ACCT 4421 Exam 2 Questions and
Answers|Latest Update
prepayments insurance, operating leases and similar services; GASB allows expenditures
extending over more than one accounting period to be recorded as expenditures in the period of
acquisition (all in one year for purchase method); does not prescribe govt's using the "purchase
method" report material amounts on the BS; reclass entry for consumption method still required
capital assets provide services in periods beyond those in which they are acquired; neither
reported on govt fund balance sheet nor depreciated on govt fund statements of rev, expenditures,
and changed in fund balance
capital assets GASB standards state that govt's report these in the period requiring the
outflow of expendable available financial resources; govt fund= record an expenditure when
purchase/ govt wide= capitalize and depreciate
OFS capital assets: LT debt not reported in govt funds, GASb standards require that the
proceeds of LT debt be shown as ____________
, capital lease equivalent of a purchase/borrow acquisition transaction; in economic
substance, the lessee becomes the owner of the leased asset and the debt
operating lease conventional rental agreement under which the lessor remains the owner
of the property both in legal in economic substance
Interest and Principal often, the govt will transfer cash from general fund to the DSF as
payments are made; GASB specify that in govt funds neither interest nor principal on LT debt
should be accrued in advance of the year in which it is due; both should be accrued only in the
period in which they are due and until then they are not current liabilities and will not require the
liquidation of expendable/available financial resources
non-exchange __________________ expenditures should generally be recognized with
their revenue counterparts
unrestricted grant w time requirement no liability or expenditure is recorded until the
time requirement is satisfied
grant w purpose restriction recognize expenditure as soon as the award is made
Answers|Latest Update
prepayments insurance, operating leases and similar services; GASB allows expenditures
extending over more than one accounting period to be recorded as expenditures in the period of
acquisition (all in one year for purchase method); does not prescribe govt's using the "purchase
method" report material amounts on the BS; reclass entry for consumption method still required
capital assets provide services in periods beyond those in which they are acquired; neither
reported on govt fund balance sheet nor depreciated on govt fund statements of rev, expenditures,
and changed in fund balance
capital assets GASB standards state that govt's report these in the period requiring the
outflow of expendable available financial resources; govt fund= record an expenditure when
purchase/ govt wide= capitalize and depreciate
OFS capital assets: LT debt not reported in govt funds, GASb standards require that the
proceeds of LT debt be shown as ____________
, capital lease equivalent of a purchase/borrow acquisition transaction; in economic
substance, the lessee becomes the owner of the leased asset and the debt
operating lease conventional rental agreement under which the lessor remains the owner
of the property both in legal in economic substance
Interest and Principal often, the govt will transfer cash from general fund to the DSF as
payments are made; GASB specify that in govt funds neither interest nor principal on LT debt
should be accrued in advance of the year in which it is due; both should be accrued only in the
period in which they are due and until then they are not current liabilities and will not require the
liquidation of expendable/available financial resources
non-exchange __________________ expenditures should generally be recognized with
their revenue counterparts
unrestricted grant w time requirement no liability or expenditure is recorded until the
time requirement is satisfied
grant w purpose restriction recognize expenditure as soon as the award is made
