ACCT 4421 Exam 2 Review Exam Questions
with Complete Solutions
Under the accrual basis of accounting, imposed nonexchange revenues (such as fines) should be
recognized
A. when assessed
B. when the government has an enforceable legal claim
C. when collected
D. when the government has an enforceable legal claim and when collected within the current
period or soon enough thereafter to be used to pay the liabilities of the current period Correct
Answ_B
Under the modified accrual basis of accounting, gains and losses on disposal of capital assets
A. are not recognized
B. are recognized when the proceeds (cash) of the sale are received (on the installment basis)
C. are recognized only if there is a gain
D. are recognized when the sale occurs, regardless of when the cash is collected Correct
Answ_A
,Under the accrual basis of accounting, gains and losses on disposal of capital assets
A. are not recognized
B. are recognized when the proceeds (cash) of the sale are received (on the installment basis)
C. are recognized only if there is a gain
D. are recognized when the sale occurs, regardless of when the cash is collected Correct
Answ_D
Under the modified accrual basis of accounting, license fees, permits, and other miscellaneous
revenue are generally recognized for practical purposes
A. when cash is received
B. when the exchange takes place
C. over the period during which the government obtains an enforceable legal claim
D. when related expenditures are incurred Correct Answ_A
Ideally, under the accrual basis of accounting, license fees, permits, and other miscellaneous
revenue should be recognized
A. when cash is received
B. when the exchange takes place
C. over the period during which the government obtains an enforceable legal claim
,D. when related expenditures are incurred Correct Answ_B
A city that has a 12/31 fiscal year end has adopted a policy of recognizing the maximum amount
of property tax revenue allowable under GAAP. Property taxes of $720,000 (of which 10 percent
are estimated to be uncollectible) are levied in October 2013 to finance the activities of the fiscal
year 2014. During 2014, cash collections related to property taxes levied in October 2013 were
$600,000. In 2015 the following amounts related to the property taxes levied in October 2013
were collected: January $30,000; March, $6,000. For the fiscal year ended 12/31/14, what
amount should be recognized as property tax revenues related to the 2013 levy on the
governmental fund financial statements?
A. $720,000
B. $648,000
C. $630,000
D. $600,000 Correct Answ_C
A city that has a 12/31 fiscal year end has adopted a policy of recognizing the maximum amount
of property tax revenue allowable under GAAP. Property taxes of $720,000 (of which 10 percent
are estimated to be uncollectible) are levied in October 2013 to finance the activities of the fiscal
year 2014. During 2014, cash collections related to property taxes levied in October 2013 were
$600,000. In 2015 the following amounts related to the property taxes levied in October 2013
were collected: January $30,000; March $6,000. For the fiscal year ended 12/31/14, what amount
, should be recognized as property tax revenues related to the 2013 levy on the government-wide
financial statements?
A. $720,000
B. $648,000
C. $630,000
D. $600,000 Correct Answ_B
A city that has a 12/31 fiscal year end has adopted a policy of recognizing property tax revenue
consistent with the 60-day rule allowable period under GAAP. Property taxes of $600,000 (of
which none are estimated to be uncollectible) are levied in October 2013 to finance the activities
of fiscal year 2014. Property taxes are due in two installments June 20 and December 20. Cash
collections related to property taxes are as follows:
1/15/14 for property taxes levied in 2012, due in 2013 $ 25,000
2/15/14 for property taxes levied in 2012, due in 2013 $ 15,000
3/15/14 for property taxes levied in 2012, due in 2013 $ 10,000
6/20/14 First installment of taxes levied in 2013, due 6/20/14 $350,000
12/20/14 Second installment of taxes levied in 2013, due 12/20/14 $150,000
1/15/15 for property taxes levied in 2013, due in 2014 $ 15,000
2/15/15 for property taxes levied in 20130, due in 2014 $ 10,000
with Complete Solutions
Under the accrual basis of accounting, imposed nonexchange revenues (such as fines) should be
recognized
A. when assessed
B. when the government has an enforceable legal claim
C. when collected
D. when the government has an enforceable legal claim and when collected within the current
period or soon enough thereafter to be used to pay the liabilities of the current period Correct
Answ_B
Under the modified accrual basis of accounting, gains and losses on disposal of capital assets
A. are not recognized
B. are recognized when the proceeds (cash) of the sale are received (on the installment basis)
C. are recognized only if there is a gain
D. are recognized when the sale occurs, regardless of when the cash is collected Correct
Answ_A
,Under the accrual basis of accounting, gains and losses on disposal of capital assets
A. are not recognized
B. are recognized when the proceeds (cash) of the sale are received (on the installment basis)
C. are recognized only if there is a gain
D. are recognized when the sale occurs, regardless of when the cash is collected Correct
Answ_D
Under the modified accrual basis of accounting, license fees, permits, and other miscellaneous
revenue are generally recognized for practical purposes
A. when cash is received
B. when the exchange takes place
C. over the period during which the government obtains an enforceable legal claim
D. when related expenditures are incurred Correct Answ_A
Ideally, under the accrual basis of accounting, license fees, permits, and other miscellaneous
revenue should be recognized
A. when cash is received
B. when the exchange takes place
C. over the period during which the government obtains an enforceable legal claim
,D. when related expenditures are incurred Correct Answ_B
A city that has a 12/31 fiscal year end has adopted a policy of recognizing the maximum amount
of property tax revenue allowable under GAAP. Property taxes of $720,000 (of which 10 percent
are estimated to be uncollectible) are levied in October 2013 to finance the activities of the fiscal
year 2014. During 2014, cash collections related to property taxes levied in October 2013 were
$600,000. In 2015 the following amounts related to the property taxes levied in October 2013
were collected: January $30,000; March, $6,000. For the fiscal year ended 12/31/14, what
amount should be recognized as property tax revenues related to the 2013 levy on the
governmental fund financial statements?
A. $720,000
B. $648,000
C. $630,000
D. $600,000 Correct Answ_C
A city that has a 12/31 fiscal year end has adopted a policy of recognizing the maximum amount
of property tax revenue allowable under GAAP. Property taxes of $720,000 (of which 10 percent
are estimated to be uncollectible) are levied in October 2013 to finance the activities of the fiscal
year 2014. During 2014, cash collections related to property taxes levied in October 2013 were
$600,000. In 2015 the following amounts related to the property taxes levied in October 2013
were collected: January $30,000; March $6,000. For the fiscal year ended 12/31/14, what amount
, should be recognized as property tax revenues related to the 2013 levy on the government-wide
financial statements?
A. $720,000
B. $648,000
C. $630,000
D. $600,000 Correct Answ_B
A city that has a 12/31 fiscal year end has adopted a policy of recognizing property tax revenue
consistent with the 60-day rule allowable period under GAAP. Property taxes of $600,000 (of
which none are estimated to be uncollectible) are levied in October 2013 to finance the activities
of fiscal year 2014. Property taxes are due in two installments June 20 and December 20. Cash
collections related to property taxes are as follows:
1/15/14 for property taxes levied in 2012, due in 2013 $ 25,000
2/15/14 for property taxes levied in 2012, due in 2013 $ 15,000
3/15/14 for property taxes levied in 2012, due in 2013 $ 10,000
6/20/14 First installment of taxes levied in 2013, due 6/20/14 $350,000
12/20/14 Second installment of taxes levied in 2013, due 12/20/14 $150,000
1/15/15 for property taxes levied in 2013, due in 2014 $ 15,000
2/15/15 for property taxes levied in 20130, due in 2014 $ 10,000
