Acct 4421 Midterm Review Exam #1 Questions with Correct
Answers
When Capitol City makes its annual lease payment on an unpaid lease obligation,
the journal entry for the debt service fund accounts will include: - ✔✔A debit to
Expenditures - Principal of Lease Obiligation
Premiums received on tax-supported bonds are generally transferred to what
fund? - ✔✔Debt Service
A liability is recorded in governmental funds when: - ✔✔Goods or services are
received, and the invoice is vouchered.
The town received a $5,000,000 endowment, the terms of which indicate that
earnings on the endowment are to be used by health and welfare to provide
vaccines to all citizens that are interested. Where would the $5,000,000 be
recorded? - ✔✔Permanent Fund
What is the process by which a legal valuation is placed on taxable property
called? - ✔✔Property assessment
When Capitol City makes its annual lease payment on an unpaid lease obligation,
the journal entry for the governmental activities accounts will include: - ✔✔A
debit to lease Obligation Payable
Which of the following is not a required disclosure about each major class of
capital assets? - ✔✔Capital acquisitions and sales or other dispositions during the
year showing the date and method of acquisition or disposition.
,For which of the following types of nonexchange transactions are revenues
recognized when all the eligibility requirements are met? - ✔✔Voluntary
nonexchange transactions.
The receipt of equipment that had previously been ordered should be recorded in
the General Fund as a debit to: - ✔✔Expenditures
In which of the following would it not be appropriate to record depreciation of
capital assets? - ✔✔Capital projects fund
The sale of revenue bonds by a water utility fund would be recorded: - ✔✔In an
enterprise fund as a liability.
The account "Interfund Transfers In" would be classified in a General Fund
statement of revenues, expenditures, and changes in fund balance as a(an): -
✔✔Other Financing source
The General Fund sent $750,000 to a debt service fund to cover principal and
interest costs. This transaction would be recorded in the governmental activities
journal as - ✔✔It would not be recorded since the transaction involves two
governmental funds.
Which of the following bases of accounting should be used in preparing fund
financial statements?
Governmental fundsProprietary fundsFiduciary funds
A)Modified accrual Accrual Modified accrual
B)Modified accrual Modified accrual Modified accrual
, C)Modified accrual Accrual Accrual
D)Accrual Accrual Accrual - ✔✔Choice C
In accounting for state and local governments the modified accrual basis is
required for - ✔✔Governmental Funds
Which of the following is not classified as a support activity reported by not-for-
profit entities? - ✔✔Program Expenses
GASB standards require that general capital assets be recorded in the
government-wide statements at: - ✔✔Historical Cost
When a government transfers the rights and obligations of an asset to another
legally separate governmental or private sector entity, the transaction is referred
to as: - ✔✔A service concession arrangement
The Town of Orleans purchased a truck for the parks department. If the
operations of the parks department are financed by general revenues, which of
the following is correct concerning where the capital asset would be recorded? -
✔✔General Fund: No; Governmental Activities: Yes
Under the modified accrual basis of accounting used by the General Fund,
financial resources are considered available if the revenue or other financing
source is expected to be collected - ✔✔During the current fiscal period or soon
enough after year-end to pay current period obligations.
Answers
When Capitol City makes its annual lease payment on an unpaid lease obligation,
the journal entry for the debt service fund accounts will include: - ✔✔A debit to
Expenditures - Principal of Lease Obiligation
Premiums received on tax-supported bonds are generally transferred to what
fund? - ✔✔Debt Service
A liability is recorded in governmental funds when: - ✔✔Goods or services are
received, and the invoice is vouchered.
The town received a $5,000,000 endowment, the terms of which indicate that
earnings on the endowment are to be used by health and welfare to provide
vaccines to all citizens that are interested. Where would the $5,000,000 be
recorded? - ✔✔Permanent Fund
What is the process by which a legal valuation is placed on taxable property
called? - ✔✔Property assessment
When Capitol City makes its annual lease payment on an unpaid lease obligation,
the journal entry for the governmental activities accounts will include: - ✔✔A
debit to lease Obligation Payable
Which of the following is not a required disclosure about each major class of
capital assets? - ✔✔Capital acquisitions and sales or other dispositions during the
year showing the date and method of acquisition or disposition.
,For which of the following types of nonexchange transactions are revenues
recognized when all the eligibility requirements are met? - ✔✔Voluntary
nonexchange transactions.
The receipt of equipment that had previously been ordered should be recorded in
the General Fund as a debit to: - ✔✔Expenditures
In which of the following would it not be appropriate to record depreciation of
capital assets? - ✔✔Capital projects fund
The sale of revenue bonds by a water utility fund would be recorded: - ✔✔In an
enterprise fund as a liability.
The account "Interfund Transfers In" would be classified in a General Fund
statement of revenues, expenditures, and changes in fund balance as a(an): -
✔✔Other Financing source
The General Fund sent $750,000 to a debt service fund to cover principal and
interest costs. This transaction would be recorded in the governmental activities
journal as - ✔✔It would not be recorded since the transaction involves two
governmental funds.
Which of the following bases of accounting should be used in preparing fund
financial statements?
Governmental fundsProprietary fundsFiduciary funds
A)Modified accrual Accrual Modified accrual
B)Modified accrual Modified accrual Modified accrual
, C)Modified accrual Accrual Accrual
D)Accrual Accrual Accrual - ✔✔Choice C
In accounting for state and local governments the modified accrual basis is
required for - ✔✔Governmental Funds
Which of the following is not classified as a support activity reported by not-for-
profit entities? - ✔✔Program Expenses
GASB standards require that general capital assets be recorded in the
government-wide statements at: - ✔✔Historical Cost
When a government transfers the rights and obligations of an asset to another
legally separate governmental or private sector entity, the transaction is referred
to as: - ✔✔A service concession arrangement
The Town of Orleans purchased a truck for the parks department. If the
operations of the parks department are financed by general revenues, which of
the following is correct concerning where the capital asset would be recorded? -
✔✔General Fund: No; Governmental Activities: Yes
Under the modified accrual basis of accounting used by the General Fund,
financial resources are considered available if the revenue or other financing
source is expected to be collected - ✔✔During the current fiscal period or soon
enough after year-end to pay current period obligations.
