Governmental and Nonprofit Accounting Exam 1 (with Complete Solutions)

Which of the following is a characteristic of a Special Revenue Fund that differentiates it from a General Fund? correct answers A SRF is established only if a revenue source is restricted or committed to expenditure for a specific purpose other than debt service and capital outlay. The net revenue approach can be described as correct answers The approach used to account for uncollectible revenues in both governmental and proprietary funds. Which of the following statements is true concerning assigned fund balance? correct answers Assigned fund balance reflects a government's intent to use resources for a specific purpose The GAAP based statements that are required to be presented for the General Fund are: correct answers Balance sheet and Statements of Revenues, Expenditures, and Changes in Fund Balances In the Statement of R, E, and C in FBs, transfers must be reported correct answers in a section immediately following the excess of revenues over/under expenditures The minimum expenditure classifications required in the basic financial statements for governmental funds are correct answers fund and function or program Which fund balance category is affected by having inventory and prepaid items at year end? correct answers Nonspendable fund balance Which fund balance category may be increased by encumbrances outstanding? correct answers Assigned fund balance Which of the following activities would most likely be accounted for in a nonexpendable (proprietary) fund? correct answers Water Operations Expenses and expenditures are least likely to differ in amount for which type of transactions? correct answers Salaries Expenditures in a governmental (expendable) fund would potentially include correct answers Salaries/Wages, Capital Outlay, LT Debt Principal Retirement, LT debt interest The General Capital Assets nonfund account would be used to account for correct answers Capital assets acquired with governmental fund resources that will be used in governmental fund activities. Assume that the city of Wakefield purchased a tract of land to be used as a public park. The purchase was financed with proceeds from a five-year note issued by a local lending institution. The park itself will not be ready for public use, however, for at least two years. At the date of