54) The City of Island Grove uses encumbrance accounting and its fiscal year ends on June 30. On
May 6, a purchase order was approved and issued for supplies in the amount of $6,000. Island
Grove received these supplies on June 2, and the $6,000 invoice was approved for payment. What
General Fund journal entry or entries should Island Grove make on June 2, upon receipt of the
supplies and approval of the invoice?
Transaction
General Journal
Debits
Credits
A)
Encumbrances Outstanding
6,000
Encumbrances
6,000
Expenditures
6,000
Vouchers Payable
6,000
B)
Encumbrances
6,000
Appropriations
6,000
Fund Balance—Unassigned
6,000
Vouchers Payable
6,000
C)
Supplies
6,000
Vouchers Payable
6,000
D)
Appropriations
6,000
Encumbrances
6,000
Supplies
6,000
Vouchers Payable
6,000
A) Choice A.
B) Choice B.
C) Choice C.
D) Choice D.
55) Which of the following will require a credit to Fund Balance—Unassigned of a governmental
fund when operating statement accounts are closed at the end of the year, assuming there are no
other financing sources or uses?
A) Revenues are less than expenditures.
B) Revenues are more than expenditures.
C) Revenues are more than expenditures and encumbrances.
D) Revenues are less than expenditures and encumbrances.
56) On July 1, the first day of its fiscal year, the Town of Eldon levied a $1,000,000 property tax
which is payable in full on December 1 of the same year. On September 15, the town decided to
borrow $200,000 in 90-day tax anticipation notes to cover operating expenditures until the tax
revenues are collected. The journal entry on September 15 to record the issuance of tax
anticipation notes will include:
A) A credit to Other Financing Sources—Proceeds of Tax Anticipation Notes.
B) A credit to Tax Anticipation Revenue.
C) A credit to Tax Anticipation Notes Payable.
D) A credit to Deferred Outflows of Resources—Tax Anticipation Notes.
57) The voters of the city passed an ordinance to increase their sales tax by 1/4 percent. The
proceeds of the sales tax are to be used for culture and recreation. In the governmental activities
journal, how would the 1/4 percent sales tax revenue be recorded?
A) Program Revenue—Culture and Recreation—Sales Tax.
B) Program Revenue—Culture and Recreation—Operating Grants and Contributions.
C) General Revenue—Sales Tax.
D) General Revenue—Culture and Recreation—Sales Tax.
58) During January 2020 General Fund supplies ordered in the previous fiscal year and
encumbered at an estimated amount of $2,000 were received at an actual cost of $2,200. The entry
to record this transaction will require a debit to:
A) Expenditures—2020 in the amount of $2,200.
B) Expenditures—2019 in the amount of $200.
C) Expenditures—2020 in the amount of $200.
D) Expenditures—2019 in the amount of $2,200.
59) When a fire truck purchased from General Fund revenues is received, what account, if any,
should have been debited in the General Fund?
A) No journal entry should be made in the General Fund.
B) Expenditures.
C) Encumbrances.
D) Equipment.
60) Which of the following accounts would not be closed at the end of each fiscal year?
A) Fund balance.
B) Estimated revenues.
C) Interfund transfers out.
D) Expenditures.
61) In fiscal year 2020 the “Expenditures—2019″ account represents
A) Excess expenditures in 2019 that will be offset against appropriations for 2020.
B) Goods or services received in 2019 which the government has no record of ordering.
C) Amount of expenditures for goods ordered in 2019 that were received in 2020 and chargeable to
appropriations of 2019.
D) The amounts of purchase orders issued in 2019 that were intended to be paid in full from
appropriations for 2020.
62) If state law requires that local governments prepare General Fund and special revenue fund
budgets on a basis that differs from the basis of accounting required by GAAP, then the budgetary
comparison schedule or statements should
A) Not be included as part of the basic financial statements.
B) Be included with the actual figures presented on the budget basis and then reconciled to the
GAAP basis.
C) Be included with budget figures and actual figures adjusted to the GAAP basis.
D) Be included as part of management’s discussion and analysis (MD&A).
63) Which of the following transactions is classified as an exchange transaction?
A) Property taxes.
B) Fees charged by a municipal airport.
C) Bequest left to the city by a wealthy citizen.
D) State grant to conduct an after school program for children.
64) The City of Burlington borrowed $350,000 via a tax anticipation note. If the city repaid the
note three months later, the General Fund entry to record the repayment and interest of $2,750 will
include
A) A debit to Tax Anticipation Notes Payable for $350,000.
B) A debit to Expenditures for $352,750.
C) A debit to Expenditures for $2,750.
D) A debit to Tax Anticipation Notes Payable for $350,000 and a debit to Expenditures for $2,750.
65) Which of the following assets would appropriately be reported on the governmental funds
balance sheet?
A) Capital assets.
B) Inventories.
C) Unamortized debt issuance costs.
D) Goodwill.
66) Which of the following would be reported on the operating statement of a governmental fund?
A) The liability for the annual obligation to the employee retirement plan.
B) Depreciation expense.
C) Resources received for services to be provided in future periods.
D) Revenue deferred from prior periods.
67) If a governmental fund issues debt to finance a capital acquisition, how should the proceeds of
the debt be recorded?
A) Long-term liability.
B) Revenue.
C) Other financing source.
D) Not reported by the governmental fund; only reported at the government-wide level.
68) Under the modified accrual basis of accounting, revenues should be recognized when
A) Realizable.
B) Earned.
C) Available.
D) Spent.
69) At the end of the 2020 fiscal year the General Fund had $500 in encumbrances that remained
opened into fiscal year 2021. In 2021 the encumbered goods were received at an invoiced cost of
$520. How much would be recorded as the 2021 expenditure?
A) $0.
B) $20.
C) $500.
D) $520.
70) The governmental funds operating statement presents all of the following except
A) Expenditures.
B) Other financing sources.
C) Revenues.
D) Encumbrances.
71) The account Deferred Inflows of Resources—Unavailable Revenues is used in governmental
funds to record
A) Property taxes that are considered uncollectible.
B) Property taxes that have been collected but not yet earned.
C) Property taxes that will not be collected within 60 days of fiscal year end.
D) All of the above property taxes could be included in Deferred Inflows of
Resources—Unavailable Revenues.
72) Under the consumption method for recording supplies that are maintained on a perpetual
inventory system, the adjusting entry made at year end would affect which of the following
accounts?
A) Fund Balance—Nonspendable—Inventory of Supplies.
B) Fund Balance—Restricted—Inventory of Supplies.
C) Expenditures.
D) Inventory of Supplies.
73) Supplies recorded in the General Fund under the purchases method will initially include a
A) Debit to Inventory of Supplies.
B) Credit to Fund Balance—Restricted—Inventory of Supplies.
C) Debit to Expenditures.
D) Debit to Fund Balance—Restricted—Inventory of Supplies.
74) Revenues that are legally restricted for expenditure on specified operating purposes should be
accounted for in special revenue funds, including
A) Endowment where the investment earnings are to be used for public purposes.
B) Pension trust fund revenues.
C) Accumulation of resources for payment of general long-term debt principal and interest.
D) Gasoline taxes to finance road repairs.
75) The city’s electric utility fund sent $700,000 to the General Fund to help cover the city’s
operating costs. This transaction would be recorded in the governmental activities journal as
A) Interfund transfer in.
B) Internal balance.
C) Revenue.
D) It would not be recorded since the transaction involves two funds of the same government.
76) Which of the following transactions is classified as an exchange transaction?
A) Fees charged for use of an athletic field at a city park.
B) State grant to conduct a smoking cessation program for middle school-aged youth.
C) Bequest left to the city by a former mayor.
D) Personal property taxes.
77) Which of the following types of nonexchange transactions recognize revenue when all the
eligibility requirements are met?
A) Voluntary nonexchange transactions.
B) Imposed nonexchange transactions.
C) Derived tax revenues.
D) Property tax revenues.
78) Which of the following is not a program revenues classification used in the governmental
activities journal and reported in the government-wide statement of activities?
A) User fees.
B) Capital grants and contributions.
C) Charges for services.
D) Operating grants and contributions.