Chapter 16—Governmental Accounting: Other Governmental
Funds, Proprietary Funds, and Fiduciary Funds Key
1. Which of the following activities would not be accounted for in a Special Revenue Fund?
2. In a Special Revenue fund:
3. Which of the following fund types have accounting principles most closely related to those of the General
Fund?
4. Permanent Funds are established to
5. The basis of accounting for the Public Purpose Trust is the
6. Revenue in a Capital Projects Fund includes all but:
7. Capital projects expected to take several years to complete and involve large amounts of money
8. When a city plans to build a fire station by issuing long-term debt, it could obtain money to start construction
before the bonds are sold by
9. In a Capital Projects Fund, when a contract is signed with a contractor to construct a fixed asset, the amount
of the contract is:
10. Debt Service funds account for
11. Utilizing serial bonds to raise long term resources is preferred in debt service funds because:
12. In a Debt Service fund:
13. On December 1, $125,000 was deposited with a fiscal agent for payment on bonds payable in the amount of
$90,000 and interest payable for $35,000 due maturing on the last day of December. This will require a debit of
14. Which of the following funds or account groups would be affected by a transfer of property tax receipts to
pay bond principal and interest payments? The bonds were issued several years ago to fund the construction of a
new library.
15. A government may decide to do an advance refunding of long-term debt to remove legal impairments or
lower the effective interest rate. If the refunding does not pay off the old debt, but simply sets aside monies
irrevocably with a trustee to pay it as it comes due, it is a(n)
16. Service-type special assessments:
17. Capital improvements which are financed by special assessment debt for which the government is obligated
in some manner would be recorded in the General Fixed Assets Account Group as a(n)
18. Capital improvement special assessments:
19. An enterprise fund should be used to account for
20. At the inception of the City of Covedale’s motor pool, $1,000,000 was transferred from the General Fund as
beginning capital. The entry in the Internal Service Fund included a credit to:
21. Which of the following is not a classification of net assets of proprietary funds?
22. Which of the following is not a typical year-end statement for an Enterprise Fund?
23. In the Statement of Cash Flows for an Proprietary Fund, the receipt of an operating grant would be included
in cash flows from:
24. In the Statement of Cash Flows for an Proprietary Fund, the acquisition of a fixed asset would be included
in cash flows from:
25. For the Statement of Cash Flows for an Proprietary Fund:
26. When a landfill operation is accounted for in an Enterprise Fund:
27. The activities of a central motor pool that supplies and services vehicles for the use of municipal employees
on official business should be accounted for in a(n)?
28. Internal Service funds:
29. The best fund in which to account for the interest and dividends from an endowment to purchase library
books would be a(n)
30. Which of the following terms best describes the accounting methods used to account for a city’s Pension
Trust Fund?
31. The main difference between an agency fund and a trust fund is:
32. If a county collects taxes on behalf of the city and school district, it would record the taxes in the
33. A government may use agency funds to account for all but the following:
34. The financial statements of fiduciary funds:
35. Interfund transactions include all of the following except for:
36. The entry in the General Fund to record the purchase of water for City Hall from the city’s Water Utility
Enterprise Fund would include a debit to:
37. The entry in the General Fund to record the an operating subsidy paid to the city’s Water Utility Enterprise
Fund for which it does not expect repayment would include a debit to:
38. The entry in the General Fund to record the reimbursement from a capital projects fund for legal services
paid by the General Fund on its behalf would include:
39. A redemption of the final serial of general obligation bonds, including a deficiency covered by the general
fund, would affect which funds and/or account groups?
40. If general obligation debt is refunded to lower the interest rate and the proceeds are irrevocably placed with
an escrow agent or trustee to pay off the old debt as it comes due, the government must
41. The following summary events are for the Village of Carsonville:
a.
The annual budget for the Special Revenue fund was adopted as follows:
Estimated Revenues
$170,000
Appropriations
$150,000
b.
The state transfers $160,000 to the city for its current year’s share of gasoline tax.
c.
$148,000 was spent on road repairs and maintenance during the year.
d.
Closing entries are made for the year.
Required:
Prepare the journal entries necessary to record these events in the Special Revenue Fund. The fund was established to record the city’s share of state
gasoline tax, which is used for street maintenance.
a.
Estimated Revenues
170,000
Appropriations
150,000
Budgetary Fund Balance—Assigned
20,000
b.
Cash
160,000
Revenue
160,000
c.
Expenditures
148,000
Cash
148,000
d.
Appropriations
150,000
Budgetary Fund Balance—Unassigned
20,000
Estimated Revenues
170,000
42. On 1-1-01, the City of Midville received $100,000 from a citizen, who specifies the principal amount should
remain intact. Earnings on the principal are to be used for park beautification projects and upkeep.
Required:
Record the following events in the appropriate Permanent Fund and Special Revenue Fund, as necessary.
a.
The deposit is made of the cash received.
b.
The cash is invested in marketable securities.
c.
Total interest accrued on investments for the year is $8,000; A liability is established in the permanent fund for what is owed to special
revenue fund.
d.
The interest is collected and transferred to the appropriate special revenue fund.
e.
Park Operating expenses are $2,500; $5,500 is spent on new park benches.
Required:
Using this information, make the necessary entries in all other affected funds or groups and identify the fund for each event. If no other fund or group
is affected, so note. Closing entries are not required.
a.
Permanent Fund:
Cash
100,000
Operating Revenues
100,000
Investments
100,000
Cash
100,000
c.
Permanent Fund:
Interest Receivable
8,000
Operating Revenues
8,000
Operating Transfer Out
8,000
Due to Special Revenue Fund
8,000
Special Revenue Fund:
Due from Permanent Fund
8,000
Other Financing Sources—Operating
Transfer In
8,000
d.
Permanent Fund:
Cash
8,000
Interest Receivable
8,000
Due to Special Revenue Fund
8,000
Cash
8,000
Special Revenue Fund:
Cash
8,000
Due from Permanent Fund
8,000
e.
Special Revenue Fund:
Expenditures
8,000
Cash
8,000
43. On July 1, 20X5, Rhodes City approved the construction of a new library costing $8,000,000. The project
was to be financed with a $4,000,000 general obligation bond issue and a matching state grant.
Required:
Record the following events in the Capital Project Fund for Rhodes City during 20X5.
a.
The city estimated that approximately one-fourth of the contract price would be paid for in the current fiscal year and that the bond issue
will be sold this year. The project should be completed and the matching grant received next year.
b.
The bonds are sold at 102 and premium to be used for future principal payment, forwarded to the Debt Service Fund.
c.
A contract was signed to construct the library at a cost of $7,900,000 with a retained percentage of 10% until final inspection at
completion.
d.
The contractor submits a $1,000,000 progress billing.
e.
The books are closed at year end.
a.
Memorandum entry only to record authorization to expend $8,000,000 for construction of
the library. Budget entry is optional:
Estimated Other Financing Sources
4,000,000
Appropriations
2,000,000
Budgetary Fund Balance—Unassigned
2,000,000
Other Financing Sources—Bond Proceeds
4,080,000
Other Financing Uses—Operating Transfer Out
80,000
Cash
80,000
c.
Encumbrances
7,900,000
Fund Balance—Assigned
7,900,000
d.
Expenditures
1,000,000
Contracts Payable
900,000
Contracts Payable—Retained Percentage
100,000
Fund Balance—Assigned
1,000,000
Encumbrances
1,000,000
e.
Other Financing Sources—Bond Proceeds
4,080,000
Fund Balance—Unassigned
3,900,000
Expenditures
1,000,000
Encumbrances
6,900,000
Other Financing Uses—Operating Transfer Out
80,000
44. The City of Warwick authorized a project to modernize its street lighting.
a.
The project will take approximately nine months to complete and will cost $290,000. The project will be financed by a $60,000 grant from
the federal government and a $15,000 transfer from the General Fund. In addition, the city will issue $125,000 of special assessment serial
bonds. Special assessments of $180,000, to be collected in two equal installments due November 1 each year, will be levied. The first
installment is to go directly to the Capital Projects Fund. The remaining installment will be used to repay the related bond issue. The city
desires that budgetary accounts be established for the project.
b.
A construction contract for $265,000 is signed. The amount is encumbered.
c.
The installment assessments of $180,000 are levied.
d.
All but $1,000 of the first installment is collected.
e.
Serial bonds are sold at a face value of $125,000 on an interest payment date.
f.
The transfer from the General Fund and the grant from the federal government are received.
Required:
Prepare journal entries in a Capital Projects Fund for the above events:
Estimated Revenues
150,000
Estimated Other Financing Sources
140,000
Appropriations
290,000
Estimated Revenues:
Installment
$ 90,000
Federal Grant
60,000
Total
$150,000
(Alternatively, this can be recorded as a memorandum entry.)
b.
Encumbrances
265,000
Budgetary Fund Balance—Reserved for
Encumbrances
265,000
Special Assessments Receivable—Current
90,000
Revenues
90,000
To record initial installment.
d.
Cash
89,000
Special Assessments Receivable—Current
89,000
e.
Cash
125,000
Other Financing Sources
125,000
Cash
75,000
Revenues
60,000
Other Financing Sources
15,000
45. Consider the following transactions:
a.
The city government approved a $1,500,000 addition to the library to be financed by a $1,000,000 general obligation bond issue and a
$500,000 state grant. The city anticipated that the proceeds from both the bond sale and the grant would be received in 20X1. It is also
estimated that 40% of the project will be completed by year end.
b.
The bonds are sold at 101. The bond premium is transferred to the debt service fund to be used for interest.
c.
The grant is approved by the state for payment.
d.
A contract for the project is signed to build the addition for $1,440,000.
e.
The architect’s bill is received for $15,000 and paid without an encumbrance.
f.
One-half of the grant is received from the state.
g.
A progress billing for $576,000 is received from the contractor.
h.
The closing entries for 20X1 are made.
Required:
Make the necessary journal entries to record the transactions in the Capital Project Fund of Chatham during 20X1. Budgetary accounts are used.
Estimated Revenues
500,000
Estimated Other Financing Sources
1,000,000
Appropriations
600,000
Budgetary Fund Balance—Unassigned
900,000
b.
Cash
1,010,000
Other Financing Sources
1,010,000
Other Financing Uses
10,000
Cash
10,000
Due from the State
500,000
Revenues
500,000
d.
Encumbrances
1,440,000
Fund Balances—Assigned
1,440,000
Expenditures
15,000
Cash
15,000
f.
Cash
250,000
Due from the State
250,000
46. The following events occurred in the City of Boonebury during 20X5.
a.
On January 1, the city sells $600,000 of general obligation bonds at 101. The premium is to be used to pay interest. The bonds have a 6%
stated interest rate and mature in 20XX. Interest is payable on July 1 and January 1.
b.
On June 30, enough cash is transferred from the General Fund to service the bonds described in a.
c.
A check is written to the fiscal agent handling the bonds on June 30.
d.
Notification is received from the fiscal agent on August 1 that interest has been paid to the bondholders.
e.
On September 30, enough cash is transferred from the General Fund to retire $150,000 of a serial bond issue plus $3,000 of interest. The
cash is immediately forwarded to the fiscal agent.
Required:
Prepare the journal entries necessary to record the events in the Debt Service Fund. The City of Boonebury is a calendar-year city.
a.
January 1, 20X5
Cash
6,000
Other Financing Sources
6,000
b.
June 30, 20X5
Expenditures (600,000 x 6% x 1/2)
18,000
Matured Interest Payable
18,000
Cash (18,000 – 6,000)
12,000
Other Financial Sources
12,000
June 30, 20X5
Cash with Fiscal Agent
18,000
Cash
18,000
d.
August 1, 20X5
Matured Interest Payable
18,000
Cash with Fiscal Agent
18,000
e.
September 30, 20X5
Expenditures
153,000
Matured Interest Payable
3,000
Matured Bonds Payable
150,000
Cash
153,000
Other Financial Sources
153,000
Cash with Fiscal Agent
153,000
Cash
153,000
47. Consider the following events:
a.
A portion of the property tax levied was directly earmarked for, and previously recorded in, the Debt Service fund. Of these property taxes,
$6,600 was previously reclassified as delinquent. From the delinquent taxes, $5,000 is now collected, with the balance considered
uncollectible. An allowance for uncollectible delinquent of $2,000 existed.
b.
Previously deferred property taxes amounting to $50,000 will be subjected to collection during the current year. A 4% allowance is to be
created to cover uncollectible amounts.
c.
The state has remitted $45,000 as the municipality’s portion of a shared sales tax. No receivable had previously been recorded. The amount
is to be used for debt service and is to be recorded directly in that fund.
d.
The General Fund transferred $80,000 to the Debt Service Fund, $70,000 for serial bond principal retirement, and $10,000 for interest
payment.
e.
A check for $110,000 is sent by the Debt Service Fund to the fiscal agent who handles the principal and interest payments. The amount
covers $70,000 for matured bond principal and $40,000 for interest due.
f.
The fiscal agent later reports that all payments for matured principal and interest mentioned in item e above have been made.
Required:
Prepare the journal entries that would be made in a municipality’s Debt Service Fund for each of the following events:
Cash
5,000
Allowance for Uncollectible
Delinquent Taxes
2,000
Taxes Receivable—Delinquent
6,600
Revenues
400
b.
Deferred Revenues
50,000
Revenues
48,000
Allowance for Uncollectible Taxes
2,000
Cash
45,000
Revenues
45,000
d.
Cash
80,000
Other Financing Sources
80,000
Expenditures
110,000
Matured Serial Bonds Payable
70,000
Matured Interest Payable
40,000
Cash with Fiscal Agent
110,000
Cash
110,000
Matured Serial Bonds Payable
70,000
Matured Interest Payable
40,000
Cash with Fiscal Agent
110,000