Chapter 15—Governmental Accounting: The General Fund and the
Account Groups Key
1. A primary distinction between the flow of resources through a business enterprise and through a
governmental entity is that operations in a governmental entity consume resources and assets to
2. Governmental financial statements report whether financial resources received during a period were
sufficient to cover the expenditures of the period, and whether spending was within budgetary limits. This is
demonstrating:
3. The body currently responsible for developing local governmental accounting standards is the
4. The cornerstone of external financial reporting for governmental units and not-for-profit organizations is:
5. If the city expends more during the budget year than it receives during the budget year in revenues that are
available to finance the expenditures, it will
6. The governmental Accounting Standards Board has stated governmental financial reporting should be
designed to show:
7. The focus of governmental funds in fund accounting is a(n):
8. Recently effective accounting standards require the preparation of two separate sets of financial statements.
The first set of fund financial statements are similar to the historical fund based reporting model. Which of the
following statements is false concerning the additional financial statements that are now required?
9. The modified accrual method of accounting is applied to which of the following funds or asset groups?
10. In fund financial statements, the accrual method of accounting is applied to all but:
11. A special assessment levied on citizens for a service they are receiving from a local government should be
accounted for in a fund that matches the nature of the special assessment. Which of the following funds would
not derive inflows from a service activity?
12. Property taxes are considered:
13. Property taxes are recorded as revenue in the General Fund
14. Trash removal fees are considered:
15. Interest and dividends from investments are typically recognized as revenue:
16. Fees for licenses and permits are typically recognized as revenue:
17. Income taxes are considered:
18. Sales taxes and other derived taxes are typically recognized as revenue:
19. Inflows from other financing sources recorded in the general fund include all of the following except for:
20. Proceeds from issuing long-term debt reflected as ___________in the general fund.
21. In the governmental funds, an expenditure is recognized when:
22. Jay County received a report from its actuary that stated its unfunded pension liability was $100,000, and a
deposit of $15,000 needed to be made prior to the end of the fiscal year to the Pension Trust Fund. Jay should
record:
23. Which of the following correctly identifies how certain transactions are recorded (as a debit or credit) in the
general fund?
Debits Credits
24. Debt that is recorded as a liability in the general fund because it is expected to be paid with available
financial resources is:
25. Which is not true about special items and extraordinary items?
26. A loss incurred as a result of a civil riot is considered a(n):
27. An authorized expenditure is a(n):
28. Which of the following correctly portrays the necessary journalization of the budget journal entry?
Debit Credit
29. Which of the following would not be considered a budgetary account in the General Fund?
30. The entry to record the Warwick City budget for the General Fund includes the following:
Estimated Revenues
$4,000,000
Appropriations
3,850,000
Estimated Other Financing Uses
400,000
Estimated Other Financial Sources
150,000
The entry to record this budget would include a debit to
31. The entry to record the Warwick City budget for the General Fund includes the following:
Estimated Revenues
$4,000,000
Appropriations
3,850,000
Estimated Other Financing Uses
400,000
Estimated Other Financial Sources
150,000
The entry to close the budget accounts at the end of the year would include a debit to
32. Which of the following is not a type of account classification found in the general fund?
33. Which one of the following statements is false concerning the accounting for the budget in the general fund
general ledger?
34. Fund balance that consists of amounts such as inventory that are not in spendable form is classified as:
35. Fund balance that has an external constraint imposed by creditors, grantors, contributors or regulations is
classified as:
36. Fund balance that has an internal constraint imposed by formal action of the government’s highest decision
making authority is classified as:
37. Fund balance that is constrained to be used for a certain purpose or is encumbered is classified as:
38. The entry in the General Fund to record the posting of a tax lien by a city would include a credit to
39. Property taxes in the amount of $3,000,000 are billed to city property owners. It is estimated that two
percent will prove to be uncollectible. In recording this event,
40. Estimated uncollectible property taxes are:
41. An expected expenditure is a(n):
42. The purpose of an encumbrance is to:
43. Goods ordered and originally encumbered at $7,500 were received with an invoice price of $7,700. In
recording this event,
44. Goods ordered and originally encumbered at $7,500 were received with an invoice price of $7,700. In
recording this event,
45. Which one of the following equations will yield the unobligated balance in an expenditure subsidiary ledger
account? Unobligated Balance equals
46. The City of Olburg failed to record invoiced expenditures for the last year of $15,000 that were not
encumbered. Of this amount, $10,000 was paid this year debited to Expenditures (Control). The unpaid portion
has not been vouchered. The entry to record this event would include a
47. Generally, a governmental entity’s investments should be reported on the balance sheet at:
48. If a government enters into a securities lending agreement or reverse repurchase transaction, they would
record as assets
49. After the closing entries have been journalized and posted, but prior to the next accounting period, which of
the following accounts would have a balance?
50. Which of the following accounts would not be found on a city’s General Fund Balance Sheet?
51. Which of the following accounts would not be found in the year-end General Fund balance sheet of a city?
52. When recording the acquisition of a fixed asset in a city’s General Fixed Asset Account Group (GFAAG),
the debit entry should be selected from one of the following accounts except:
53. When recording the acquisition of a fixed asset in a city’s General Fixed Asset Account Group, the credit
entry may be to which one of the following accounts?
54. If a city uses a General Fixed Asset Account Group (GFAAG) and records depreciation in anticipation of
the city wide financial reports, accumulated depreciation accounts are credited in the GFAAG. What would be
the corresponding debit entry?
55. To record the sale of a fixed asset carried in the General Fixed Assets Account Group, a city could debit
which one of the following accounts in the GFAAG?
56. If the police department purchases a police car for $20,000 and trades in the old car for $6,000 paying a net
cash payment of $14,000, the entry in the General Fund would
57. A government may avoid charging depreciation on infrastructure assets if:
58. A city should record an unfunded liability for a claim from a citizen who files suit because their toddler
drowned in the community swimming pool unattended by a lifeguard as:
59. If the City of Billings determines that it has $200,000 of unfunded pension liability, it would record this
liability as a(n)
60. Which fund and/or account group would account for the following activities?
a.
property taxes
b.
purchase a fire truck
c.
order some general supplies
d.
build a city hall
e.
pay principal and interest on long-term debt
f.
issue long-term debt to build the city hall
g.
pay the current portion of pension liability
a.
general fund
b.
general fund and general fixed asset account group
c.
general fund
d.
capital projects fund and general fixed asset account group
e.
general fund, debt service fund, and general long-term debt account group
f.
capital projects fund and general long-term debt account group
g.
general fund
61. The Village of Applegate General Fund has the following accounts:
a.
Budgetary Fund Balance—Unassigned
b.
Property Taxes Receivable
c.
Fund Balance—Assigned
d.
Vouchers Payable
e.
Expenditures
f.
Other Financing Source—Bond Proceeds
g.
Appropriations
h.
Investments
i.
Fund Balance—Unassigned
Required:
Identify the normal balance expected for each account during the fiscal year before closing entries. Select from debit, credit or either.
Either
b.
Debit
Credit
d.
Credit
Debit
Credit
g.
Credit
h.
Debit
Either
62. The City of Franklin has adopted the General Fund budget for the next fiscal year. The details of the budget
are:
$500,000
50,000
75,000
15,000
50,000
$150,000
450,000
30,000
Required:
Estimated Revenues (500,000 + 50,000 + 75,000)
625,000
Estimated Other Financing Sources (15,000 + 50,000)
65,000
Appropriations (150,000 + 450,000)
600,000
Estimated Other Financing Uses
30,000
Budgetary Fund Balance – Unassigned
60,000
63. The following selected account balances for the City of Hampton on January 1, 20X8 are listed below:
Delinquent Taxes Receivable
$34,000
Dr.
Allowance for Uncollectible Delinquent Taxes
11,000
Cr.
Tax Liens Receivable
12,000
Dr.
Allowance for Uncollectible Tax Liens
5,000
Cr.
Required:
Record the following transactions that occurred during 20X8:
a.
Current property taxes are levied at $750,000 with a 4% allowance for uncollectible property taxes.
b.
Property to which tax liens apply is sold for $6,000 and the account is closed.
c.
Current property taxes are collected in the amount of $702,000.
d.
Previous delinquent property taxes are converted to tax liens and the current uncollected property taxes are considered delinquent.
a.
Taxes Receivable—Current
750,000
Allowance for Uncollectible Current Taxes
30,000
Revenue
720,000
b.
Cash
6,000
Tax Liens Receivable
6,000
Allowance for Uncollectible Tax Liens
5,000
Revenue
1,000
Tax Liens Receivable
6,000
c.
Cash
702,000
Taxes Receivable—Current
702,000
d.
Tax Liens Receivable
34,000
Taxes Receivable—Delinquent
34,000
Allowance for Uncollectible Delinquent Taxes
11,000
Allowance for Uncollectible Tax Liens
11,000
Taxes Receivable—Delinquent
48,000
Taxes Receivable—Current (750,000 – 702,000)
48,000
Allowance for Uncollectible Current Taxes
30,000
Allowance for Uncollectible Delinquent Taxes
30,000
64. Lake City had the following transactions.
July 1, 20X3
Lake City levied $500,000 in property taxes to be paid by its citizens before October 1, 20X3. Estimated
uncollectible accounts are 1% of the taxes levied.
July 31, 20X3
During July, $10,000 was collected for licenses and permits.
August 1, 20X3
Received a grant from the state government to pay for a drug enforcement officer for one year. The amount is
$50,000 and the officer is to begin on October 1, 20X3.
Required:
Make the necessary journal entries to record the impact of the transactions in the General Fund for the fiscal year ended June 30, 20×4.
July 1, 20X3
Taxes Receivable—Current
500,000
Revenues
495,000
Allowances for Current
Uncollectible Taxes
5,000
July 31, 20X3
Cash
10,000
Revenues
10,000
August 1, 20X3
Cash
50,000
Revenues
37,500
Deferred Revenues *
12,500
65. The following transactions were made by the City of Morrell:
June 2, 20X5
Purchase orders of $57,000 were approved.
June 17, 20X5
Goods of $32,000 of the purchase orders were received. These items are in good order. The invoices totaled
$29,000 and vouchers were approved for payment.
June 30, 20X5
Make entries for the City of Morell’s year-end to close the encumbrances and the start of the next fiscal year
on July 1, 20X5 to reinstate them.
July 16, 20X5
The remaining items arrived in good order.
The invoices totaled $25,000.
Required:
Make the necessary journal entries to record the transactions in the General Fund.
June 2, 20X5
Encumbrances
57,000
Fund Balance—Assigned
57,000
June 17, 20X5
Fund Balance—Assigned
32,000
Encumbrances
32,000
Expenditures
29,000
Vouchers Payable
29,000
June 30, 20X5
Fund Balance—Unassigned
25,000
Encumbrances
25,000
July 1, 20X5
Encumbrances
25,000
Fund Balance—Unassigned
25,000
July 16, 20X5
Fund Balance—Unassigned
25,000
Encumbrances
25,000
Expenditures
25,000
Vouchers Payable
25,000
66. On July 1, 20X0, the beginning of its fiscal year, the trial balance of the General Fund of the City of St. Bea
was as follows:
Cash
20,000
Tax Receivable—Delinquent
120,000
Allowances for Uncollectible Delinquent Taxes
12,000
Interest and Penalties Receivable on Taxes
8,000
Allowance for Uncollectible Interest and Penalties
800
Due from Other Funds
28,000
Vouchers Payable
87,200
Fund Balance—Assigned
16,000
Fund Balance—Unassigned
60,000
176,000
176,000
Required:
Prepare journal entries that would be made in the General Fund for the following events. Omit explanations.
a.
The budget shows estimated General Fund revenues of $450,000 and estimated expenditures (including amount
encumbered in the prior year) of $392,000.
b.
Late in June 20X0, an order was placed and an encumbrance recorded for $15,000. Later in July, the item was
received at an invoice cost of $15,400. A voucher is prepared.
c.
Property taxes amounting to $300,000 were levied, with 4% estimated to be uncollectible.
d.
Cash collections during the year were as follows:
Current taxes
$270,000
Delinquent taxes (in full settlement)
104,000
Interest and penalties on last year’s taxes (in full settlement)
7,600
$381,600
The controller wishes variations in estimates to be recorded in the appropriate revenue or expenditure account.
e.
Purchase orders totaling $276,000 were placed. Later, invoices for $288,000 were received and vouchered for
items that were originally estimated to be $285,000; supplies inventory purchases were $16,000 of the total.
f.
Payrolls of $50,000 were paid. (Ignore payroll taxes and other deductions.) In addition, vouchers totaling
$280,000 were paid. (Supplies Inventory purchases were $16,000 of the total.)
g.
An automobile was purchased for the fire department. It cost $18,000 and was not previously encumbered. The
invoice is vouchered.
h.
At year end, $6,000 in supplies were on hand. There were no supplies on hand a year ago. The city wishes to
show the inventory and to earmark fund balance accordingly.