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Midterm Exam
Midterm Exam
1. Government-wide financial statements would include all government -wide activities associated with operational accountability for all activities, except:
a. Governmental activities
b. Business-type Activities
c. Component Unit Activities
d. Fiduciary Activities
2. In the comprehensive annual financial report fora government entity, the statistial section ofthe report should include selected financial data for the past ___ years
a. 3
b. 5
c. 8
d. 10
3. Which of the following is a minimum required report for the basic financial statements ofa government entity?
a. fund financial statements
b. Management’s discussion and analysis
c. Required supplementary information
d. Budgetary comprison schedules
4. Brandon County’s general fund had the following transactions during the year:
| Transfer to a debt srvice fund | $100,000 |
| Payment to a pension trust fund | 500,000 |
| Purchase of equipment | 300,000 |
What amount should Brandon County report for the general fund as other financing issues in its govenmental funds statement of revenues, expenditures, and changes in fund balances?
a. $100,000
b. $400,000
c. $800,000
d. $900,000
5. Which of the following funds is required to provide statement of cash flows?
a. Revenue (special fund)
b. Pension trust (fiduciary) fund
c. Debt service fund
d. Internal service fund
6. A debt service fund prepared a budget on January 1, Year 2, which included estimated revenues of $88,000, appropriations of $69,500, and a fund balance of $18,500. Actual activity for the debt service fund during Year 2 included bond issue proceeds of $60,000, other revenues of $24,000, and interest expenditures of $53,000. Based on the above, what is the entry to close the budget on December 31, Year 2?
7. A board of commissioners direclty elected by the citizens of the City of Lewisville governs the Lewisville Library, and the library represents a legally recognized jurisdiction within its state. The City of Council of Lewisville approves the budget of the library and, by law, is entitled to any excess earnings of the library. The Lewisville Library should be reported as a:
a. Blended component unit of the City of Lewisville
b. Discrete component unit of the City of Lewisville
c. Primary government
d. Special purpose government
8. All of the following funds use the accrual basis of accounting and the economic resources measurement focus, except:
Capital projects funds.
Internal service funds.
Investment trust funds.
Private purpose trust funds.
9. “A county’s balances in the general fund included the following:
Appropriations $435,000
Encumbrances 18,000
Expenditures 164,000
Vouchers payable 23,000
What is the remaining amount available for use by the county?”
$253,000
$230,000
$248,000
$271,000
10. The local government reported capital outlay expenditures, debt service expenditures, and loan proceeds in its statement of revenues, expenditures, and changes in fund balance. In its reconciliation of the governmental fund change fund balance to the change net position displayed for governmental activities on the government-wide statement 01 activities, which transaction would least likely to be displayed as a reconciling item?
Debt service-interest payments
Capital outlay expenditures
Debt service—principal payments
Loan proceeds
11. Financial statements for Which fund type generally report net position in their individual fund financial statements?
Enterprise.
Capital projects.
Special revenue.
Permanent fund.
12. Chase City uses an internal Service fund for central motor pool. The assets and liabilities account balances for this fund that are not eliminated normally should be reported in the government-wide statement of net position as:
Governmental activities.
Business-type activities
Fiduciary activities.
Note disclosures.
13. On March 2, Year 1, Finch City issued 10-year general obligation bonds at face amount, with interest payable March 1 and September 1. The proceeds were to be used to finance the construction of a Civic center over the period April 1, Year 1, to March 31, Year 2, During the fiscal year ended June 30, Year 1, no resources had been provided to the debt service fund for the payment principal and interest.
Proceeds from the general obligation bonds should be recorded in the:
Capital projects fund.
General fund.
General long-term debt account group.
Debt service fund.
14. A city government levies a tax on its citizens tor improvements to roads. How should the city report the tax in its statement of activities?
By type of tax in general revenues.
By type of tax in program revenues.
As program-specific contributions in program revenues.
In special items reported separately from general revenue.
15. A government has the following liabilities at the end of the year:
General obligation bonds $1,500,000
Compensated absences 120,000
Salaries payable 40,000
What amount of liabilities should be reported the governmental activities column of the government-wide statement of net position?
$1,660,000
$40,000
$1,540,000
$160,000
16. The County Road & Bridge fund is funded by gas taxes whose use restricted by law to road construction and is properly classified as a special revenue fund. The fund maintains inventories road signage and road construction materials. Resources associated with those inventories would be classified within fund balance as:
Non-spendable.
Restricted.
Assigned.
Unassigned.
17. In Which situation(s) should property taxes due to a governmental unit be recorded as deferred of resources?
- Property taxes receivable are recognized in advance of the year
IL property taxes are collected in advance of the year in Which they are levied
Both I and II.
I only
II only.
Neither I nor ll.
18. The city of Accountability Junction has applied GASE 34 reporting standards to its current year financials. Readers of the financial statements should expect to find the financial reports relative to the city’s performance in relation to the budget:
Presentation of budget versus actual amounts for General Fund and each major Special Revenue Fund with a legally adopted budget presented in either the Required Supplementary Information within the Basic Financial Statements.
A presentation of a government-wide budget in comparison to financial statements.
A presentation of budget and actual data for all governmental fund types with variances of actual performance computed from both the original budget and the final adjusted budget.
Presentation of budget versus actual data on cash basis in the Required Supplementary Information for aa funds a legally adopted budget.
19. Deferred compensation plans, for other than proprietary fund employees, adopted under IRC Section 457 Should be reported in a(an):
Pension (and other employee benefits) trust fund.
Custodial fund.
Government fund.
Account group.
20. Riche Township recorded more estimated revenues than appropriations for the coming fiscal year. In integrating its adopted budget with its financial accounting records, the town would:
Credit budgetary control.
Debit budgetary control.
Debit encumbrance control.
Credit encumbrance control.
21. Which of the following statements is correct concerning a governmental entity’s statement of cash flows?
Cash tows from capital financing activities are reported separately from cash tom non-capital financing activities.
The statement format is me same as that of a business enterprises statement of cash flows.
Cash from operating activities may use the indirect method.
The statement format includes columns for the general, governmental, and proprietary fund types.
22. A permanent fund of a municipality would have the same measurement focus as a(an):
General Fund.
Internal Service Fund
Custodial Fund.
Investment Trust Fund.
23. Stone Corp. donated investments to Pine City and stipulated that the income from the investments be used to acquire art for the city’ museum. Which of the following funds should be used to account the investments?
Permanent fund.
Special revenue hind.
private purpose trust fund.
Endowment fund.
24. Which of the following Information is needed to prepare the budgetary comparison schedules for e local government?
Original budget.
Explanation of variances.
Description of the local government’s budgeting process.
Computation of variances from budget to actual
25. When preparing a statement cash a proprietary fund, all of the mowing are differences from a commercial for-profit (U.S. GMP) enterprise with the exception which item?
The issuance and retirement of debt is reported as a financing cash flow activity for a proprietary fund.
There are four major categories presented on the proprietary Kind s statement ff cash flows.
A proprietary fund reports interest and dividend income received as an investing cash flow activity.
A proprietary fund presents financing activities section before the investing activities section.
26. Nack City received a donation of a valuable painting. Nack planned to add me painting to its collection and display it in me protected exhibition area of City Hall. Rack had a policy that if such donated art works were sold, the proceeds would be used to acquire other terns for its collections. Which Of me following would be correct regarding the donated painting?
May be capitalized, but it is not required, and depreciation is not required.
Must be capitalized and depreciated.
Must be but not depreciated.
May be capitalized. but it not required, and it must be depreciated.
27. The only fund that should show a positive amount in its unassigned fund balance classification would be the:
General fund.
Special revenue fund.
Capital projects fund.
Permanent fund.
28. All of the following represent Similarities between the application of governmental fund accounting and commercial GAAP accounting, except:
Both have a profit motive which is reflected in an income statement.
Both provide information for internal and external use.
Both apply double-entry bookkeeping.
Both use a historical basis of measurement.
29. Encumbrances outstanding at year-end in a state’s general fund would most likely be reported as a:
Fund balance commitment in the general fund.
Liability in the general long-term debt account
Fund balance restriction in the general fund.
Liability in the general fund.
30. Fixed assets donated to a governmental unit should be recorded:
At estimated fair value when received.
At the lower of donors carrying amount or estimated fair value when received.
At the donor’s carrying amount
As e memorandum entry only.
31. The Baker County Headstart fund, which is properly accounted for as a special revenue fund, overspent its available resources. The deficit in this fund would likely be as:
Negative fund balance – unassigned.
Due the general fund.
Due from other governments – headstart.
Negative fund balance – restricted.
32. For governmental fund types, which item is considered the primary measurement focus?
Current financial resources.
Capital maintenance.
Cash flows and balances.
Income determination.
33. The city of Curtain had the following interfund transactions during the month of May:
- Billing by the internal service fund to a department financed by the general fund, for services rendered the amount of $5,000
- Transfer of $200,000 from the general fund to establish a new enterprise fund.
- Routine transfer $50,000 from the general fund to the debt service fund.
What was the total reciprocal interfund activity Curtain during May?
$5,000
$55,000
$200,000
$255,000
34. South City School District has a separately elected governing body that administers the public school system. The district’s budget is subject to the approval of the city council. The district’s financial activity should be reported in the South City’s financial statements by:
Discrete presentation.
Inclusion as a footnote only.
Either blending or inclusion as a footnote.
Blending only.
35 The general fund has several unique accounting aspects. Which of the following does not accurately reflect the accounting and/or characteristics of a government entity’s general fund?
Fixed assets purchased with fund resources are not reflected as a transaction item and are only reported in the footnotes government-wide financial statements.
The general fund provides financing to other funds by making equity interfund transfers, providing loans, or making up a deficit in an enterprise fund.
The budget for the general fund formally recorded accounting system.
The general fund is considered an operating “catch-all” fund for certain operating items not reported in other governmental funds.
36. The Town of Seabreeze adopted its budget for the year ended December 31, Year 1. The town formally integrates its budget into its accounting records. In journalizing its budget, the town would record:
A credit to appropriations control.
A debit to reserve for encumbrances.
A credit to reserve encumbrances.
A debit to appropriations control.
37. Which of the following would be reported as program revenues on a local government’s government-wide statement of activities?
Charge for service.
Taxes levied for a specific function.
Proceeds from the sale of a capital asset used ‘or a specific function.
Interest revenues.
38. Which of the following does not affect an internal service fund’s change in net position?
Due from other funds.
Depreciation expense on its fixed assets.
Interfund transfers in.
Interfund transfers out.
39. Lemonville Township issued $75,000 of bond anticipation notes at face amount the current fiscal period. The proceeds were recorded in the capital projects fund. These notes are due within one year. Lemonville intends to repay the bond anticipation notes with a bond issue. Lemonville has taken legal steps to refinance the notes on a long-term basis. Under these circumstances, what account should be credited the capital projects fund?
Other financing notes payable.
Revenue control.
Bond anticipation notes payable.
Tax anticipation notes payable.
40. On what accounting basis does GASB recommend that governmental fund budgets be prepared?
Modified accrual
Accrual.
Cash
Modified cash.
41. Elm City issued a purchase order for supplies with an estimated cost of $5,000. When the supplies were received, the accompanying invoice indicated an actual price of $4,950. What amount should Elm debit (credit) to the budgetary control after the supplies and invoice were received?
$5,000
$50
$4,950
42. The statement of activities of the government-wide financial statements is designed primarily to provide information to assess which of the following?
Operational accountability
Financial accountability
Fiscal accountability
Accountability