Test bank advanced accounting 10e by beams chapter 19

In the general fund, capital projects fund and general fixed asset group.. Capital improvement costs incurred for general government special assessments projects require recognition in t

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Chapter 19 Test Bank

ACCOUNTING FOR STATE AND LOCAL GOVERNMENTAL UNITS -

GOVERNMENTAL FUNDS

Multiple Choice Questions

LO1

1 When a capital lease is used to acquire general fixed assets,

the governmental fund acquiring the fixed assets records a(n) at the _

a expenditure, lease payment cost

b fixed asset, lease payment cost

c expenditure, present value of the minimum lease payments

d fixed asset, present value of the minimum lease payments LO1

2 The estimated revenues control account of Star City general

fund is eliminated when

a the city’s tax receipts are measurable and available

b the budget is recorded

c appropriations are made

d budgetary accounts are closed

LO1

3 When recording an approved budget into the general fund, which

of the following accounts would be credited?

LO1

4 A fund balance increase resulting from an operating transfer to

a governmental fund would have a

a credit to other financing sources

b debit to other financing sources

c credit to revenues

d debit to revenues

LO2

5 The proceeds from a bond issuance for the building of a new

public school should be recorded in the fund at the time the bonds are sold The fund balance increase is classified as

a capital projects, revenues

c general, other financing sources

d capital projects, other financing sources

LO2

6 A fire station that the city of Plenty constructed many years

ago is sold and is accounted for as an other financing source Where should entries be made?

a In the general fund only

b In the general fund and capital projects fund

c In the general fund, capital projects fund and general fixed asset group

d In the special revenue fund

LO2

7 Capital improvement costs incurred for general government

special assessments projects require recognition in the

a spending more than an appropriation

b making unreasonable appropriations

c spending more than deferred revenue

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LO3

9 The proper sequence of events is

a order, appropriation, encumbrance, expenditure

b order, encumbrance, expenditure, appropriation

c appropriation, encumbrance, order, expenditure

d appropriation, order, encumbrance, expenditure

LO3

10 According to the GASB Codification, the "collected soon enough

after year-end to pay liabilities for current expenditures" criterion for revenue recognition means collected within a period not exceeding

a 30 days after the fiscal year end

b 60 days after the fiscal year end

c 90 days after the fiscal year end

d 120 days after the fiscal year end

LO3

11 Which of the following approaches is used to recognize

governmental fund revenues?

a The gross amounts earned approach

b The gross amounts levied approach

c The net of estimated uncollectible accounts approach

d The net of related expenditures approach

LO3

12 At any point in time, a government will be able to spend an

amount equal to

a appropriations minus expenditures

b appropriations minus expenditures minus encumbrances

c appropriations minus encumbrances

d expenditures minus encumbrances

LO4

13 Which of the following items would be presented in a Statement

of Revenues, Expenditures, and Changes in Fund Balance?

c Other financing sources

d Unreserved fund balance

LO4

14 Which of the following funds has similar accounting and

reporting to the special revenue fund?

a The proprietary fund

b The trust fund

c The general fund

d The agency fund

LO4

15 Which financial statement(s) is (are) required for governmental

funds with legally adopted annual budgets?

I The statement of cash flows

II The statement of revenues, expenditures and changes in fund balance-budget and actual

16 Which statement below is correct with respect to the general

fund financial statements?

a A budgetary comparison must be presented

b Encumbrances must be included on the statements

c Capital leases must be included on the statements

d All governmental fixed assets and long-term debt must be included on the statements

c general government expenses

d capital outlay expenditures

LO5

18 Infrastructure costs in government-wide financial statements

a must be recorded and depreciated by government

b may be recorded and depreciated at the option of government

as long as footnote disclosures are made

c must be recorded and depreciated by a government unless a modified approach is used, in which case, depreciation is optional

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LO5

19 All of the following government fund items must be reconciled

in government-wide financial statements except

20 Which statement below is incorrect with respect to the

government wide financial statements?

c Capital leases must be included on the statements

d All governmental fixed assets and long-term debt must be included on the statements

LO1

Exercise 1

The City of Sharpesburg entered the following transactions during 2006:

1 The city authorized a bond issue of $2,500,000 par to finance

construction of a fountain in the city square The bonds were issued for $2,560,000 The premium was transferred to the fund for which the debt will be serviced

2 The city entered into a contract for construction of the fountain

at an estimated cost of $2,425,000

3 The city received and paid a bill for $2,445,000 from the

contractor upon completion of and approval of the fountain

4 The unused bond proceeds were set aside for debt service on the

bonds Accordingly, those resources were paid to the appropriate fund

Required:

Prepare journal entries for each of the above transactions Identify the appropriate fund or funds used by Sharpesburg

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LO1

Exercise 2

1 The city issued $6 million of refunding bonds at par

2 The city transferred $3,700,000 from its General Fund to its Debt Service Fund to provide the additional resources needed to defease the bonds in substance

3 The city paid $9,700,000 into an irrevocable trust established at the First Seaside Bank to defease the bonds in substance

Prepare journal entries to record the following grant-related

transactions for a municipality special revenue fund

1 Awarded an operating grant from the state, $2,500,000 (cash will

be received after qualified expenditures are made)

2 Incurred and paid qualifying expenditures on the grant program,

$1,600,000

3 Received a federal grant to finance construction of a new school,

$4,500,000 (cash received in advance)

4 Incurred and paid construction cost on the school building,

$3,000,000

LO1

Exercise 4

The general fund trial balance for Overland City held the following

balances at September 30, 2006, just before closing entries were

made:

Required

Prepare the necessary closing entries

LO1

Exercise 5

The general fund trial balance for Owens Creek City held the

following balances at June 30, 2006, just before closing entries were

made:

Required

Prepare the necessary closing entries

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LO1&2

Exercise 6

El Dorado County incurred the following transactions during 2006:

1 Marketable securities were donated to support the county's bike

and nature trails The donor acquired the securities for $35,000 ten years earlier; however, their current market value was

$200,000 The donor specified that all income from the

securities be used for the trails The principal is to be held intact for an indefinite period of time

2 Computer equipment was ordered for general fund departments The

estimated cost was $48,000

3 The county received the computer equipment The actual cost was

$47,750, of which $42,000 was paid to the vendor before end

year-4 The county sold a (general government) dump truck that originally

cost $55,000 The county sold the truck at auction for $3,300

5 The government leased equipment under a capital lease agreement

The capitalized cost was $120,000 The county made an initial down payment of $10,000

Required:

Prepare journal entries for each of the above transactions Identify the appropriate fund or funds used by El Dorado County

LO1&2

Exercise 7

Johnson County incurred the following transactions during 2006:

1 The county authorized a new general obligation bond issue of $5 million par to purchase an office building with a contract price of

$4,975,000 The bonds were issued for $4,960,000

2 The county levied real property taxes of $10,000,000 Sixty per cent of the taxes levied were for local municipal governments By fiscal year-end, 85% of the taxes were collected and remitted to the municipalities Two per cent of the total levy was estimated to

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LO3

Exercise 8

Address the following situations separately

1.For the budgetary year beginning July 1, 2006, Center Township expected the following cash flow resources:

Property taxes, licenses, and fees $3,000,000

Proceeds of debt issue 1,000,000

Interfund transfers from debt service 750,000

In the budgetary entry, what amount did Center Township record for estimated revenues?

2 During the fiscal year ended June 30, 2006, Pacific City issued purchase orders totaling $7,000,000 Pacific City received

$6,500,000 of invoiced goods at the encumbered amounts and paid

$6,100,000 toward them before year-end

How much were Pacific City's encumbrances on July 1, 2006?

3.The following information pertains to property taxes levied

($1,035,000 total) by Palm Lake City for the calendar year 2006: Expected collections during 2006 $750,000

Expected collections in first 60 days of 2007 200,000

Expected collections during the remainder of 2007 50,000

Expected collections during January 2008 30,000

Other financing sources 1,000,000

Other financing uses 3,000,000

Revenues 9,000,000

At what amount will Dodge City's total fund balance increase

(decrease) in 2006?

LO4

Exercise 9

The following information regarding the fiscal year ended September

30, 2006, was drawn from the accounts and records of the Jasper

County general fund:

Revenues and other asset inflows:

Expenditures and other asset outflows:

Payment to debt service fund to cover future debt

Required

Prepare a statement of revenues, expenditures, and

changes in fund balance for the Jaspar County general

fund for the year ended September 30, 2006

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LO4

Exercise 10

The unadjusted trial balance for the general fund of the City of

Pegasus at June 30, 2006 is as follows:

Supplies on hand at June 30, 2006 totaled $8,000 The

$60,000 encumbrance relates to equipment ordered but

not received by fiscal year-end

Required

Prepare a balance sheet for the general fund of the

City of Pegasus at June 30, 2006

Multiple Choice Questions

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Other financing uses-payment to

refunded bond escrow agent 6,000,000

Other financing sources-

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Unreserved fund balance 4,950

Unreserved fund balance 7,900

Vouchers payable 5,750

4

GF

Other financing sources-proceeds from

sale of general fixed assets 3,300

5

GF

Other financing sources-increase in

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4.Dodge City

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Exercise 9

Jasper County General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance

For the Year Ended September 30, 2006 Revenues:

Other financing sources (uses):

Excess of revenues and other financing sources

over (under) expenditures and other

Exercise 10

City of Pegasus General Fund Balance Sheet June 30, 2006 Assets:

Fund Balance:

Computation of Unreserved Fund Balance: