ACCT 4421 Exam 2 UPDATED Exam
Questions and CORRECT Answers
Basis of Accounting - CORRECT ANSWER - When transactions and other events are
recognized
Measurement Focus - CORRECT ANSWER - What is being reported upon
Measurement focus of modified accrual basis accounting - CORRECT ANSWER -
Current financial resources: liquid assets (cash, receivables, marketable securities, prepaid items,
and supplies inventories) less current liabilities
GASB Staetment No. 33 - CORRECT ANSWER - GAAP for revenue recognition
Limitations on resources:
1) Time requirements - wait to recognize
2) Purpose restrictions - don't wait to recognize
Nonexchange Revenue - CORRECT ANSWER - Generated solely to meet expenditures
Types:
1) Imposed nonexchange revenues: taxes
2) Derived tax revenues: sales tax
3) Government-mandated nonexchange transactions: grants
4) Voluntary nonexchange transactions: gifts
"Available" revenue - CORRECT ANSWER - Collected in current period or expected to
be collected soon enough to pay current period's liabilities
60 days
,Stated Due Date - CORRECT ANSWER - Date due
Substantive Due Date - CORRECT ANSWER - Date interest and penalties accrue or lien
is imposed
Recording Property Taxes - CORRECT ANSWER - - Recognize assets in period there is
an enforceable claim or when assets are received (whichever is first)
- Recognize revenue in the period taxes are levied, delay recognition until budgeted and
available
Record Levy:
Property Taxes Receivable x
Property Taxes (deferred inflow of resources) x
Allowance for Uncollectible Property Taxes x
Record collection:
Cash x
Property Taxes Receivable x
Recognize Revenue:
Property Taxes (deferred inflow of resources) x
Property Tax Revenue x
Gov-wide statements: don't have to be available
A school district received property taxes in advance of the year in which they were due and for
which they were budgeted. Such taxes should be recognized as - CORRECT ANSWER -a
deferred inflow of resources.
, Special Assessments - CORRECT ANSWER - Special kind of Derived Property Tax
levied against certain properties deemed to receive a particular benefit that not all taxpayers
receive. Ex: street repair, street cleaning, or snow plowing for taxpayers who live outside the
normal service area.
Accounting for Fines - CORRECT ANSWER - Gov only has legal claim once protest
period expires, so only recognize when received. Can't recognize those under protest.
Cash x
Parking Tickets Receivable (not protested) x
Revenue from Parking Fines x
Parking Fines (deferred inflow of resources) x
Allowance for Uncollectible Parking Tickets x
Gov-wide statements: don't have to be available to recognize
Accounting for Sales Taxes - CORRECT ANSWER - Sales Tax Receivable x
Sales Tax Revenue x
Sales Taxes (deferred inflow of resources) x
Gov-wide statements: don't have to be available to recognize
Accounting for Income Taxes - CORRECT ANSWER - Cash x
Taxes Billed but not Collected - Receivable y
Revenue from Income Taxes x
Income Taxes (deferred inflow) y
Gov-wide statements: don't have to be available to recognize
Questions and CORRECT Answers
Basis of Accounting - CORRECT ANSWER - When transactions and other events are
recognized
Measurement Focus - CORRECT ANSWER - What is being reported upon
Measurement focus of modified accrual basis accounting - CORRECT ANSWER -
Current financial resources: liquid assets (cash, receivables, marketable securities, prepaid items,
and supplies inventories) less current liabilities
GASB Staetment No. 33 - CORRECT ANSWER - GAAP for revenue recognition
Limitations on resources:
1) Time requirements - wait to recognize
2) Purpose restrictions - don't wait to recognize
Nonexchange Revenue - CORRECT ANSWER - Generated solely to meet expenditures
Types:
1) Imposed nonexchange revenues: taxes
2) Derived tax revenues: sales tax
3) Government-mandated nonexchange transactions: grants
4) Voluntary nonexchange transactions: gifts
"Available" revenue - CORRECT ANSWER - Collected in current period or expected to
be collected soon enough to pay current period's liabilities
60 days
,Stated Due Date - CORRECT ANSWER - Date due
Substantive Due Date - CORRECT ANSWER - Date interest and penalties accrue or lien
is imposed
Recording Property Taxes - CORRECT ANSWER - - Recognize assets in period there is
an enforceable claim or when assets are received (whichever is first)
- Recognize revenue in the period taxes are levied, delay recognition until budgeted and
available
Record Levy:
Property Taxes Receivable x
Property Taxes (deferred inflow of resources) x
Allowance for Uncollectible Property Taxes x
Record collection:
Cash x
Property Taxes Receivable x
Recognize Revenue:
Property Taxes (deferred inflow of resources) x
Property Tax Revenue x
Gov-wide statements: don't have to be available
A school district received property taxes in advance of the year in which they were due and for
which they were budgeted. Such taxes should be recognized as - CORRECT ANSWER -a
deferred inflow of resources.
, Special Assessments - CORRECT ANSWER - Special kind of Derived Property Tax
levied against certain properties deemed to receive a particular benefit that not all taxpayers
receive. Ex: street repair, street cleaning, or snow plowing for taxpayers who live outside the
normal service area.
Accounting for Fines - CORRECT ANSWER - Gov only has legal claim once protest
period expires, so only recognize when received. Can't recognize those under protest.
Cash x
Parking Tickets Receivable (not protested) x
Revenue from Parking Fines x
Parking Fines (deferred inflow of resources) x
Allowance for Uncollectible Parking Tickets x
Gov-wide statements: don't have to be available to recognize
Accounting for Sales Taxes - CORRECT ANSWER - Sales Tax Receivable x
Sales Tax Revenue x
Sales Taxes (deferred inflow of resources) x
Gov-wide statements: don't have to be available to recognize
Accounting for Income Taxes - CORRECT ANSWER - Cash x
Taxes Billed but not Collected - Receivable y
Revenue from Income Taxes x
Income Taxes (deferred inflow) y
Gov-wide statements: don't have to be available to recognize
