1) In addition to the government-wide statements, governments are required to prepare
fund financial statements for governmental, proprietary and fiduciary funds.
2) Unexpended Appropriations Balance may be interpreted as how much a government
may continue to spend and remain within its budget.
3) The proprietary accounts of a federal agency are used to prepare the accrual basis
financial statements of the federal government and its agencies.
4) The Debt Service Fund would record the receipt of money from the General Fund as
nonoperating revenue on the activities Statement of Revenues, Expenditures, and
Changes in Fund Balance.
5) Investments in a pension trust fund should generally be reported using fair market
value.
6) A donation received is considered a voluntary non exchange transaction only if it is
unrestricted.
7) The Proprietary Fund Statement of Net Positionmay choose whether to classify
assets and liabilities between current and long-term.
8) An organization is presumed to be governmental if it has the ability to issue directly
debt that is exempt from federal taxes.
9) Governmental health care entities, public school systems, and museums are
commonly accounted for as special-purpose governments.
10) Budgets are legally binding upon administrators.
11) GASB requires a reconciliation from governmental fund financial statements to the
government-wide statements governmental-activities columns from modified accrual
accounting to accrual accounting.
12) The City of Charlestown levied property taxes in the amount of $10,000,000. It is
estimated that 2% will not be collected. The taxes were levied July 1, 2014 for the fiscal
year ended June 30, 2015 . During the year ended June 30, 2015, $8,900,000 in
property taxes were collected from this levy. It is estimated that $620,000 will be
collected during the next 60 days, $300,000 will be collected more than 60 days after
June 30, 2015, and $180,000 will never be collected.
When preparing the General Fund financial statements, how much property tax revenue
should be recognized from this levy for the year ended June 30, 2015?
A)$ 8,900,000
B)$ 9,520,000
C)$ 9,820,000
D)$10,000,000
13) Assume that The Sandy Creek Nature Center, a private not-for-profit organization,
started the fiscal year ending December 31, 2015 with $59,380 in temporarily restricted
net assets. The amounts are restricted for the following:
restricted for educational programs relating to preservation of wetlands $16,000.
restricted for future equipment purchases $18,000 (Fixed assets are recorded as
unrestricted when acquired) and
a promise to provide $5,000 each of the next six years for general support. Assume the
pledge was made on December 31, 2014 and the present value of six (January 1)
payments discounted at 5 percent is $25,378.
During the fiscal year ended December 31, 2015, the following transactions occur:
(a)The first $5,000 installment on the pledge receivable was received.
(b)Expenses related to educational programs on conservation of wetlands were incurred
and paid in the amount of $19,900
(c)The $18,000 received in a prior year for equipment, together with an additional
$25,500 was used to acquire equipment.
(d)Interest of 5% is recorded on the remaining balance of the pledge receivable.
Required: Prepare the journal entries necessary for the above transactions:
14) Moving cash from the General Fund to a debt service fund for payment of debt
service is an example of a (an)
A)Inter fund transfer
B)Inter fund loan
C) Inter fund reimbursement
D)Quasi-external transaction
15) If an Internal Service Fund has positive operating income, the worksheet entry to
add the Internal Service Fund to governmental activities would include a:
A) Debit to Transfers In
B) Credit to Net Position
C) Debit to Expenditures/expense
D) Credit to Expenditures/expense
16) Which of the following is a major source of funding for capital projects funds?
A) Gifts from individuals and corporations
B) Proceeds from issuance of Long-term debt
C) Grants
D) All of the above
17) The asset, equipment, used by a department accounted for by the General Fund of a
governmental unit should be reported in the:
A)Government-wide statements
B)General Fund
C)Both (a) and (b)
D)None of the above
18) A government may have __________________ General Fund(s).
A)Only one
B)As many as needed to fulfill legal obligations
C)A varying number, depending on the annual needs of the government
D) None of the above
19) The Township of Thomasvilles General Fund has the following net resources at
year end:
$77,000 of prepaid insurance
$375,000 rainy day fund approved by the township governing board with specific
conditions for its use
$2,500 of supplies inventory
$61,000 state grant for snow removal
$150,000 contractual obligations for the purchase of equipment
$200,000 to be used to fund government operations in the future
Outstanding encumbrance of $80,000 for the purchase of furniture & fixtures (assume
no contractual obligation)
What would be the total Unassigned fund balance?
A)$ 80,000
B)$200,000
C)$280,000
D)$375,000
20) Which of the following is True regarding revenue recognition for sales taxes, when
reporting in the government-wide statements?
A)Assets are recognized when the underlying exchange (retail sale) has occurred or
when resources are received, whichever occurs first
B)Revenues are recognized when the underlying exchange (retail sale) has occurred
C)Neither of the above is True
D)Both of the above are True
21) Expenditure classifications by function includes all of the following except
A) Debt Service
B) General Government
C) Public Safety
D) Highways & Streets
22) Revenues of governmental fund types should be recognized when:
A)collected in cash
B)authorized by the budget ordinance
C)taxes become delinquent
D)measurable and available
23) Which of the following funds would not be included in the government-wide
financial statements
A) Capital Project Fund
B) Private Purpose Trust Fund
C) Enterprise Fund
D) Permanent Fund
24) Which of the following would not be correct with respect to accounting for colleges
and universities under the jurisdiction of the FASB?
A)Contributed services should be recognized only when the services create or enhance
nonfinancial assets or require specialized skills, are provided by an individual
possessing those skills, and would typically be purchased if not provided by donation
B)Multiyear pledges are recorded as restricted revenue and receivable for the gross
amount of the pledge when the pledge is made
C)Depreciation is recorded
D)Investments in stock with determinable fair values and all debt securities are reported
at market value
25) Governmental funds do not include:
A)Special revenue funds
B)Agency funds
C)Debt service funds
D)The General fund
26) Assume the director of a federal agency allots a portion of the agencys
apportionment to subunits within the agency. The journal entries at the agency level to
record this event will include:
A)a debit to the accountApportionments
B)a debit to the account Allotments
C)a credit to the account Obligations Undelivered Orders
D)None of the above
27) Which of the following expenditure classification schemes may be used by
governmental funds
A)Activity
B)Character
C)Function
D) All of the above
28) Which of the following pledges of support would not be recognized in the year the
pledge was made?
A)An unconditional pledge restricted to a particular year in the future
B)A pledge with no restrictions, but conditional on receiving matching pledges
C)An unconditional pledge restricted to a particular purpose
D)None of the above all would be recognized
29) The Village of Lake George decided to establish an internal service fund to account
for the operations of a Print Shop. The Print Shop is to begin operations on July 1, 2014
the first day of the City’s fiscal year. During the fiscal year ended June 30, 2015 the
following transactions occurred:
(a)The General Fund made a permanent contribution of $400,000 and a long-term
advance of $800,000 to the Print Shop Fund. The advance is to be repaid by the Print
Shop Fund in four equal annual installments; the first installment is due 6/30/2015 . The
advance is non-interest bearing and is considered issued for the purchases of equipment.
(b)During the year equipment was purchased (for cash) in the amount of $ 890,000.
(c)During the year, printing supplies costing $120,000 were purchased; all but $30,000
was paid in cash.
(d)Billings to departments during the year totaled $400,000 at selling price. All but
$50,000 was received in cash.
(e)The cost of supplies used during the year totaled $73,000;
(f)Salaries and wages were $19,000 and utilities were $3,000 (all paid in cash); and
(g)Depreciation was charged on equipment, $80,000.
(h)The first installment of the advance was repaid.
Required:
1>Prepare journal entries in the general journal of the Village of Lake George Print
Shop Fund to reflect the above transactions.
2>Prepare closing entries for the year.
3>Prepare, in good form, the equity section of the Statement of Net position for the
Village of Lake George Print Shop Fund as of June 30, 2015 .
30) For private colleges and universities, reclassifications of temporarily restricted and
unrestricted net assets could be made:
A)For satisfaction of purpose restrictions
B)When time restrictions expire
C)If the resources donated for fixed assets have been expended on such assets
D)All of the above
31) The City of Madison, a general purpose government, reported fund balances in the
amount of $19,700,000 in the governmental funds balance sheet dated December 31,
2015 . In addition, the following information is relevant:
A.General government capital assets amounted to $28,000,000. Accumulated
depreciation of those capital assets amounted to $13,000,000. Enterprise fund capital
assets amounted to $ 17,000,000 with accumulated depreciation of $ 8,400,000.
B.Internal service funds net assets amounted to $2,500,000. These were reported in the
proprietary funds fund basis statements but serve departments in the General Fund.
C.Property Taxes, which should be recognized as revenue in the government-wide
statements, amounted to $ 200,000. The balance of deferred inflows – property taxes
from the previous year was $ 170,000.
D.Liabilities, in addition to the amount reported in the governmental funds balance
sheet included accrued interest payable, $300,000;
E.General long-term liabilities of the government amounted to (1) general obligation
bonds of $ 6,000,000 and (2) compensated absences payable of $1,500,000. Revenue
Bonds Payable in the enterprise fund totaled $ 2,000,000.
Required: Prepare a reconciliation from the fund balances recognized in the
governmental funds balance sheet to the Net Positionrecognized in the governmental
funds column of the government-wide statement of Net Position
32) When preparing the Statement of Cash Flows for the Proprietary Funds, cash flows
from noncapital financing activities include all of the following EXCEPT:
A) Receipts from customers
B) Proceeds and repayment of debt not clearly related to capital outlay
C) Grants received from and paid to other governments for noncapital purposes
D) Transfers to and from other funds
33) Assume a federal agency places orders for contracted services supporting a federal
program. The journal entries at the agency level to record this event will include:
A)a credit to the account Expended Appropriations
B)a debit to the account Allotments
C)Both (a) and (b)
D)Neither (a) nor (b)
34) Which of the following financial statements is required for private not-for-profit
organizations?
A) Income Statement
B) Statement of Net Assets
C) Statement of Cash Flows
D) Budgetary Comparison Schedule
35) A local government purchased a building and recorded the event by debiting
Expenditures Capital Outlay and crediting Cash. What would be the worksheet entry to
prepare the government-wide statements?
A)Debit to Capital Assets and credit to Expenditures Capital Outlay
B)Debit to Capital Assets and credit to Cash
C)Debit to Capital Assets and credit to Accumulated Depreciation-Capital Assets and
Expenditures Capital Outlay
D)Debit to Capital Assets for the book value of the asset and credit to Expenditures
Capital Outlay
36) Which of the following are the net asset classes required by the FASB for private
not-for-profit organizations?
A)Assigned, Committed, and Unrestricted
B)Net investment in capital assets, Restricted, and Unrestricted
C)Partially Restricted, Temporarily Restricted, Unrestricted
D)None of the above
37) A city government makes its semiannual payment of interest on revenue bonds
issued to pay for the construction of additional public transit stations. Which fund
would account for the payment?
A)Debt service fund
B)Capital projects fund
C)Enterprise fund
D)Internal service fund
38) Which of the following is False regarding major fund reporting for governmental
funds?
A)The General Fund is always a major fund
B)Each fund that is considered major must be reported in a separate column in the
governmental funds financial statements
C)A government may designate any fund as major if it feels that reporting that fund in
the basic financial statements would be useful
D)None of the above, all are True
39) Capitalized fixed assets are reported in which of the following fund-basis
statements?
A)Agency fund
B) Proprietary fund
C) Governmental fund
D) All of the above