Professional Documents
Culture Documents
Multiple Choice
1.
To what extent should fund or fund type data be displayed on the face of
government-wide financial statements?
a. Information should be displayed for the government as a whole, but
individual funds or fund types should not be displayed
b. Information should be displayed by fund type, with a total for the
government as a whole
c. Information should be displayed by major fund, with a total for the
government as a whole
d. Information should be displayed by major fund, except for fiduciary funds
Answer: a
2.
Answer: c
3.
How should the difference between assets, deferred outflows, deferred inflows,
and liabilities be characterized in government-wide financial statements?
a. as fund balances
b. as net position
c. as fund equity
d. as available for spending
Answer: b
4.
Answer: c
5.
Answer: c
6.
Answer: b
7.
A city health department charges fees for copies of birth certificates provided to
its citizens. How should those fees be reported in the government-wide statement
of activities?
a. as a separate item of revenue in the revenue section
b. as a direct reduction of the expenses of the health department
c. as an element of program revenues, which reduce gross expenses of the
health department
d. as a special item
Answer: c
8.
A city government levies property taxes that are recorded directly into a Debt
Service Fund, rather than the General Fund. How should those property taxes be
reported in the government-wide statement of activities?
a. as property tax revenue in the general revenues section
b. as a direct reduction of interest expenses in the functional expense section
c. as an element of program revenue, which reduce gross interest expenses
d. as a negative expense, which is then allocated to all functions or programs
Answer: a
9.
How should Internal Service Fund (ISF) activities be reported in the governmentwide statement of activities?
a. ISF activities should be reported in a separate column
b. ISF activities should be included in the column headed "business-type activities."
c. ISF activities should be included in the column headed "governmentaltype activities."
d. ISF activities (revenues and expenses) should be eliminated and interfund
profits or losses should be eliminated by decreasing or increasing the costs
of the activities that were billed
Answer: d
10.
Merchants remit $800,000 to a county government in calendar year 2013 for sales
taxes collected in 2013. In January, 2014, they send the county an additional
$25,000 applicable to the year 2014. Based on past experience, the county expects
to receive an additional $15,000 later in 2014, but applicable to 2013. How much
should the county recognize as sales tax revenues when it prepares its fund and
government-wide financial statements?
Fund
Government-wide
Statements
Statements
a.
$800,000
$800,000
b.
$800,000
$840,000
c.
$825,000
$825,000
d.
$825,000
$840,000
Answer: d
11.
An Internal Service Fund (ISF) provided services to two agencies financed by the
General Fund -- the Tax Department (which it billed $200,000) and the
Comptroller's Office (which it billed $100,000). In the fund financial statements,
the ISF reported a loss of $30,000. How should this information be reported in the
government-wide statement of activities?
a. Under "business-type activities," in a separate line captioned ISF,
revenues of $300,000, expenses of $330,000, and net expenses of
($30,000) should be reported
b. Under "governmental-type activities," in a separate line captioned ISF,
revenues of$300,000, expenses of $330,000, and net expenses of
($30,000) should be reported
c. ISF activities should not be reported, but expenses reported for the Tax
Department and the Comptroller's Office should be increased by $20,000
and $10,000, respectively
d. ISF activities should not be reported, but expenses reported for the Tax
Department and the Comptroller's Office should be reduced by $20,000
and $10,000, respectively
Answer: c
12.
A county, that did not previously have a property tax levies a property tax for
$900,000 in December 2012. The tax is for the budget year January 1 - December
31, 2013. Because it sends out the bills on December 1, it actually collects
$500,000 in cash before December 31, 2012. It collects an additional $375,000 of
2013 property taxes during calendar year 2013, $20,000 during January 1 February 28, 2014, and the remaining $5,000 in June 2014. How much property
tax revenue should the county report in its 2013 fund and government-wide
financial statements?
Fund
Government-wide
Statements
Statements
a.
$375,000
$400,000
b.
$875,000
$900,000
c.
$875,000
$895,000
d.
$895,000
$900,000
Answer: d
13.
Answer: b
14.
Answer: b
15.
A city experienced several auto damage claims during its year ended December
31, 2012. The total amount claimed was $600,000. No cash was paid out in 2012.
However, claims totaling $200,000 were settled by December 31, 2012. These
claims were settled for $80,000, and were scheduled for payment on January 15,
2013. City attorneys felt that the remaining $400,000 of claims could be settled
during 2013 for about $160,000. How much should the city recognize as claims
expenses in its government-wide financial statements for 2012?
a. $0
b. $80,000
c. $240,000
d. $480,000
Answer: c
16.
Answer: b
17.
What is the general rule regarding use of the "consumption method" for
recognizing materials and supplies in fund-level and government-wide financial
statements?
Fund
Government-wide
Statements
Statements
a.
Optional
Required
b.
Optional
Optional
c.
Required
Required
d.
Required
Optional
Answer: a
18, 19, and 20. The following set of facts relates to questions 18 through 20: On July 1, 2012, a
city used tax resources of $70,000 to acquire three police cruisers. The police cars were expected
to have a useful life of three years, after which the salvage value would be $10,000.
18.
Answer: d
19.
Answer: d
20.
How much should the city report in its December 31, 2012, government-wide
financial statements as net position invested in capital assets, net of related debt?
a. $70,000
b. $60,000
c. $58,333
d. $10,000
Answer: b
21.
Just before the close of its fiscal year, a city government issues $2 million of
bonds to finance the acquisition of capital assets. However, no part of the debt is
repaid by year-end and no part of the debt is used to purchase capital assets. What
adjusting entry is needed to prepare the city's government-wide financial
statements from its fund-level financial statements?
a. No adjusting entry is needed
b. Available for capital assets
2,000,000
Bonds payable
2,000,000
c. Net investment in capital assets
2,000,000
Bonds payable
2,000,000
d. Other financing source - proceeds from bond issue 2,000,000
Bonds payable
2,000,000
Answer: d
22.
During its calendar year 2012, a city issued $800,000 of bonds to acquire various items of
capital equipment. By the end of 2013, the city had spent all the bond proceeds to
purchase capital assets. Accumulated depreciation on the assets was $120,000, and
$150,000 of the bonds had been paid off. How much should the city report in its
government-wide statement of net position as net investment in capital assets?
a. $0
b. $30,000
c. $630,000
d. $650,000
Answer: b
23.
Which of the following is a plausible explanation for the difference between the
net change in fund balances of governmental funds (fund-level statement of
revenues, expenditures, and changes in fund balances) and the change in net
position of governmental activities (government-wide statement of activities)?
a. Some expenses reported in the statement of activities do not require the
use of current financial resources and are not reported as expenditures in
the fund-level statements
b. Amounts reported as expenditures in the statement of activities are
reported as capital assets in the fund-level statements
c. Debt proceeds provide current financial resources in the statement of
activities, but are reported as long-term liabilities in the fund-level
statements
d. Depreciation of general fixed assets is not reported as an expense in the
statement of activities, but it is reported as an expense in the fund-level
statements
Answer: a
24.
Answer: c
25.
Which of the following is the most accurate statement regarding the depreciation
of general capital assets in the governmental activities column of the statement of
activities?
a. All general capital assets must be depreciated
b. General capital assets are not required to be depreciated
c. General capital assets should be depreciated, but financial statement
preparers may choose not to depreciate land and infrastructure assets
d. General capital assets should be depreciated, except for land and
infrastructure assets that are reported using the "modified approach."
Answer: d
26.
What is the general rule for reporting capital assets in the governmental activities
column of the government-wide statement of net position?
a. Capital assets are not reported in that column
b. Both proprietary fund and general capital assets are reported in that column
c. All general capital assets should be reported in that column
d. All general capital assets, except infrastructure assets, should be reported
in that column.
Answer: c
27.
What must a government do to avoid depreciating its infrastructure assets and still
meet the GASB's financial reporting standards?
a. have an asset management system and document that its assets are being
preserved at a condition level that it establishes and discloses
b. estimate the dollar amount of its infrastructure assets and report that
amount in the government-wide statement of net position
c. leave the dollar value of its infrastructure assets off both the governmentwide statement of net position and the governmental fund balance sheet
d. take a compete inventory of its infrastructure assets every year
Answer: a
28.
Answer: b
29.
Answer: c
30.
Which of the following elements properly will not be displayed as a specific item
in a government-wide statement of activities prepared by a city or county
government?
a. program revenues
b. interfund reimbursements
c. interest expense on long-term debt
d. the beginning net position balance(s)
Answer: b
31.
Jace Township's General Fund reports a balance due from another fund. This item
and the corresponding interfund liability will appear in Jace Township's
government-wide statement of net position only if the debtor fund is
a. an enterprise fund
b. a capital projects fund
c. an internal service fund
d. a permanent fund
Answer: a
32.
Answer: c
33.
Answer: a
34.
Answer: c
35.
Answer: c
36.
Tinsel Town has only two funds, the General Fund (GF), and a Capital Projects
Fund (CPF). Summarized operating statements for each of the funds for fiscal
2013 are as follows:
GF
CPF
Total
Revenues
$100
$ -$100
Expenditures
89
62
151
Bond proceeds
-70
70
Increase in fund balance
11
8
19
Beginning fund balance
52
0
52
Ending fund balance
63
8
71
The total net position balance for Tinsel Town's governmental activities at the end
of fiscal 2013 is
a. 63
b. 43
c. 68
d. 75
In 2013, Monks Town received a State grant of $300,000 that can only be used to
hire additional police officers. How should this revenue be reported in the Towns
government-wide statement of activities?
a. as a general revenue
b. as a program-specific capital grant
c. as a charge for services
d. as a program-specific operating grant
Answer: d
38.
The City of Bogue provides other postemployment benefits (OPEB) to its fulltime employees. The City uses an actuary to measure its obligation. Which of the
following should the City report as a liability in its government-wide statement of
net position?
a. the contribution it made to the OPEB plan during the year
b. the unpaid portion of medical benefits it expects to pay retirees for events
that happened during the year.
c. the cumulative difference between the annual accrual basis OPEB
expense, as determined by the actuary, less payments to retirees and
contributions to the OPEB plan
d. nothing. The liability should only be reported in the governmental fund
balance sheet.
Answer: c
Problems
39.
Required:
a. Calculate how much Regina County should report as motor pool
transportation expenses for each of its programs in its 2012 governmentwide statement of activities.
b. Assume the ISF assets are: Cash of $20,000; and Capital assets, net of
depreciation, of $180,000. Describe how the ISF assets are brought into
the government-wide financial statements.
Answer:
a. Intragovernmental "profit" percentage included in ISF billings:
Intragovernmental profit = $ 30,000 / $120,000 = 25%
Governmental program expenses after reduction for intragovernmental profit:
General government.
Public safety
Social service
Expenditures
Fund-level
statement
$ 60,000
10,000
30,000
$100,000
25%
Reduction
$15,000
2,500
7,500
$25,000
Expenses
Governmentwide statement
$45,000
7,500
22,500
$75,000
40.
Required:
a. Prepare journal entries so the foregoing information can be used in a work
sheet to prepare government-wide financial statements for the year ended
December 31, 2013.
b. Compute the amounts for the following statement elements as they will
appear in the government-wide financial statements for the year ended
December 31, 2013:
1. Depreciation expense (assume all assets acquired in 2013 were
acquired July 1 and all have a 10-year life)
2. Interest expense
3. Capital assets
4. Accumulated depreciation, capital assets
5. Interest payable
6. Bonds payable
7. Net investment in capital assets
Answer:
Part a. Journal Entries
a. Capital assets
Accumulated depreciation, capital assets
Net position
To report carry-over balances.
2,000,000
1,600,000
400,000
b. Capital assets
Expenditures - capital outlay
To report capital asset acquisitions.
640,000
640,000
c. Depreciation expense
232,000
Accumulated depreciation, capital assets
To report depreciation expense ([10% of 2,000,000]
+ 5% of 640,000)]
d. Proceeds of debt
Expenditures - bond principal
Bonds payable
To report outstanding bonds payable
e. Interest expense
Interest payable
To report accrued interest
(540,000 x 5% x 3 months)
232,000
600,000
60,000
540,000
6,750
6,750
232,000
21,750
2,640,000
1,832,000
6,750
540,000
268,000
900,000
35,000
935,000
(Note: This adjustment can be made in two entries, one of which carries
forward the December 31, 2012, liability of 900,000.)
b. Sales taxes receivable
Revenues - sales taxes
28,000
35,000
28,000
28,000
7000
(Note: Because the $800,000 of revenues reported in the 2013 fund statement
includes $28,000 accrued in the 2012 government-wide statement, only $7,000
additional revenue should be accrued for the 2013 government-wide statement.)
42.
Tax levy
Taxes collected in cash from the year's levy
Taxes expected to be collected in first
60 days of the following year
Taxes expected to be collected later in
the following year
2013
$700,000
$670,000
2014
$730,000
$690,000
$ 22,000
$ 29,000
$ 8,000
$ 11,000
Assume that all taxes expected to be collected in the following year were actually
collected when expected. Also assume that all journal entries to record the tax
levy, tax collections and so on were made, as appropriate.
Answer:
2013 Fund-level
Revenues - property taxes
Deferred revenues
2013 Government-wide
Deferred revenues
Revenues - property taxes
2014 Fund-level
Revenues - property taxes
Deferred revenues
2014 Government-wide
Deferred revenues
Revenues - property taxes
Net position
8,000
8,000
8,000
8,000
11,000
11,000
11,000
3,000
8,000
43.
Town of Catlettville
Government-Wide Adjusted Trial Balance
June 30, 2013
Cash and investments
Taxes receivable, net
Accounts receivable, net
$380,500
380,500
871,000
189,000
Inventories
74,950
Other assets
18,900
Capital assets
20,000,000
$10,500,000
Accounts payable
87,500
Deferred revenues
144,000
100,000
400,000
Net position
10,000,000
Revenuesproperty taxes
3,650,000
Revenues--other taxes
417,000
Investment revenues
94,500
Miscellaneous revenues
61,350
350,000
275,000
30,000
1,050,000
1,000,000
2,500,000
2,100,000
25,000
25,000
$27,159,350
$27,159,350
$380,500
380,500
871,000
189,000
Inventories
74,950
Other assets
18,900
1,534,350
9,500,000
Total assets
11,034,350
Current liabilities:
Accounts payable
87,500
Deferred revenues
144,000
100,000
331,500
400,000
Total liabilities
731,500
Net position
Net investment in capital assets
9,000,000
Unrestricted
1,302,850
$ 10,302,850
Expenses
Functions
General government
Charges
for services
$ 1,000,000
$ 350,000
Public safety
2,500,000
30,000
2,100,000
Operating
Grants
Capital Grants
$
$ 275,000
$5,625,000
650,000
2,195,000
$ 1,050,000
25,000
Totals
1,050,000
25,000
$ 380,000
$ 275,000
$ 1,050,000
3,920,000
General revenues
Property taxes
Other taxes
3,650,000
417,000
Investment revenues
94,500
Miscellaneous revenues
61,350
4,222,850
302,850
10,000,000
$ 10,302,850