Governmental and Nonprofit ACCT
CAPSTONE Exam with Questions Passed
100%
What is the JE for taxes when the govt deems it collectible? - ✔✔dr. taxes receivable
cr: revenue control & allowance for uncollectible taxes
How should an enterprise fund recognize revenue?
A. Enterprise funds do not have revenue.
B. They are counted for as additions to the fund (not revenue)
C. They should simply be recognized as op revenue from its normal ongoing activities. - ✔✔C
How should an agency fund recognize revenue?
,A. They do not have revenue.
B. They are counted for as additions to the fund (not revenue)
C. They should simply be recognized as op revenue from its normal ongoing activities. - ✔✔A
How should an permanent fund accountd recognize revenue?
A. They do not have revenue.
B. They are counted for as additions to the fund (not revenue)
C. They should account for the receipt of endowment principal that is donated to a government and is to
be held in trust for the benefit of the government (or of its citizens) as revenue. The value of the
revenue is based upon fair value and the assets should be reported at fair value.
D. They should simply be recognized as op revenue from its normal ongoing activities. - ✔✔C
OFten times, financial resources for project funds are provided by bond issue proceeds, other funds, and
interest earnings - interim financing... if interim borrowing is short term, how will this be recorded and
where? - ✔✔a CURRENT liability of the Capital Projects Fund is credited to Notes Payable.
when lower levels of govt receive money from higher levels (ex: food stamps: to feed poor people from
food that comes from local govt) , these paymnets are included in the ________ fund.... - ✔✔trust;
but when a decision making authority exists, the payments may be included in whichever
fund...depending!
DEPRECIATION
Funds using modified accruals accounting do not carry their own fixed assets.
,In addition, depreciation is optional under modified accruals accounting.
The government can choose to depreciate or not depreciate its fixed assets. In governmental funds
the acquisition of the fixed asset will be recorded as an expenditure for the entire amount.
This optional status regarding depreciation exists because in governmental operations, some fixed
assets are not expected to generate future revenues. This means that there is no need to match the
revenues and expenses of the fixed assets. - ✔✔
There are two possible methods of inventory accounting:
1. purchase and 2. consumption
describe both - ✔✔1. The purchase method occurs when inventories are recorded as expenditures
when acquired AND significant inventory that is left on hand i s recorded in the asset section of balance
sheet. These are FULL RESERVED in equity section and named "reserved for supplies inventory"
2. inventory is initially recorded in the inventory acct and recorded as an expenditure only when used
In govt acct, if the lease is an operating lease, then the lease payment is recorded as an expenditure
in the ________ fund or as an expense in the _________ fund. - ✔✔govt; proprietary
Capital Lease: Lease Inception JE & which fund does it go in? - ✔✔GOVT FUND;
, Dr. Expenditure
Cr. Other Financing Sources - Capital Lease (the amt to record is the lesser of total present value of
minimum lease payments or total FV of the leased property)
Capital Lease: Lease Repayment JE & which fund does it go in?? - ✔✔debt service fund (bc
annual payments are installments of general long-term debt)
Dr. Expenditure (both principle and interest)
Cr. Cash
How are assets acquired by a lease in a proprietary fund accounted for? - ✔✔the same way as
business accts for a lease... FA is recorded in books, depreciation is recorded , capt. lease obligation is
recorded and interest is recog as payment is made.
These interfund transfers arise from transactions that would have given rise to a revenue or an
expense if the transaction had been undertaken with anyone other than a governmental entity. These
transfers give rise to a revenue or expense in governmental accounting and are therefore essentially
treated as a regular transaction. - ✔✔Quasi-External Transfers
These are transfers that are made to reimburse a fund for an expense that was originally recorded
in one fund, but should have been in another.
The result of this type of transfer is an expense for the fund that makes the transfer and a reduction of
expense for the fund that receives the transfer. - ✔✔Reimbursement
When a fund (the General Fund, for example) makes a permanent transfer to another fund, it is
reported in the government financial statements as follows: - ✔✔Other Financing Uses (fund
making transfer)
Other Financing Sources (fund receiving transfer)
CAPSTONE Exam with Questions Passed
100%
What is the JE for taxes when the govt deems it collectible? - ✔✔dr. taxes receivable
cr: revenue control & allowance for uncollectible taxes
How should an enterprise fund recognize revenue?
A. Enterprise funds do not have revenue.
B. They are counted for as additions to the fund (not revenue)
C. They should simply be recognized as op revenue from its normal ongoing activities. - ✔✔C
How should an agency fund recognize revenue?
,A. They do not have revenue.
B. They are counted for as additions to the fund (not revenue)
C. They should simply be recognized as op revenue from its normal ongoing activities. - ✔✔A
How should an permanent fund accountd recognize revenue?
A. They do not have revenue.
B. They are counted for as additions to the fund (not revenue)
C. They should account for the receipt of endowment principal that is donated to a government and is to
be held in trust for the benefit of the government (or of its citizens) as revenue. The value of the
revenue is based upon fair value and the assets should be reported at fair value.
D. They should simply be recognized as op revenue from its normal ongoing activities. - ✔✔C
OFten times, financial resources for project funds are provided by bond issue proceeds, other funds, and
interest earnings - interim financing... if interim borrowing is short term, how will this be recorded and
where? - ✔✔a CURRENT liability of the Capital Projects Fund is credited to Notes Payable.
when lower levels of govt receive money from higher levels (ex: food stamps: to feed poor people from
food that comes from local govt) , these paymnets are included in the ________ fund.... - ✔✔trust;
but when a decision making authority exists, the payments may be included in whichever
fund...depending!
DEPRECIATION
Funds using modified accruals accounting do not carry their own fixed assets.
,In addition, depreciation is optional under modified accruals accounting.
The government can choose to depreciate or not depreciate its fixed assets. In governmental funds
the acquisition of the fixed asset will be recorded as an expenditure for the entire amount.
This optional status regarding depreciation exists because in governmental operations, some fixed
assets are not expected to generate future revenues. This means that there is no need to match the
revenues and expenses of the fixed assets. - ✔✔
There are two possible methods of inventory accounting:
1. purchase and 2. consumption
describe both - ✔✔1. The purchase method occurs when inventories are recorded as expenditures
when acquired AND significant inventory that is left on hand i s recorded in the asset section of balance
sheet. These are FULL RESERVED in equity section and named "reserved for supplies inventory"
2. inventory is initially recorded in the inventory acct and recorded as an expenditure only when used
In govt acct, if the lease is an operating lease, then the lease payment is recorded as an expenditure
in the ________ fund or as an expense in the _________ fund. - ✔✔govt; proprietary
Capital Lease: Lease Inception JE & which fund does it go in? - ✔✔GOVT FUND;
, Dr. Expenditure
Cr. Other Financing Sources - Capital Lease (the amt to record is the lesser of total present value of
minimum lease payments or total FV of the leased property)
Capital Lease: Lease Repayment JE & which fund does it go in?? - ✔✔debt service fund (bc
annual payments are installments of general long-term debt)
Dr. Expenditure (both principle and interest)
Cr. Cash
How are assets acquired by a lease in a proprietary fund accounted for? - ✔✔the same way as
business accts for a lease... FA is recorded in books, depreciation is recorded , capt. lease obligation is
recorded and interest is recog as payment is made.
These interfund transfers arise from transactions that would have given rise to a revenue or an
expense if the transaction had been undertaken with anyone other than a governmental entity. These
transfers give rise to a revenue or expense in governmental accounting and are therefore essentially
treated as a regular transaction. - ✔✔Quasi-External Transfers
These are transfers that are made to reimburse a fund for an expense that was originally recorded
in one fund, but should have been in another.
The result of this type of transfer is an expense for the fund that makes the transfer and a reduction of
expense for the fund that receives the transfer. - ✔✔Reimbursement
When a fund (the General Fund, for example) makes a permanent transfer to another fund, it is
reported in the government financial statements as follows: - ✔✔Other Financing Uses (fund
making transfer)
Other Financing Sources (fund receiving transfer)
