GOVERNMENTAL ACCOUNTING -
EXAM #1 QUESTIONS WITH CORRECT
ANSWERS
Assume that the County of Katerah maintains its books and records in a manner that
facilitates preparation of the fund financial statements. The county formally integrates
the budget into the accounting system and uses the encumbrance system. All
appropriations lapse at year-end. At the beginning of the fiscal year, the county had
the following balances in its accounts.
Cash: $200
Fund balance unassigned: $50
Reserve for encumbrances (committed or assigned): $150
Prepare the necessary entries for the current fiscal year.
The county incurred salaries and other operating expenses during the year totaling
$600. The county paid these items in cash.
Select one: - ANSWER-Dr. Expenditure $600; Cr. Cash $600
Assume that the City of Pasco maintains its books and records in a manner that
facilitates preparation of the fund financial statements. The city engaged in the
following transactions related to its general fund during the current fiscal year. The
city formally integrates the budget into the accounting records. The city does not
maintain an inventory of supplies.
Choose the best answer from the set of journal entries below.
The city incurred salaries and other operating expenses during the year totaling
$730. The city paid for these items in cash.
Select one: - ANSWER-Dr. Expenditures $730; Cr. Cash $730
Assume that the County of Katerah maintains its books and records in a manner that
facilitates preparation of the fund financial statements. The county formally integrates
the budget into the accounting system and uses the encumbrance system. All
appropriations lapse at year-end. At the beginning of the fiscal year, the county had
the following balances in its accounts.
Cash: $200
Fund balance unassigned: $50
Reserve for encumbrances (committed or assigned): $150
Prepare the necessary entries for the current fiscal year.
The county received the items that had been ordered in the prior year at an actual
cost of $135.
Select one: - ANSWER-Dr. Expenditure $135; Cr. Accounts Payable $135; Dr.
Reserve for Encumbrance $150; Cr. Encumbrance $150
,During the year the City of Hamburg engaged in the following transactions. The city
uses the consumption method of recording inventories and prepayments. The city
has a 6/30 fiscal year end.
Instructions: Choose the correct journal entry to record the following transactions
related to supplies, prepaid items and fixed asset acquisitions.
On January 1, the city leased some office equipment for use in the administrative
offices. The lease qualified as a capital lease. The present value of the minimum
lease payments is $96,000. - ANSWER-Dr. Capital lease expenditure $96,000; Cr.
Cash $96,000
A government places an order for a particular item of equipment and encumbers
$5,500. The item arrives accompanied by an invoice for $5,200. The entries that the
government should make should include (but are not necessarily be limited to): -
ANSWER-a debit to expenditures for $5,200, a credit to encumbrances for $5,500,
and credit to accounts payable for $5,200
In 2021, city employees earned $1.4 million in sick leave that they did not take during
the year. The city estimates that of this amount, $0.8 million will actually be paid to
employees who take sick leave. Of the balance, $0.1 million will be paid to
employees upon their retirement or resignation and $0.5 million will not have to be
paid (since employees are limited in the number of sick days that they can carry over
from one year to the next).
The amount that the city should add to a fund-statement liability account as of year-
end 2021 is - ANSWER-$0
In its fund financial statements, the city would recognize the receipt of a new
computer (to be used for general administrative purposes) that it had ordered the
previous year as an - ANSWER-expenditure
Upon closing the books at year-end, a government should - ANSWER-debit fund
balance and credit encumbrances
Apportionments are made during which phase of the budget cycle? - ANSWER-
execution
Which of the following accounts would a government be most likely to debit as part
of its year-end closing process? - ANSWER-revenues, appropriations, and fund
balance
A primary virtue of an object classification budget is that it - ANSWER-facilitates
control by establishing detailed spending mandates
In 2021, city employees earned $3.6 million in vacation pay that they did not use
during the year. The city estimates that of this amount, $2.8 million will be paid in
2022 (out of amounts budgeted for that year), $0.6 million will be paid in subsequent
years, and the balance of $0.2 million will not have to be paid.
The amount that the city should add to the liability account in the government-wide
statement of net position as of year-end 2021 is - ANSWER-$3.4 million
, A government requires that all appropriations lapse at the end of a year. At the end
of year 1, that government has $100,000 of goods and services on order. At the start
of Year 2, the government should - ANSWER-debit encumbrances and credit fund
balance
Nolanville starts fiscal 2021 with $25,000 in supplies. During the year, it orders
$180,000 in supplies, receives $170,000, and uses $190,000. It accounts for
inventories on the consumption basis. In its 2021 governmental fund financial
statements, it should report - ANSWER-Expenditure
$190,000
Nonspendable Fund Balance
$5,000
The prime function of budgetary entries is to - ANSWER-help the government
monitor revenues and expenditures
Per GASB Statement No. 34, a budget-to-actual comparison must include columns
for the actual results and - ANSWER-both the original and the final budget
Upon ordering supplies a government should - ANSWER-debit encumbrances and
credit reserve for encumbrances
On December 1, 2021, Nolanville issued $10 million of 30-year, 8 percent bonds for
$9.78 million, a price that reflects a semiannual yield of 4.1 percent. Interest
($400,000 per semiannual period) is payable on May 31 and November 30,
beginning May 31, 2022.
In its 2021 fund and government-wide statements, Nolanville should report an
interest expenditure/expense of - ANSWER-Fund Statement
$0
Government-Wide Statement
$66,830
In closing budgetary and expenditure accounts at year-end, a government should -
ANSWER-debit appropriations and credit expenditures
Appropriation budgets are typically concerned with - ANSWER-current operating
revenues and expenditures
A government should debit an expenditure account upon - ANSWER-recording the
receipt of an invoice from its telephone service provider
Upon receiving supplies that had previously been encumbered, a government should
- ANSWER-debit reserve for encumbrances and credit encumbrances
In adopting and recording the budget, a government should - ANSWER-debit
estimated revenues and credit fund balance
EXAM #1 QUESTIONS WITH CORRECT
ANSWERS
Assume that the County of Katerah maintains its books and records in a manner that
facilitates preparation of the fund financial statements. The county formally integrates
the budget into the accounting system and uses the encumbrance system. All
appropriations lapse at year-end. At the beginning of the fiscal year, the county had
the following balances in its accounts.
Cash: $200
Fund balance unassigned: $50
Reserve for encumbrances (committed or assigned): $150
Prepare the necessary entries for the current fiscal year.
The county incurred salaries and other operating expenses during the year totaling
$600. The county paid these items in cash.
Select one: - ANSWER-Dr. Expenditure $600; Cr. Cash $600
Assume that the City of Pasco maintains its books and records in a manner that
facilitates preparation of the fund financial statements. The city engaged in the
following transactions related to its general fund during the current fiscal year. The
city formally integrates the budget into the accounting records. The city does not
maintain an inventory of supplies.
Choose the best answer from the set of journal entries below.
The city incurred salaries and other operating expenses during the year totaling
$730. The city paid for these items in cash.
Select one: - ANSWER-Dr. Expenditures $730; Cr. Cash $730
Assume that the County of Katerah maintains its books and records in a manner that
facilitates preparation of the fund financial statements. The county formally integrates
the budget into the accounting system and uses the encumbrance system. All
appropriations lapse at year-end. At the beginning of the fiscal year, the county had
the following balances in its accounts.
Cash: $200
Fund balance unassigned: $50
Reserve for encumbrances (committed or assigned): $150
Prepare the necessary entries for the current fiscal year.
The county received the items that had been ordered in the prior year at an actual
cost of $135.
Select one: - ANSWER-Dr. Expenditure $135; Cr. Accounts Payable $135; Dr.
Reserve for Encumbrance $150; Cr. Encumbrance $150
,During the year the City of Hamburg engaged in the following transactions. The city
uses the consumption method of recording inventories and prepayments. The city
has a 6/30 fiscal year end.
Instructions: Choose the correct journal entry to record the following transactions
related to supplies, prepaid items and fixed asset acquisitions.
On January 1, the city leased some office equipment for use in the administrative
offices. The lease qualified as a capital lease. The present value of the minimum
lease payments is $96,000. - ANSWER-Dr. Capital lease expenditure $96,000; Cr.
Cash $96,000
A government places an order for a particular item of equipment and encumbers
$5,500. The item arrives accompanied by an invoice for $5,200. The entries that the
government should make should include (but are not necessarily be limited to): -
ANSWER-a debit to expenditures for $5,200, a credit to encumbrances for $5,500,
and credit to accounts payable for $5,200
In 2021, city employees earned $1.4 million in sick leave that they did not take during
the year. The city estimates that of this amount, $0.8 million will actually be paid to
employees who take sick leave. Of the balance, $0.1 million will be paid to
employees upon their retirement or resignation and $0.5 million will not have to be
paid (since employees are limited in the number of sick days that they can carry over
from one year to the next).
The amount that the city should add to a fund-statement liability account as of year-
end 2021 is - ANSWER-$0
In its fund financial statements, the city would recognize the receipt of a new
computer (to be used for general administrative purposes) that it had ordered the
previous year as an - ANSWER-expenditure
Upon closing the books at year-end, a government should - ANSWER-debit fund
balance and credit encumbrances
Apportionments are made during which phase of the budget cycle? - ANSWER-
execution
Which of the following accounts would a government be most likely to debit as part
of its year-end closing process? - ANSWER-revenues, appropriations, and fund
balance
A primary virtue of an object classification budget is that it - ANSWER-facilitates
control by establishing detailed spending mandates
In 2021, city employees earned $3.6 million in vacation pay that they did not use
during the year. The city estimates that of this amount, $2.8 million will be paid in
2022 (out of amounts budgeted for that year), $0.6 million will be paid in subsequent
years, and the balance of $0.2 million will not have to be paid.
The amount that the city should add to the liability account in the government-wide
statement of net position as of year-end 2021 is - ANSWER-$3.4 million
, A government requires that all appropriations lapse at the end of a year. At the end
of year 1, that government has $100,000 of goods and services on order. At the start
of Year 2, the government should - ANSWER-debit encumbrances and credit fund
balance
Nolanville starts fiscal 2021 with $25,000 in supplies. During the year, it orders
$180,000 in supplies, receives $170,000, and uses $190,000. It accounts for
inventories on the consumption basis. In its 2021 governmental fund financial
statements, it should report - ANSWER-Expenditure
$190,000
Nonspendable Fund Balance
$5,000
The prime function of budgetary entries is to - ANSWER-help the government
monitor revenues and expenditures
Per GASB Statement No. 34, a budget-to-actual comparison must include columns
for the actual results and - ANSWER-both the original and the final budget
Upon ordering supplies a government should - ANSWER-debit encumbrances and
credit reserve for encumbrances
On December 1, 2021, Nolanville issued $10 million of 30-year, 8 percent bonds for
$9.78 million, a price that reflects a semiannual yield of 4.1 percent. Interest
($400,000 per semiannual period) is payable on May 31 and November 30,
beginning May 31, 2022.
In its 2021 fund and government-wide statements, Nolanville should report an
interest expenditure/expense of - ANSWER-Fund Statement
$0
Government-Wide Statement
$66,830
In closing budgetary and expenditure accounts at year-end, a government should -
ANSWER-debit appropriations and credit expenditures
Appropriation budgets are typically concerned with - ANSWER-current operating
revenues and expenditures
A government should debit an expenditure account upon - ANSWER-recording the
receipt of an invoice from its telephone service provider
Upon receiving supplies that had previously been encumbered, a government should
- ANSWER-debit reserve for encumbrances and credit encumbrances
In adopting and recording the budget, a government should - ANSWER-debit
estimated revenues and credit fund balance
