79) The county received a $10,000,000 endowment, the terms of which indicate that earnings on
the endowment are to be used by health and welfare to provide medical services to low-income
children. Where would the $10,000,000 be recorded?
A) Special revenue fund.
B) Permanent fund.
C) Private-purpose trust fund.
D) Public-purpose trust fund.
80) The earnings on the assets of a permanent fund are to be used to support the city’s library
(special revenue fund). How would the earnings be recorded?
A) Revenues by the permanent fund.
B) Revenues by the library.
C) Revenues by both the permanent fund and the library.
D) Other financing source by the permanent fund.
81) Select the appropriate term from the list that best matches to the definition.
A. Derived tax revenues
B. Exchange transactions
C. Nonexchange transactions
D. Imposed nonexchange transactions
E. Voluntary nonexchange transactions
_____ 1. Transactions in which the donor derives no direct tangible benefits from the recipient
agency
_____ 2. A classification of nonexchange transaction, such as income or sales taxes
_____ 3. A category of nonexchange transaction that includes certain grants and entitlements and
most donations
_____ 4. A category of nonexchange transactions, such as property taxes and most fines and
forfeitures.
82) In what ways does the government-wide statement of net position differ from the balance sheet
for governmental funds?
83) Why might the property tax revenue in a given year differ between the governmental funds
statement of revenues, expenditures, and changes in fund balances and the governmental activities
column of the statement of activities?
84) Why might actual revenues and expenditures reported on the schedule of revenues,
expenditures, and changes in fund balances—budget and actual differ from those reported on the
GAAP-basis statement of revenues, expenditures, and changes in fund balances?
85) Identify the four types of nonexchange transactions and discuss the rules for recognition of
revenues and expenses/expenditures for each type of transaction.
86) All revenues of the City of Capri are accounted for on the modified accrual basis. Below is
1) Receipt of money from issue of tax anticipation notes.
2) Collection of taxes that had been written off in prior year.
3) Collection of current-year property taxes.
4) Collection of prior years’ delinquent property taxes.
5) Receipt of money in prepayment of a property owner’s next-year taxes.
6) Collection of accounts receivable for charges for services. Amount is included in deferred
inflows of resources.
2) Current revenue: the receivable should be restored to the accounting records, then the collection
item should be credited to the receivable account. Ordinarily there should be interest collected on
3) Current revenue: this collection of a receivable is related to a revenue recognized in current year
4) Current revenue: under modified accrual, revenue is recognized when it is measurable and
5) Deferred inflows of resources in year of collection: will be recognized as revenue next year
6) Current revenue: the receivable will be reduced, revenue will be recognized, and deferred
87) The following is a pre-closing trial balance for Sun City’s General Fund as of June 30, 2020:
Debits
Credits
Cash
$
116,500
Taxes Receivable—Current
29,000
Allowance for Uncollectible Current Taxes
$
3,000
Accounts Payable
7,800
Due to Other Funds
5,500
Tax Anticipation Notes Payable
50,000
Fund Balance—Unassigned
70,200
Budgetary Fund Balance
1,000
Estimated Revenues
100,000
Revenues
102,000
Appropriations
99,000
Expenditures
93,000
Totals
$
338,500
$
338,500
What is the fund balance as of June 30, 2020, after all closing entries have been made?
88) Beach City received a gift of corporate stock valued at $1,200,000 on the date of the gift. The
donor specified that the principal amount of the gift be maintained in perpetuity, but that earnings
can be used to acquire works of art to improve the appearance of public buildings. All changes in
fair value are to increase or decrease the principal amount of the gift. Assuming that Beach City
uses a permanent fund to account for the endowment and a special revenue fund to account for the
earmarked earnings from the endowment, explain the accounting process for (1) receipt of the
original gift, (2) receipt of quarterly dividends, (3) notification that fair value of the original stock
increased by $3,000 during the year, and (4) the effect on fund balances of closing temporary
accounts at year-end. (Note: Ignore the effects of the transactions at the government-wide level).