Version 1 1
Student name:__________
1) 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.
2) All revenues of the City of Centerville are accounted for on the modified accrual basis.
Below is shown a list of Centerville’s General Fund transactions of a revenue nature. State which
transactions should be recognized by the General Fund as a revenue in the year of occurrence. If
any item is not a current revenue, state the proper treatment for that item.
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.
3) The following is a pre-closing trial balance for Montpelier’s General Fund as of June 30,
2023:
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, 2023, after all closing entries have been made?
4) During fiscal year 2023, the Town ofBatavia issued purchase orders to various vendors in
the amounts shown for the following functions of the town:
General Government
$ 82,500
Public Safety
148,700
Public Works
130,400
Culture and Recreation
97,300
Health and Welfare
94,800
Miscellaneous
14,200
Total
$ 567,900
All goods ordered during the year were received at the following actual costs:
General Government
$ 83,720
Public Safety
147,940
Public Works
131,140
Culture and Recreation
98,780
Health and Welfare
93,970
Miscellaneous
14,300
Total
$ 569,850
a.Prepare a summary journal entry in the General Fund general journal to record the issuance of
purchase orders during fiscal year 2023. (If no entry is required for a transaction/event, select
“No Journal Entry Required” in the first account field.)
b.Prepare summary journal entries in the General Fund general journal to record the receipt of
and payment for goods during fiscal year 2023. (If no entry is required for a
transaction/event, select “No Journal Entry Required” in the first account field.)
5) The following transactions occurred for the City of Forest Green’s General Fund.
1.The budget prepared for the fiscal year included total estimated revenues of $2,774,000 and
appropriations of $2,693,000.
2.Encumbrances issued against the appropriations during the year were $931,000.
3.The current year’s tax levy of $2,005,000 was recorded; uncollectibles were estimated as
$65,000.
4.Collections of delinquent taxes from prior years’ levies totaled $132,000; collections of the
current year’s levy totaled $1,459,000.
5.Invoices were received and approved for payment for items ordered in documents recorded
as encumbrances in transaction (2) of this problem. The estimated liability was $851,200. Actual
costs were $850,500.
6.Revenue other than taxes collected during the year consisted of licenses and permits,
$373,000; intergovernmental revenue, $400,000; and $66,000 of miscellaneous revenues.
7.Payments on Vouchers Payable totaled $1,505,000.
Prepare the journal entries for the General Fund. Governmental activities and closing entries
are not required. (If no entry is required for a transaction/event, select “No Journal Entry
Required” in the first account field.)
6) During the current year, the Town of Westworld recorded the following transactions
related to its property taxes:
1.Levied property taxes of $3,300,000, of which 2 percent is estimated to be uncollectible.
2.Collected current property taxes amounting to $2,987,500.
3.Collected $26,500 in delinquent taxes and $2,400 in interest and penalties on the delinquent
taxes. These amounts had been recorded as Deferred Inflows of Resources in the prior year.
4.Imposed penalties and interest in the amount of $3,750 but only expects to collect $3,100 of
that amount. No interest or penalties are expected to be collected this year or within 30 days of
year-end.
5.Reclassified uncollected taxes as delinquent. These amounts are not expected to be collected
within the first 60 days of the following fiscal year.
Prepare the journal entries for the General Fund and governmental activities journals. Closing
entries are not required. (If no entry is required for a transaction/event, select “No Journal
Entry Required” in the first account field.)
Version 1 5
7) 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).
8) Which of the following financial statement(s) reports both current and noncurrent assets
and liabilities?
Government–wide Statement of Net
Position
A)
No
B)
No
C)
Yes
D)
Yes
A) Choice A
B) Choice B
C) Choice C
D) Choice D
Version 1 6
9) Which of the following should not be reported on the balance sheet of the General Fund?
A) Equipment.
B) Vouchers payable.
C) Tax anticipation notes payable.
D) Due from federal government.
10) When equipment is ordered by a department of the government, the purchase order
should be recorded in the General Fund as a debit to:
A) Appropriations.
B) Equipment.
C) Encumbrances.
D) Expenditures.
11) The receipt of equipment that had previously been ordered should be recorded in the
General Fund as a debit to:
A) Appropriations.
B) Equipment.
C) Encumbrances.
D) Expenditures.
12) The City of Kastle purchased a vehicle for the parks department. If the operations of the
parks department are financed by general revenues, an asset would be recorded in which
journal(s)?
General Fund
Governmental
Activities
A)
Yes
No
B)
No
No
C)
No
Yes
Version 1 7
D)
Yes
Yes
A) Choice A.
B) Choice B.
C) Choice C.
D) Choice D.
13) The Town of Heartland levied property taxes in the amount of $1,600,000. The town
estimates that 1 percent will be uncollectible. The journal entry to record the tax levy in the
General Fund will include:
A) A debit to Cash for $1,584,000.
B) A credit to Revenues for $1,584,000.
C) A debit to Allowance for Uncollectible Current Taxes for $16,000.
D) A debit to Estimated Revenues for $1,600,000.
14) The Town of Cumberland levied property taxes in the amount of $1,600,000. The town
estimates that 1 percent will be uncollectible. The journal entry to record the tax levy in the
Governmental Activities general journal will include:
A) A debit to Cash for $1,584,000.
B) A credit to Revenues for $1,584,000.
C) A debit to Allowance for Uncollectible Current Taxes for $16,000.
D) A debit to Estimated Revenues for $1,600,000.
15) Motor City has calculated that General Fund property tax revenues of $5,640,000 are
required for the current fiscal year. Over the past several years, the city has collected 94 percent
of all property taxes levied. The city levied property taxes in the amount that will generate the
required $5,640,000. Which of the following general journal entries would correctly record the
property tax levy?
Version 1 8
A)
General Journal
Debit
Credit
Taxes Receivable—Current
5,640,000
Estimated Uncollectible Current Taxes
338,400
Revenues
5,301,600
B)
General Journal
Debit
Credit
Taxes Receivable—Current
6,000,000
Estimated Uncollectible Current Taxes
360,000
Revenues
5,640,000
C)
General Journal
Debit
Credit
Taxes Receivable—Current
5,640,000
Deferred Inflows of Taxes
338,400
Revenues
5,301,600
D)
General Journal
Debit
Credit
Taxes Receivable—Current
6,000,000
Deferred Inflows of Taxes
360,000
Revenues
5,640,000
16) The General Fund has transferred cash to the appropriate fund for eventual retirement of
term bonds maturing in 10 years. Which funds would record this transaction?
Version 1 9
General Fund
Capital Projects Fund
Debt Service Fund
A)
Yes
No
Yes
B)
No
No
Yes
C)
Yes
No
No
D)
Yes
Yes
Yes
A) Choice A.
B) Choice B.
C) Choice C.
D) Choice D.
17) A properly prepared schedule of revenues, expenditures, and changes in fund balances—
budget and actual will include which of the following columns?
A) Actual revenue and expenditure amounts on the GAAP basis.
B) Actual revenue and expenditure amounts on the budget basis.
C) Encumbrances outstanding at year-end.
D) Unexpended appropriations.
18) Using the information below, what amount should be accounted for in a special revenue
fund or funds?
Warehouse equipment used to store supplies for delivery
to all city departments and agencies on a cost–
reimbursement basis
$ 300,000
Equipment used for supplying electric power to residents
$ 1,750,000
Receivables for completed sidewalks to be paid for in
installments by affected property owners. Construction
was financed by special assessment bonds for which the
town has no liability
$ 1,500,000
Cash received from federal government, dedicated to
highway maintenance
$ 1,800,000
Version 1 10
A) $1,800,000.
B) $2,100,000.
C) $3,300,000.
D) $5,350,000.
19) Which of the following would properly be reported in the operating statement of a
governmental fund?
A) Interest on a tax anticipation note issued and repaid during the period.
B) Amortization expense.
C) Depreciation expense.
D) A grant that is intended to finance activities of the following period.
20) The Revenues account of a government is debited when:
A) The budget is recorded at the beginning of the year.
B) Property taxes are recorded.
C) The account is closed to fund balance—unassigned at the end of the year.
D) Property taxes are collected.
21) The Estimated Revenues account of a government is debited when:
A) The budget is recorded at the beginning of the year.
B) Property taxes are recorded.
C) The account is closed to fund balance—unassigned at the end of the year.
D) Property taxes are collected.
22) Which of the following would be considered an internal exchange transaction?
Version 1 11
A) The General Fund transfers $200,000 to establish a Central Supplies Fund; this
amount will not be repaid.
B) The General Fund transfers $125,000 to the Debt Service Fund for payment of
currently due bond interest payments.
C) The General Fund transfers $9,000 to the Central Supplies Fund for supplies it
received from Central Supplies.
D) The Capital Projects Fund completes a library building project and transfers the
remaining cash to the Debt Service Fund.
23) The General Fund used electricity provided by the city-owned electric utility (an
enterprise fund of the city). The General Fund general journal entry to record the transaction will
include:
A) A debit to Expenses.
B) A debit to Expenditures.
C) A debit to Interfund Transfers Out.
D) A debit to Due to Other Funds.
24) The General Fund used water provided by the city-owned water department (an
enterprise fund of the city). The governmental activities journal entry to record the transaction
will include:
A) A debit to Expenses.
B) A debit to Expenditures.
C) A debit to Internal Balances.
D) No entry would be recorded since the transaction is between two funds of the same
government.
Version 1 12
25) On May 1, the City of Spencer was notified of approval of a $300,000 federal operating
grant, payable on a reimbursement basis as the city expends resources for the intended purpose
of the grant. As of May 1, no expenditures had been made for grant purposes. The journal entry
to record approval of this grant will include:
A) A credit to Revenues in the amount of $300,000.
B) A credit to Deferred Inflows of Resources—Grant Proceeds in the amount of
$300,000.
C) A debit to Grants Receivable in the amount of $300,000.
D) No journal entry will be made until authorized expenditures occur.
26) Caravan County was awarded a $500,000 federal operating grant for use in year two. On
December 1 of year one, half of the grant money was received by the City. The journal entry to
record receipt of the grant funds will include:
A) A credit to Revenues in the amount of $250,000.
B) A credit to Deferred Inflows of Resources—Grant Proceeds in the amount of
$250,000.
C) A debit to Grant Expenditures in the amount of $250,000.
D) No journal entry will be made until expenditures are made in year two.
27) Which of the following best describes the proper treatment for uncollectible amounts of
taxes?
A) Report as bad debt expense.
B) Report as deferred inflows of resources.
C) Report as bad debt expenditures.
D) Report receivables net of uncollectible amounts.
28) Property taxes due and collectible 90 days after the 2023 fiscal year end would be
recorded as revenues in 2023 in which journal?
General Fund
Governmental
Activities
Version 1 13
A)
Yes
No
B)
No
No
C)
No
Yes
D)
Yes
Yes
A) Choice A.
B) Choice B.
C) Choice C.
D) Choice D.
29) Essex Village’s capital expenditures during the year ended December 31 included:
Equipment for village mayor’s office
$ 40,000
Village vehicles
60,000
What amounts should have been recorded in the General Fund and the governmental activities
journal for the increase in the equipment account during the year ended December 31?
A) General Fund: $0; Governmental activities: $0
B) General Fund: $0; Governmental activities: $100,000
C) General Fund: $40,000; Governmental activities: $60,000
D) General Fund: $100,000; Governmental activities: $0
30) The City of Walnut Creek 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.
Walnut Creek received these supplies on June 2, and the $6,000 invoice was approved for
payment. What General Fund journal entry should Walnut Creek make on May 6, to record the
approved purchase order?
Transaction
General Journal
Debits
Credits
A)
Encumbrances
6,000
Appropriations
6,000
B)
Supplies
6,000
Vouchers Payable
6,000
Version 1 14
C)
Encumbrances
6,000
Encumbrances Outstanding
6,000
D)
Expenditures
6,000
Encumbrances
6,000
A) Choice A
B) Choice B
C) Choice C
D) Choice D
31) The City of Walnut Creek 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.
Walnut Creek received these supplies on June 2, and the $6,000 invoice was approved for
payment. What General Fund journal entry or entries should Walnut Creek 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
Version 1 15
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.
32) 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.
33) On July 1, the first day of its fiscal year, the Town of Carefree levied a $1,000,000 in
property taxes, 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.
Version 1 16
34) The voters of the city passed an ordinance to increase their sales tax by ¼ percent. The
proceeds of the sales tax are to be used for culture and recreation. In the governmental activities
journal, how would the ¼ 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.
35) During January 2023, 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—2023 in the amount of $2,200.
B) Expenditures—2022 in the amount of $200.
C) Expenditures—2023 in the amount of $200.
D) Expenditures—2022 in the amount of $2,200.
36) 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.
37) Which of the following accounts would not be closed at the end of each fiscal year?
Version 1 17
A) Fund balance.
B) Estimated revenues.
C) Interfund transfers out.
D) Expenditures.
38) In fiscal year 2023 the “Expenditures—2022″ account represents
A) Excess expenditures in 2022 that will be offset against appropriations for 2023.
B) Goods or services received in 2022 that the government has no record of ordering.
C) Amount of expenditures for goods ordered in 2022 that were received in 2023 and
chargeable to appropriations of 2022.
D) The amounts of purchase orders issued in 2022 that were intended to be paid in full
from appropriations for 2023.
39) 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).
40) 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.
Version 1 18
41) 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 transfer to the debt service fund for $352,750.
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.
42) 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.
43) 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.
44) If a governmental fund issues debt to finance a capital acquisition, how should the
proceeds of the debt be recorded?