37) During the year, a wealthy local merchant donated a building to the City of Rosewood. The
original cost of the building was $300,000. Accumulated depreciation at the date of the gift
amounted to $250,000. The appraised value of the donation at the date of the gift was $600,000. At
what amount should this contribution be recorded in the governmental activities accounts at the
government-wide level?
A) $50,000.
B) $300,000.
C) $600,000.
D) $0.
38) During the year, a wealthy local merchant donated a building to the city of Rosewood. The
original cost of the building was $300,000. Accumulated depreciation at the date of the gift
amounted to $250,000. The appraised value of the donation at the date of the gift was $600,000. At
what amount should Rosewood record this donated property in the General Fund?
A) $50,000.
B) $300,000.
C) $600,000.
D) $0.
39) Which of the following is not a required disclosure about each major class of capital assets?
A) Beginning-of-year and end-of-year balances showing accumulated depreciation separate from
historical cost.
B) Capital acquisitions and sales or other dispositions during the year showing the date and method
of acquisition or disposition.
C) Depreciation expense for the current period with disclosure of the amounts charged to each
function in the statement of activities.
D) Disclosures describing works of art or historical treasures that are not capitalized and
explaining why they are not capitalized.
40) The City of Oak Park constructed a new storage facility using the city’s own public works
employees. Construction costs were incurred in the amount of $900,000, plus $25,000 in interest
on short-term notes used to finance construction. What amount should be capitalized in the
government-wide statements?
A) $900,000.
B) $925,000.
C) $875,000.
D) $0.
41) The following general capital assets were owned by the Town of Otterville:
Town buildings
$
3,250,000
Intangible assets
1,000,000
Streets, sidewalks, and water lines
2,000,000
What amount should be recorded as capital assets in the town’s governmental activities accounts?
A) $0.
B) $3,250,000.
C) $5,250,000
D) $6,250,000
42) Equipment that had been acquired several years ago by a special revenue fund at a cost of
$40,000 was sold for $15,000 cash. Accumulated depreciation of $30,000 existed at the time of the
sale. The journal entry to be made in the governmental activities journal will include all of the
following except:
A) A debit to Cash for $15,000.
B) A debit to Accumulated Depreciation for $30,000.
C) A credit to Equipment for $40,000.
D) A credit to Other Financing Sources for $5,000.
43) Equipment that had been acquired several years ago by a special revenue fund at a cost of
$40,000 was sold for $15,000 cash. Accumulated depreciation of $30,000 existed at the time of the
sale. The journal entry to be made in the special revenue fund will include:
A) A debit to Cash for $15,000.
B) A debit to Accumulated Depreciation for $30,000.
C) A credit to Equipment for $40,000.
D) A credit to Other Financing Sources for $5,000.
44) How should a lease for a general capital asset be recorded in the governmental activities
accounts at the inception of the lease?
A) Debit to a lease asset account.
B) Debit to a capital expense/expenditure account.
C) Credit to Lease Obligations Payable.
D) Both Debit to a lease asset account and Credit to Lease Obligations Payable are correct.
45) How should a lease for a general capital asset be recorded in the General Fund accounts at the
inception of the lease?
A) Debit to a lease asset account.
B) Debit to a capital expenditure account.
C) Credit to Lease Obligations Payable.
D) Both Debit to a lease asset account and Credit to Lease Obligations Payable are correct.
46) The City of Castle Rock issued bonds at par for the construction of a new city office building.
Receipt of the bond proceeds would result in journal entries in which funds?
A) Capital Projects Fund: Yes; Debt Service Fund: No
B) Capital Projects Fund: No; Debt Service Fund: Yes
C) Capital Projects Fund: Yes; Debt Service Fund: Yes
D) Capital Projects Fund: No; Debt Service Fund: No
47) A government enters into a lease agreement for the purchase of a new snow plow. The present
value of the future lease payments is $845,500 and there is a down payment at the inception of the
lease of $25,000. The snow plow should be recorded in the General Fund at:
A) $25,000.
B) $870,500.
C) $845,500.
D) $0.
48) A government enters into a lease agreement for the purchase of a new snow plow. The present
value of the future lease payments is $845,500 and there is a down payment at the inception of the
lease of $25,000. The snow plow should be recorded in the government-wide statement of net
position at:
A) $25,000.
B) $870,500.
C) $845,500.
D) $0.
49) Which of the following statements is correct regarding depreciation?
A) Depreciation expense should be recorded in the appropriate governmental funds, and recorded
in the governmental activities accounts.
B) Depreciation expense must be recorded in the governmental fund, but no depreciation expense
is recorded in the governmental activities accounts.
C) No depreciation can be recorded in any governmental fund, but depreciation expense must be
recorded in the governmental activities accounts.
D) No depreciation can be recorded in any governmental fund, nor is it permissible to record
depreciation expense in the governmental activities accounts.
50) Four new computers, for which the cost exceeded the city’s capitalization threshold, were
purchased for use in the city clerk’s office using General Fund resources. Which of the following
entries would be required to completely record this transaction?
A)
General Journal
Debit
Credit
General Fund:
Expenditures
8,000
Vouchers Payable
8,000
B)
General Journal
Debit
Credit
Governmental Activities:
Expenses
8,000
Vouchers Payable
8,000
C)
General Journal
Debit
Credit
General Fund:
Expenditures
8,000
Vouchers Payable
8,000
Governmental Activities:
Expenses
8,000
Vouchers Payable
8,000
D)
General Journal
Debit
Credit
General Fund:
Expenditures
8,000
Vouchers Payable
8,000
Governmental Activities:
Equipment
8,000
Vouchers Payable
8,000
51) A capital projects fund might be used to account for which of the following activities?
A) Maintaining sidewalks.
B) Building a parking garage.
C) Providing water and sewer services.
D) Servicing long-term debt.
52) Which of the following is true regarding capital projects funds?
A) Encumbrances accounting is employed.
B) Encumbrances accounting is not normally employed, but Appropriations are recorded.
C) No budgetary accounts are used.
D) All budgetary accounts are employed and budget to actual statements are prepared.
53) In 2020, Sunrise City signed a contract in the amount of $8,000,000 for the construction of a
new city hall. Expenditures were $4,000,000 in 2020 and $2,050,000 in 2021, which included a
change to the original construction design in the amount of $50,000. What amount should be added
to capital assets in the governmental activities accounts in 2021?
A) $0
B) $50,000
C) $2,050,000
D) $2,000,000
54) To offset engineering and design costs incurred prior to the issuance of a long-term bond issue,
a capital projects fund borrowed the sum of $75,000 on a short-term basis from First National
Bank. This transaction should be recorded in:
A) The capital projects fund.
B) The debt service fund.
C) The special revenue fund.
D) None of the options are correct. Debt is not recorded in governmental funds.
55) Transfers from the General Fund to the capital projects fund to provide partial financing of a
capital project would be reported by the capital projects fund as a(an):
A) Fund balance addition.
B) Revenue.
C) Other financing source.
D) Current liability.