67) For each of the following scenarios, indicate how they would be classified for fund balance
reporting purposes using the classification list.
A. Nonspendable
B. Restricted
C. Committed
D. Assigned
E. Unassigned
________ 1. Bond proceeds of $15,000,000 that must be used for construction of a fire
substation remain unspent at the end of the fiscal year.
________ 2. Prepaid rent of $6,000 remains at the end of the fiscal year.
________ 3. The city council adopted a plan to set aside 2% of revenues over the next three
years to help build cash reserves. At the end of the fiscal year 2% of the revenues were set aside.
________ 4. The state transportation department provided $1,000,000 in state funds to be used
for street widening. At the end of the fiscal year $750,000 remained unspent.
________ 5. The county received a $3,000,000 endowment during the year.
68) Following are some of the county’s governmental funds. The county has asked you to
determine is any of the funds listed should be classified as major funds based on the GASB size
criteria. Clearly indicate which fund(s) you believe should be classified as major and provide
support for your choice(s).
General
Fund
Special
Revenue
Fund
Debt
Service
Fund
Total of all
Governmental
Funds
Total of all
Governmental &
Enterprise Funds
Assets
12,000,000
1,000,000
500,000
15,000,000
21,000,000
Liabilities
3,000,000
250,000
30,000
4,580,000
5,890,000
Revenues
10,000,000
600,000
1,450,000
13,770,000
17,123,000
Expenditures/
Expenses
9,859,000
725,000
1,300,000
13,460,000
16,665,000
69) List the basic financial statements required by GASB standards and briefly explain their
purposes.
70) “The primary purpose of an accounting system for a state or a local government is to make it
possible for financial statements to demonstrate compliance with finance-related legal and
contractual provisions.” Explain why you believe this statement to be correct or incorrect.
71) Explain the difference between measurement focus and basis of accounting. Also, explain the
difference between the economic resources measurement focus and the current financial resources
measurement focus as well as the difference between the accrual and modified accrual bases of
accounting. Which funds and government-wide activities use each focus and each basis?
72) List the seven fund financial statements that are required as part of the basic financial
statements by GASB standards. What measurement focus and basis of accounting should be used
in preparing each of these statements?
73) Explain the nature of the three major activity categories of a state or local government:
governmental activities, business-type activities, and fiduciary activities. Provide examples of
each.