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SOLUTIONS
UNIVERSITY AT ALBANY
Rockefeller College of Public Affairs and Policy
PAD-501: Financial Management
Final Examination
Fall – 2008
Name: ________________________________________________
As a courtesy to your classmates, please turn off cell phones and pagers.
INSTRUCTIONS
1. PRINT your name clearly on every page of this exam and put your initials at the
2. You may use a calculator and one page of notes. All other books and materials
3. You have the full three-hour period to complete the exam. That should be more than
4. If you get stuck on any one question, move on, and come back to it later if you
5. International students may refer to a dictionary.
6. If something is not clear, ask for clarification.
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Part II (54 points): The following questions do not relate to the CDTA financial
statements.
1. 1 point. What is the fundamental accounting equation for a government funds
balance sheet?
2. 2 points. Governments record revenue in their general fund when the revenue is
a) increase
b) decrease
c) stay the same
d) can not tell from the information given
4. 1 points. The Albany County government would recognize expenses on it
government-wide financial statements when. (choose from the selections below)
5. 3 points. Choose your answer to the following questions from the list of financial
statements to answer the following questions. (Each answer is worth 1 point)
a) Balance sheet
b) Activity Statement
c) Cash Flow Statement
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6. 4 points. The Albany Community Center, a nonprofit organization, is
experiencing a short-term cash-flow problem and needs to borrow $25,000 to
meet its payroll. The Center has $1,000,000 in its temporarily-restricted building
fund. The Center’s finance officer assures the executive director that they can
borrow the money from the building fund to meet its operating needs as long as it
is paid back. How would you record this transaction from the perspectives of the
operating fund and the building fund?
7. 8 points. The Animal Rescue Foundation (ARF) supports animal adoptions for
abandoned pets. Each person that adopts a pet receives a complementary animal
bed from ARF. On July 1, 2004, they had had 100 beds valued at $5,000 total. In
September, they purchased 200 beds at $60 each. In December, they purchased
50 beds at $65 each. In February, 2005, they purchased 70 beds at $70 each. In
May, they purchased 25 beds at $72 each. At the end of the fiscal year (June 30,
2005) they had 40 beds in inventory.
a. 6 points. Use FIFO to determine the expense for animal beds for the fiscal
year ending June 2005 for ARF.
b. 2 points. What is the value of the year-end inventory reported on the
balance sheet?
8. 8 points. The City of Albany (a local governmental body) sells a building for $10
million in cash to St Rose College (a nonprofit organization).
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A. 2 points. Show the transaction as it would appear on the City’s modified accrual
transaction sheet. Assume it is a General Fund transaction.
B. 1 point. Show the transaction as it would appear for St. Rose.
C. 3 points. St. Rose borrowed money to buy the building. Show the transaction of
the first year’s loan repayment of $1,500,000 ($1,000,000 interest and $500,000
principal).
D. 2 points. After the City sold the building, they used some of the money they
received to make the final debt service payments related to the original
construction of the building. If the City had made a loan repayment of
$1,500,000 ($1,000,000 interest and $500,000 principal), their total
expenditure for that transaction would have been:
9. 25 points. You are the CFO for the New Age Neighborhood Center (NAN) that
began operations on January 1, 2008 with a fiscal year ending December 31, 2008.
NAH uses full accrual accounting. During the fiscal year, the following events
occurred:
a) A foundation gave NAN $100,000 in cash for general operating purposes.
b) A building was leased for $1,000 per month for 12 months. Monthly rent
payments were all made at the beginning of each month. The length of the lease
was 5 years. You may show all of the lease payments for the fiscal year in a single
transaction.
c) As part of the lease agreement, NAN gave the building owner a $2,000 security
deposit.
d) Staff were hired and earned $60,000 during the year. NAH paid $40,000 of those
salaries during the year.
e) $15,000 of supplies was purchased throughout the year. All supplies were paid
for.
f) NAH attracted 200 members during the year. Member bills totaled $20,000.
g) Management estimates that 10% of the members will not be able to pay their bills.
h) The ending supplies inventory was $5,000 on December 31, 2005.
i) $10,000 of the membership bills was collected.
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Record these transactions. Then, prepare an ending Balance Sheet (5 points), Activity
Statement (5 points), and Cash Flow Statement (6 points) for the fiscal year ending
December 31, 2008. SOLUTION
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