Homework 4

1. Which Of the following is one Of the three standard sections of a governmental comprehensive annual financial report?

Statistical.          

Actuarial.            

Investment.       

Single audit.

 

 

2. Jonn City entered ‘Ito a lease agreement representing a contract that transfers ownership for equipment during the year. How should the asset obtained through the lease be reported in Jonn City’s government-wide statement of net position?

General capital asset     

Other financing use        

Expenditure       

Not repotted

 

 

3.  Receipts from a special tax levy to retire and pay interest on general obligation bonds should be recorded in which fund?

Debt service.     

General.              

Capital projects.

Special revenue.

 

4.  Which of the following is the measurement focus and basis of accounting for the government-wide financial statements?

Economic resources                      Accrual 

Economic resources                       Modified accrual            

Current financial resources           Accrual              

Current financial resources          Modified accrual

 

5. Large City does not use the modified approach to account for roads. At the beginning of the current year, the spent $800,000 on new roads. The roads have a 20-year useful life. What amount should City report as an expense related to the new roads in the Statement of activities for the current year?

$40,000              

$0         

$20,000              

$800,000

 

 

6. The format for the presentation of the statement of financial position for a fiduciary fund adheres to the following equation:

Assets and deferred outflows of resources minus liabilities and deferred inflows of resources equals net position.        

Assets and deferred outflows of resources equals liabilities and deferred inflows of resources plus fund balance.      

Assets and deferred inflows of resources minus liabilities and deferred outflows of resources equals net position.        

Assets and deferred inflows of resources minus liabilities and deferred outflows of resources equals fund balance.

 

 

7. Nack City received a donation of a valuable painting. Nack planned to add the painting to its collection and display it in the protected exhibition area of city hall. Nack had a policy that if such donated art works were sold, the proceeds would be used to acquire other items for its collections. Which of the 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 capitalized but not depreciated.              

May capitalized, but is not and it must be depreciated.

 

 

8.  Cabot Township’s Water and Sewer Fund had $40,000 operating income and a total change in net position of 150,000. The Water and Sewer Fund ago had the following transactions either derived from a comparison Of current and prior year Statements of Net Position or displayed on the current year Statement Of Activities:

Increase in current assets other man cash                                                                                        $30,000

Increase in current liabilities including the $15,000 current portion of revolving debt                50,000

Depreciation expense                                                                                                                             70,000

Gain on disposal of fixed assets                                                                                                           2,000                                                                                                                       

Cash flows from operating activities would to what amount?

$115,000            

$130,000            

$132,000            

$242,000

 

 

9.    A city received a $9,000,000 federal grant to finance the construction of a homeless shelter. In which hind should the proceeds be recorded?

Capital project. 

Permanent.        

General.              

Special revenue.

 

 

10.  GASB 34 establishes financial reporting for state and local government. Basic financial statements and required supplementary information for general purpose governments should of:

Management’s Discussion and Analysis , Basic Financial Statements and Required Supplementary Information.      

Liftable financial statements, notes to the financial statements. and statistical schedules.              

General purpose financial statements, notes to the financial Statements. combining financial statements and statistical.          

Basic financial and required supplementary information introduced after the financial statements.

 

 

11. Revenues that are legally restricted or committed to expenditures for specified purposes should be accounted for in special revenue funds, including

Gasoline taxes to finance road repairs.   

Accumulation of resources for payment of general long-term debt principal and interest.              

Pension trust fund revenues.      

Proprietary fund revenues.

 

A city government reported a $9,000 increase in net position in the motor pool internal service fund, a $12,000 increase net position in the water enterprise fund and a $7,000 increase in the employee pension fund, The motor pool internal service Kind provides service primarily to the police department amount should the city report as the change in net position for business-type activities in its statement of activities?

$12,000              

$9,000

$21,000              

$28,000

 

 

12.  Kew City received a $15,000,000 federal grant to finance the construction of a center for rehabilitation of drug addicts. The proceeds of this grant should be accounted for in the:

Capital projects funds.   

Special revenue funds.  

General fund.    

Fiduciary funds.

 

 

13.  Which event(s) should be included in a statement of cash flows for a governmental entity?

1. Cash inflow from issuing bonds to finance city hall construction.
2. Cash outflow from a city utility representing payments in lieu of property taxes.

II only.  

Both I and ll.      

Neither I nor ll. 

I only.

14.  Central County received proceeds from various towns and cities for capital projects financed by the county’s long-term debt. A special tax was assessed by each local government, and a portion of the tax was properly restricted to repay the long-term debt of the county’s capital projects. Central County should account for the restricted portion of the special tax in which of the following funds?

Debt service fund            

Internal service fund      

Enterprise fund 

Capital projects fund

 

 

15.  At the end of the fiscal year, a state government reported capital assets of $20 million, accumulated depreciation of $5 million, restricted assets of $3 million, and liabilities of S7 million. What amount should the government report as the total net position in its government-wide financial statements?

$11 million         

$8 million           

$15 million         

$18 million

16.  The portion of special assessment debt maturing in five years, to be repaid from general resources of the government. should be reported in the:

Government-wide statement of net position.      

General fund.    

Capital projects fund.     

Custodial fund.

 

 

17.   Howard Township’s Water & Sewer fund transferred funds as payments in lieu of taxes  to the Township’s General Fund. What category would Howard use to classify cash disbursements for this activity on its Water & Sewer enterprise fund statement of cash flows?

Operating activities.       

Noncapital financing activities.  

Capital and financing.    

Investing activities.

 

 

18.   The statement of activities in the government-wide financial statements includes which of the following?

Separate columns for governmental activities, business-type activities, and discretely presented component units.      

Separate columns for each major governmental fund.     

Separate columns for each nonmajor governmental fund.            

A separate section at the bottom of the statement that shows program and general revenues.

 

19   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       

Functional accountability

 

 

20.   Chase City’s uses an internal service fund for its central motor pool. The assets and liabilities account balances for this fund that are not eliminated normally should be reported in the government-vide statement of net position as:

Governmental activities.              

Business-type activities.

Fiduciary activities.         

Note disclosures on only.

 

 

21. In preparing government-wide financial statements for a governmental entity interfund receivables and payables between governmental and enterprise funds should be:

Reported as internal balances.   

Reported as reservations of fund balance.           

Reported as additions to or reductions from the unrestricted balance.    

Reported as amounts due to and due from other funds.

22.   Which of the following statements is correct concerning a governmental entity‘s statement of cash flows?

Cash flows from capital financing activities are reported separated from cash flows from non-capital financing activities. 

The statement format is the same as that of a business enterprise’s statement of cash flows.              

Cash flows from operating activities may use the indirect method.            

The Statement format includes columns for the general, governmental, and proprietary Kind types.

 

 

23.  A municipality preparing its basic financial statements and required supplementary information accordance with GASB #34 would introduce the basic financial statements and provide analytical overview of the government’s financial statements in:

A section titled Management’s Discussion arid Analysis as part of the city’s required supplementary information before the basic financial statements.            

A section titled Management’s Discussion and Analysis only in the event that the basic financial statements are issued in connection with a bond offering.          

A section titled Discussion and Analysis included as part of city’s required supplementary information following the financial statements.  

A section titled Management’s Discussion and Analysis included as part of the city’s optional supplementary information immediately following the notes to the financial statements but before the required supplementary information.

 

 

24.  Land and other real estate held as investments by endowments in a permanent fund should be reported at:

Fair value.          

Historical cost   

The lower of cost and net realizable value.          

Fair value less costs of disposal

 

 

25.  The citizens of the Century City’s Central Heights subdivision an enhanced general stormwater management infrastructure for their community. The City Council of Century City agreed to the installation of improvements including culverts, and underground water management in the community. They issued a general obligation bond supported by the full faith and credit of the city, but payable from a pledge of revenues from a special assessment on the Central Heights subdivision homeowners, levied specifically for the repayment of the Century City would most likely account for the receipts from the special assessment in a(n):

Debt Service Fund.          

Custodial Fund. 

Special Revenue Fund.   

Special Assessment Fund.

 

 

26. Lake County received the following proceeds that are legally restricted to expenditure for specified purposes

Levies on affected property owners to install sidewalks                                                $500,000

Gasoline taxes to finance road repairs                                                                                  900,000

What amount should be accounted for in Lake’s special revenue funds?

$900,000            

$1,400,000        

$500,000            

$0

 

 

27.  Capital assets donated to a governmental unit should be recorded:

At estimated fair value when received.   

At the lower of the donor’s carrying amount or estimated fair value when received.         

As a memorandum entry only.   

At the donor’s carrying amount.

 

 

28.  The City of Maple sold a municipal building that formerly housed its parks and recreation facilities (a general governmental asset) for $250,000. The building had a historical cost of $185.000 and accumulated depreciation of $45,000. In its reconciliation of the governmental fund change in fund balance to the change in net position displayed for governmental activities on the government-wide statement of activities. how should this transaction be displayed?

$140.000 subtraction     

$185,000 subtraction     

$250,000 addition           

$45.000 addition

 

 

29.  Lisa County issued $5,000,000 of general obligation bonds at 101 to finance a capital project. The $50,000 premium was to be used for payment of principal and interest This transaction should be accounted for in the:

Capital projects funds, debt service funds and as assets and liabilities in the government-wide financial statements.           

Capital projects funds and debt service funds only.          

Debt funds and general long-term debt only.      

Debt service funds only.

 

 

30.   In Year 1, Palm City acquired, through forfeiture as a result of nonpayment of taxes, a parcel of Land that the city intends to use as a parking for governmental purposes. The total amount of taxes. liens, and other costs incurred by Palm incidental to acquiring ownership and perfecting title was $20,000 The lands fair market value at the forfeiture date was $560,000. What amount should Palm City relative to governmental activities?

$20,000              

$0         

$60,000              

$80,000

 

 

31.   During the current year, Wythe County levied $2,000,000 property taxes, 1% of which is expected to be uncollectible. During the year, the county collected $1,800,000 and wrote off $15,000 as uncollectible. What amount Should Wythe County report as property tax revenue in its government-wide statement of activities for the current year?

$1,800,000        

$1,980,000        

$1,800,000        

$2,000,000

 

 

32.   Foster Township property taxes to subsidize the ongoing operations of its Water & Sewer Fund. What category would Foster use to classify cash receipts from property taxes on its Water & Sewer enterprise fund statement of cash flows?

Noncapital financing activities.  

Capital and related financing activities.  

Investing activities.         

Operating activities.

 

 

33.  A city government levies a tax on its citizens for improvements to roads. How should the cay 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.

 

 

34. Japes City issued $1,000,000 general obligation bonds at 101 to build a new city hall. As part of the bond issue, the city also paid a $500 underwriter fee and $2,000 in debt issue costs. What amount should Japes City report as other financing sources?

$1,010,000        

$1,008,000        

$1,007,500        

$1,000,000

 

 

35. South City School District has a separately elected governing body that administers the public school system, The district’s budget 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.   

Blending only.   

Inclusion as a footnote only.       

Either blending or inclusion as a footnote.

 

 

36.  Cal City maintains several major fund types. The following were among Cal’s cash receipts during the current year.

Unrestricted state grant                                                                                          $1,000,000

Interest on bank accounts held for employees’ pension plan                              200,000

What amount of these cash receipts should be accounted for in Cal’s general fund?

$1,000,000        

$1,200,000        

$200,000            

$0

 

 

37. Which of the following activities should be excluded when governmental fund financial statements are converted to government-wide financial statements?

Fiduciary activities.         

Proprietary activities.    

Government activities.  

Enterprise activities.

 

 

38.  Which Of the following funds of a local government would report transfers to other funds as an other financing use?

General.              

Enterprise.         

Internal service.

Pension trust.

 

 

39.  If a primary government’s general fund has an equity interest in a joint venture, all or a portion of this equity interest should be repotted in the:

Government-wide statement of net position.      

Trust fund.         

Custodial fund. 

Internal service fund.

 

 

40.   Cash receipts from grants and subsides to decrease operating deficits should be in which of the following sections of the statement of cash for governmental. not-for-profit entities?

Noncapital financing.     

Capital and related financing.     

Operating.          

Investing.

 

 

41. A city’s water division generated $1.5 million in revenue. It reported expenses of $1 million, which included $200,000 paid to an internal service fund. The water division also transferred $50,000 to the general fund. What amount the water division’s change in net on the statement of expenses, and changes in fund net position?

$450,000            

$250,000            

$450,000            

$500,000

 

 

42.    A city government would report each of the following categories in its government-wide statement of net position except:

Fiduciary activities.         

Governmental activities.              

Business-type activities.

Component units.

 

 

43. In the comprehensive annual financial report for a government entity, the statistical section of the report should include selected financial data for the past _ years?

10          

3            

5            

8

 

 

44. Marta City’s school is a legally separate entity but two of is seven board members are also City Council members and the district is financially dependent upon the city. The school district should be reported as a:

Discrete presentation.   

Blended unit.    

Note disclosure.              

Primary government.

 

 

45.   Jordon Township’s Water & Sewer fund received interest earnings off its invested funds, what category would Jordon use to classify cash receipts from these earrings on its Water Sewer enterprise fund statement of cash flows?

Investing activities.         

Operating activities.       

Noncapital financing activities.  

Capital and related financing activities.

 

 

46.  Government-wide financial statements would include all government-wide activities associated with operational accountability for all activities, except:

Fiduciary Activities.        

Governmental Activities.             

Business-type Activities.               

Component Unit Activities.

 

 

47   Which of the following funds data should be reported as part of local governments’ governmental activities column in its government-vide statements?

Debt service      

Custodial            

Private-purpose trust     

pension trust

 

 

48.   Which format must an enterprise fund use to report cash flow operating activities in the statement of cash flows?

Direct method. 

Indirect method, beginning with operating income.         

Indirect method, beginning with change in net assets.    

Either direct or indirect method.

 

 

49.    Grove Township issued $50,000 of bond anticipation notes at face amount in Year 1 and placed the proceeds into its capital projects fund. All legal steps were taken to refinance the notes, but Grove was unable to consummate refinancing. In the capital projects fund, what account should be credited to record the $50 ,000 proceeds?

Bond anticipation notes payable.             

Other financing sources control.

Revenues control.           

Deferred inflows of resources.

 

 

50.   Stone Corp. donated to Pine City and stipulated that the income from the investments be used to acquire art for the city’s museum. Which of the following funds should be used to account for the investments?

Permanent fund.             

Endowment fund.           

Special revenue fund.    

Private purpose trust fund.

 

 

51.   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 used 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 fttnd for the payment of principal and interest. On June 30, Year 1, Finch’s debt service find should include interest payable on the general obligation bonds for.

O months.          

3 months.           

4 months.           

6 months.

 

 

52.  How should a local governments internal service fund report depreciation expense in its fund financial statements?

Operating expense.        

Nonoperating expense. 

Separate from revenues and expense.    

Not reported.

 

 

53. The following financial resources were among those received by Seco City during Year 1:

For acquisition of major capital facilities                                                                                           $6,000,000

To create a nonexpendable trust to support a public cemetery, perpetual care                       2,000,000

With respect to the foregoing resources, what amount should be recorded in special revenue funds?

$0         

$2,000,000        

$6,000,000        

$8,000,000

 

 

54.  the prescribed format for the presentation of the financial position of a governmental fund adheres to the following:

Assets and deferred outflows of resources equals liabilities and deferred inflows of resources plus fund balance       

Assets and deferred inflows of resources minus liabilities and deferred outflows of resources equals net position         

Assets and deferred inflows of resources minus liabilities and deferred outflows of resources equals fund balance       

Assets and deferred outflows of minus and inflows of equals fund balance

 

 

55.  Which of the following statements describes a characteristic of the capital projects fund?

The life of the capital projects fund is short and is limited to a construction period of one to three years.       

Capital project funds cannot be used for leased projects.              

Capital project funds cannot be used for special assessment projects.      

Capital project fund expenditures are usually entirely classified as capital Outlays and are subject to depreciation.

 

 

56.  Maple Township issued the following bonds during the year ended June 30, Year 1:

Bonds issued for the garbage collection enterprise fund that will service the debt                $500,000

Revenue bonds to be repaid from admission fees collected by the Township zoo enterprise fund. 350,000

What amount of these bonds should be accounted for in Maple’s non-current liabilities in the governmental activities column of the government-wide statement of net position?

$0         

$350,000            

$500,000            

$850,000

 

 

57. In the statement of activities for a governmental entity, revenues such as charges for building permits, garbage collection, and dog licenses are reported as which of the following?

Program revenues in the category “Charges for Services”              

Program revenues in the category “Capital Grants and Contributions”      

General revenues in the category “Charges for Services”

General revenues in the category “Capital Grants and Contributions”