
Cash
$185,000
25,000
D. Capital Asset
Cash
$185,000
25,000
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25. A government has a principal and interest payment on long-term debt coming due in the next
fiscal year. Which condition must hold true for the government to treat the payment as an
expenditure in the current fiscal year?
A. The payment must come due early in the next fiscal year, and the government must
transfer the cash for the payment to the debt service fund consistently from year-to-year.
B. The payment comes due within a year of the end of the current fiscal year, and the
government must transfer the cash for the payment to the debt service fund consistently
from year-to-year.
C. The payment must come due early in the next fiscal year, but the government has some
flexibility on when the cash for the payment is transferred to the debt service fund.
D. The payment can come due at any time, and the government can make the payments from
the General Fund so long as the resources are available at the time of the payment.
26. Nathan Township financed emergency repairs on the Township Hall by borrowing on a
$200,000, 6 month short-term note. The interest rate on the note was 6% and it was issued 2
months prior to the end of the fiscal year. Which of the following statements accurately
reflects how the General Fund will be affected in the year the financing was acquired?
A. The General Fund will report an other financing source of $200,000.
B. The General Fund will report a Note Payable of $200,000.
C. The General Fund will report interest expenditures of $12,000.
D. The General Fund will report interest expense of $2,000.
27. A government has claims and judgments outstanding at the beginning of 20X5 of $1,000,000.
These claims and judgments are expected to result in awards against the government of
31, 20X4. At the end of 20X5, the government has claims and judgments outstanding of
$2,000,000. These claims and judgments are expected to result in awards against the
government of $1,200,000. None of these claims are due and payable from the General Fund
20X5. General Fund expenditures for claims and judgments for 20X5 should be reported at
what amount?
A. $325,000.
B. $400,000.
C. $725,000.
D. $800,000.
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28. A government has a liability for accrued compensated absences at the beginning of 20X5 of
$500,000. This liability did not mature in 20X4. At the end of 20X5, the government has a
liability for accrued compensated absences (not due and payable) of $600,000. In addition,
the government had $10,000 of matured compensated absences to be paid in early 20X6 from
existing fund assets. The government paid compensated absences of $400,000 during 20X5.
The General Fund expenditures for compensated absences for 20X5 should be reported at
what amount?
A. $400,000.
B. $410,000.
C. $500,000.
D. $510,000.
29. A court judgment was rendered against a county in which they were ordered to pay $500,000
in equal installments over a five-year period to the plaintiff. The county’s General Fund will
A. Report a fund liability of $500,000 in Year 1.
B. Report expenditures of $500,000 in Year 1.
C. Report expenditures of $100,000 in Year 1.
D. Report expenditures of $100,000 in Year 1 and a fund liability of $400,000.
30. Assume that Onyx County’s annual required contribution for their OPEB plan was
determined to be $35,000. The county, however, chose to only fund $10,000 of that amount
for the current year. The General Fund, which is the only fund with employees, would
recognize expenditures in the current year of
A. $45,000.
B. $35,000.
C. $25,000.
D. $10,000.
31. A city’s annual required contribution for the OPEB plan offered to their General Fund
employees is $14,000. The city does not choose to make the annual required contribution but
instead will continue to pay postretirement benefits as they come due. The current year’s
benefit payments total $2,500. The General Fund would recognize an expenditure of
A. $0.
B. $2,500.
C. $14,000.
D. $16,500.
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32. City of Alnwick makes pension contributions on behalf of its employees to both a defined
benefit plan and a defined contribution plan. Assume that the employer contributions for the
fiscal year totaled $55,000 for the defined benefit plan and $35,000 for the defined
contribution plan. The General Fund will report
A. Total expenditures of $90,000.
B. Expenditures of $55,000 and transfers out of $35,000.
C. Transfers out of $90,000.
D. Transfers out of $55,000 and expenditures of $35,000.
33. The following benefits are examples of other postemployment benefits (OPEexcept for
A. Health care insurance.
B. Pension benefits.
C. Vision insurance.
D. Life insurance.
1. Which of the following statements is true concerning accounting and financial reporting
practices related to capital asset acquisitions?
A. Routine capital purchases such as vehicles and equipment often may be financed and
accounted for in a General Fund.
B. Most capital lease transactions related to governmental funds are accounted for in either
the General Fund or a Debt Service Fund.
C. Capital Project Funds may be used only for acquisition or construction of major capital
facilities.
D. Most capital projects last only for on fiscal year.
2. Which of the following is true?
A. A government is required to record each major general government capital project in a
separate Capital Projects Fund.
B. Acquisition or construction of general government capital assets must always be
accounted for through a Capital Projects Fund.
C. A Capital Projects Fund is not required unless a project is financed by issuing bonds.
D. A Capital Projects Fund may be used to acquire vehicles and equipment.
3. Which of the following capital asset-related transactions would most likely be accounted for
through a Capital Projects Fund?
A. A major general government capital lease transaction.
B. Purchase of multiple computers for general government departments.
C. Construction of a general government office building.
D. Maintenance of general government fixed assets.
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4. Which of the following statements is false?
A. Capital leases are not commonly reported in a Capital Projects Fund.
B. A governmental entity may report a Capital Project Fund in one year but not the next.
C. Budgetary entries are commonly made in a Capital Projects Fund.
D. Debt service payments on capital-related debt are paid from a Capital Projects Fund.
5. The General Fund is partially funding the construction of a new police station. 80% of the
project is being financed; the General Funds’ share of the project is $1,000,000. The Capital
Project Fund would report the General funds’ share as a
A. $1,000,000 other financing source.
B. $1,000,000 revenue.
C. $1,000,000 nonoperating revenue.
D. $1,000,000 other financing use.
6. If a governmental entity issued a six-month, $400,000 note payable at 6% interest three
months prior to the fiscal year end to help finance a new fire station, Capital Projects Fund
interest payable should be accrued as of the end of the fiscal year in the amount of
A. $0.
B. $6,000.
C. $12,000.
D. $24,000.
7. Which of the following transactions would not be reported as an expenditure in a Capital
Projects Fund?
A. Payment of construction costs.
B. Bond issue costs.
C. Bond discounts.
D. Insurance on short-term debt issued to finance capital project.
8. A county government secured a six-month, $600,000 loan at 5% interest from a local lending
institution to finance a project at a county-owned park. The loan transaction took place one
month prior to the end of the fiscal year, at which time 50% of the project was completed for
$300,000. As of the end of the fiscal year, the county should report capital outlay
expenditures in the amount of
A. $15,000.
B. $30,000.
C. $150,000.
D. $300,000.
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9. 1Which of the following expenditures is not capitalized as part of the cost of a capital asset
acquired through a Capital Projects Fund?
A. The retained percentage to insure proper completion of the construction by the contractor.
B. Direct materials and labor that are used or consumed in the construction process.
C. Interest expenditures on bond anticipation notes.
D. Reimbursable overhead expenditures related to the construction project.
10. Which of the following is a distinguishing feature of a budget for a Capital Projects Fund?
A. The budget is usually for a single year.
B. A budget is not used for projects for which contracts will be issued.
C. The budget is usually for the term (life) of the project.
D. Since a Capital Projects Fund usually just spends money, there is no reason for revenue or
11. The City of Bamberg, which has a fiscal year end of December 31, issued a nine month
$1,000,000 bond anticipation note on July 1. The city is planning to renew or re-issue the
bond anticipation notes for another six month period when they mature. What would the
Capital Projects Fund liability for the note be on December 31?
A. $0.
B. $500,000.
C. $1,000,000.
D. $2,000,000.
12. Bond anticipation notes are
A. Always short-term liabilities of the fund until the bonds are issued.
B. Always general long-term liabilities.
C. Sometimes treated as fund liabilities even if they have a long-term maturity.
D. Sometimes treated as general long-term liabilities even if they have a term of one year or
less.
13. A government issued bond anticipation notes to provide initial financing for a general
government capital project. The bond anticipation note
A. Proceeds are always reported as an other financing source in the Capital Projects Fund.
B. Payable should be reported as a liability of the Capital Projects Fund except when the
original term of the notes exceeds one year.
C. Payable is usually repaid by the Capital Projects Fund.
D. Interest on the bond anticipation note should be capitalized as part of the cost of the
capital asset.
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Capital Projects Fund should be reported in the Capital Projects Fund statement of revenues,
expenditures, and changes in fund balance as
A. Expenditures.
B. Other financing uses.
C. Special item.
D. Reduction of a liability.
15. A government issued short-term bond anticipation notes for a capital project. The notes are to
be repaid from bond proceeds if the voters approve the bonds. The bond anticipation notes
A. Must be reported as debt of the Capital Projects Fund.
B. Must be reported as debt of the Capital Projects Fund if it is probable that the bond
referendum will not pass.
C. Must be reported as debt of the Capital Projects Fund unless it is probable that the bond
referendum will pass.
D. Must be reported as general long-term debt.
16. A government had $7,000,000 of 5%, six month bond anticipation notes outstanding at the
end of the fiscal year. As of this date, the government has completed all legal procedures and
the notes will be re-financed to a term of ten years the following month. The BAN liability
reported in the Capital Projects Fund as of the end of the fiscal year should be
A. $0.
B. $350,000.
C. $3,500,000.
D. $7,000,000.
17. A governmental entity issued bond anticipation notes (BANs) during the year for a major
capital project. The BANs were refinanced with long-term general obligation bonds before
the end of the fiscal year. The journal entry to record the retirement of the BANs in the
Capital Projects Fund the governmental entity should include
A. Other financing sources.
B. A fund liability.
C. Revenues.
D. Other financing uses.
18. The county issued a six-month, 6%, $200,000 bond anticipation note on October 1, 20X7, to
provide temporary financing for a police station construction project. The voters have not
approved the bonds, but approval is expected before year-end. The county government was
billed $150,000 during the year for construction costs on its capital project and $125,000 was
paid. The government should report Capital Projects Fund expenditures for the year ended
December 31, 20X7 of
A. $125,000.
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Copyright © 2013 Pearson Education, Inc.
C. $153,000.
D. $162,000.
19. On October 1, the county issued a six-month, 6%, $200,000 bond anticipation note to provide
temporary financing for a police station. The voters have approved the issuance of bonds to
finance the project and the bonds are issued early in the following year. The county
government was billed $150,000 during the year on its capital project and $125,000 was
paid. The government should report Capital Projects Fund expenditures for the current year
ending December 31 equal to
A. $125,000.
B. $150,000.
C. $153,000.
D. $162,000.
20. A governmental entity issued general obligation bonds with a face value of $10,000,000 and
at a premium that totaled $100,000 for a governmental capital project. The General Long-
Term Liability accounts would report total liabilities as of the end of the year of issuance of
A. $0.
B. $100,000.
C. $10,000,000.
D. $10,100,000.
21. Government A secured a $400,000 short-term loan from a local bank for interim financing
for a governmental capital project. What would the journal entry be in the Capital Projects
Fund to account for this transaction?
Debit Credit
A
.
Cash
Other Financing Sources
$400,000
$400,000
B. Cash
Notes Payable
$400,000
$400,000
C. Construction in Progress
Other Financing Sources
$400,000
$400,000
D
.
Cash
Revenues
$400,000
$400,000
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