Test Bank for Accounting for Governmental & Nonprofit Entities 19th Edition By Jacqueline Reck

Version 1 1 Test Bank for Accounting for Governmental & Nonprofit Entities 19th Edition By Jacqueline Reck Version 1 2 Student name:__________ 1) Explain the essential differences between general purpose and special purpose governments and give several examples of each. 2) Identify and explain the characteristics that distinguish governments and not-for-profit entities from business entities. 3) GASB and FASB standards are concerned only with external financial reporting; whereas, FASAB standards are concerned with both internal and external financial reporting. Do you agree with this statement? Why or why not? Version 1 3 4) Why should persons interested in reading financial reports of governments and not-forprofit entities be familiar with standards set by the GASB and the FASB? 5) Explain in your own words why accountability is the cornerstone of all financial reporting in government. Version 1 4 6) In your own words state the primary needs the GASB believes external users have for financial reports of state and local governments. For contrast, state the uses the FASB believes external users have for the financial reports of not-for-profit organizations. 7) Describe the difference between a comprehensive annual financial report (CAFR) and GASB general purpose external financial reporting for state and local governments. 8) Identify and briefly explain the four sections of the performance and accountability report (PAR) that the Office of Management and Budget requires major federal departments and agencies to prepare. Version 1 5 9) Explain the concepts of fiscal and operational accountability and the basis of accounting used to capture each concept. 10) Describe the comprehensive annual financial report (CAFR). What are the sections of the report and which components of the organization should it include? Is a CAFR required? 11) The Governmental Accounting Standards Board is assigned responsibility for setting accounting and financial reporting standards for which of the following? Version 1 6 A) Governments such as federal agencies, states, cities, counties, villages, and townships. B) State and local government entities and governmentally-related units and agencies, such as utilities, authorities, hospitals, and colleges and universities. C) Not-for-profit organizations. D) State and local governments and all not-for-profit organizations. 12) Which of the following bodies has been established to recommend accounting and financial reporting standards for the federal government? A) Financial Accounting Standards Board (FASB). B) Governmental Accounting Standards Board (GASB). C) Federal Accounting Foundation (FAF). D) Federal Accounting Standards Advisory Board (FASAB). 13) The Financial Accounting Standards Board has the responsibility for setting accounting and financial reporting standards for which of the following? A) All not-for-profit organizations that are nongovernmental and business entities. B) All not-for-profit organizations and business entities. C) All not-for-profit organizations. D) Special purpose governments with a business purpose. Version 1 7 14) You are trying to decide if an entity you are reviewing is a government or a not-forprofit. Which of the following would indicate it is a government rather than a not-for-profit entity? A) Absence of profit motive. B) A primary source of revenues is taxes. C) Resource providers do not expect benefits proportional to the resources provided. D) Absence of a defined ownership interest that can be sold, transferred, or redeemed. 15) Which of the following is identified by the GASB as the "cornerstone" of all financial reporting in government? A) Decision usefulness. B) Stewardship. C) Accountability. D) Interperiod equity. 16) Which of the following organizations issue standards that focus on both internal and external financial reporting? A) Federal Accounting Standards Advisory Board. B) Governmental Accounting Standards Board. C) Financial Accounting Standards Board. D) American Institute of CPAs. Version 1 8 17) Which of the following is identified by the FASAB as the foundation for federal financial reporting? A) Decision usefulness. B) Accountability. C) Understandability. D) Budget integrity. 18) Which of the following is not an objective of financial reporting by state and local governments? A) To assist users in assessing the adequacy of systems and controls. B) To assist users in assessing financial condition and results of operations. C) To assist financial report users in comparing actual financial results with the legally adopted budget. D) To assist in determining compliance with finance-related laws, rules, and regulations. 19) Which of the following groups is considered a primary user of a state or local government's general-purpose external financial statements? Version 1 9 A) Citizens. B) Managers and administrators. C) Employees. D) Special interest groups. 20) One of the minimum requirements for general purpose external financial reporting by governments is A) Management's discussion and analysis (MD&A). B) Transmittal letter. C) Combining and individual fund statements. D) Statistical information. 21) A comprehensive annual financial report (CAFR) prepared in conformity with the GASB recommendations should include which of the following sections? A) Letter of transmittal, management's discussion and analysis (MD&A), and financial. B) Introductory, financial, and statistical. C) Introductory, MD&A, and financial. D) Letter of transmittal, financial, and supplementary. 22) Which of the following would be included in a properly prepared comprehensive annual financial report (CAFR), but not in the minimum requirements for general purpose financial reporting specified by GASB standards? Version 1 10 A) Management's discussion and analysis (MD&A). B) Government-wide financial statements. C) Notes to the financial statements. D) Combining and individual fund financial statements. 23) A statistical section should be included in A) A comprehensive annual financial report (CAFR). B) The basic financial statements. C) The notes to the financial statements. D) Required supplementary information, other than MD&A. 24) Which of the following would typically not be included in the introductory section of a comprehensive annual financial report? A) Title and contents page. B) Letter of transmittal. C) A description of the government. D) Summary of the government's current financial position and results of financial activities. 25) The section of the comprehensive annual financial report that presents tables and charts showing social and economic data in addition to financial trends, fiscal capacity, and operating information of the government is the Version 1 11 A) Introductory section. B) Management's discussion and analysis section. C) Statistical section. D) Financial section. 26) Which of the following should be included in the financial section of a comprehensive annual financial report? A) Transmittal letter. B) The basic financial statements, including notes thereto. C) Tables and charts showing demographic and economic data. D) A description of the government. 27) On what do the government-wide financial statements primarily report? A) Operational accountability. B) Fiscal accountability. C) The cost of government services. D) Budgetary compliance. 28) Which of the following standard-setting bodies requires a management’s discussion and analysis as a part of the financial report? Version 1 12 A) GASB. B) FASB. C) FASAB. D) Both GASB and FASAB. 29) On what should the governmental fund financial statements report? A) Net position and results of financial operations of the government as a whole. B) Fiscal accountability. C) Operational accountability. D) Cost of government services. 30) Which of the following sections is not considered a part of a federal agency’s performance and accountability report? A) Basic financial statements. B) Annual performance report. C) Statistical section. D) Management's discussion and analysis. 31) Which of the following statements is prepared by all not-for-profit organizations? Version 1 13 A) Statement of financial position. B) Statement of changes in net position. C) Statement of revenues, expenses, and changes in net position. D) Both Statement of financial position and Statement of changes in net position. 32) Recognizing revenues when measurable and available for paying current obligations and expenditures when incurred describes which basis of accounting? A) Accrual. B) Modified accrual. C) Modified cash. D) Budgetary. 33) The FASB requires that not-for-profits show the relationship of functional expenses to natural classifications of expense in what format? A) A separate statement of functional expenses. B) As part of the statement of activities. C) As a schedule in the notes to the financial statements. D) Any of these formats is acceptable. 34) Which of the following is a net asset category reported by not-for-profit entities? Version 1 14 A) Unrestricted net assets. B) Net assets with donor restrictions. C) Temporarily restricted net assets. D) Net investment in capital assets. 35) Which of the following is not classified as a support activity reported by not-for-profit entities? A) Fund-raising expenses. B) Program expenses. C) Management expenses. D) General expenses of operating the not-for-profit entity. 36) The FASAB’s Statement of Accounting and Reporting Concepts Statement No. 1 identifies four objectives of federal financial reporting. The requirement to be publicly accountable for laws and regulations related to spending tax revenues relates to which of the four objectives? A) Stewardship. B) Operating performance. C) Budgetary integrity. D) Accountability. Version 1 15 37) Which of the following best identifies the purpose of the government-wide financial statements? A) To provide detailed financial information about different funds of government. B) To provide an overview of the total government’s financial information. C) To provide an overview of how government would operate as a business-type entity. D) To provide detailed financial information on how the government’s financial performance compares to the prior reporting period. 38) Governments and not-for-profit organizations can exist in many of the same forms. Which of the following would most likely not be found in both a government and a not-for-profit form? A) A college. B) An art museum. C) A mental health clinic. D) A professional association. 39) Governments and not-for-profit organizations have several characteristics that distinguish them from business organizations. Which of the following is one of those characteristics? A) Sources of revenue. B) Operating purpose. C) Ownership interest. D) All of these characteristics. Version 1 16 40) The Financial Accounting Foundation (FAF) oversees and appoints board members to which of the following standard setting bodies? A) Financial Accounting Standards Board (FASB). B) Governmental Accounting Standards Board (GASB). C) Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB). D) Financial Accounting Standards Board (FASB), Governmental Accounting Standards Board (GASB), and the Federal Accounting Standards Advisory Board (FASAB). 41) The federal government prepares a performance and accountability report. The purpose(s) of the performance and accountability report include which of the following? A) Help users assess financial performance. B) Help users assess financial performance and management performance. C) Help users assess financial performance, management performance, and budgetary performance. D) Help users assess financial performance, and budgetary performance. 42) General purpose governments generally provide a wider range of services to their residents than do special purpose governments. ⊚ true ⊚ false Version 1 17 43) Examples of general purpose governments include cities, towns, and independent public school districts. ⊚ true ⊚ false 44) The Governmental Accounting Standards Board (GASB) is the body authorized to establish accounting principles for all state and local governments, both general purpose and special purpose. ⊚ true ⊚ false 45) The Governmental Accounting Standards Board (GASB) is the body authorized to establish accounting principles for all government entities. ⊚ true ⊚ false 46) The Financial Accounting Standards Board (FASB) is the body authorized to establish accounting principles for all colleges and universities and health care entities. Version 1 18 ⊚ true ⊚ false 47) Neither governments nor not-for-profit entities have residual equity that can be distributed to owners. ⊚ true ⊚ false 48) A characteristic common to governments and not-for-profit organizations is that they do not exist to provide goods or services at a profit or profit equivalent. ⊚ true ⊚ false 49) The needs of users of government financial reports are the same as those of users of business entity financial reports. ⊚ true ⊚ false Version 1 19 50) The Federal Accounting Standards Advisory Board (FASAB) recommends accounting principles and standards for the federal government and its agencies and departments. ⊚ true ⊚ false 51) The FASB, GASB, and FASAB all focus their standards on both internal and external financial reporting. ⊚ true ⊚ false 52) Interperiod equity refers to the concept that current-year revenues are sufficient to pay for services provided that year, so that future taxpayers will not be required to assume the burden for services previously provided. ⊚ true ⊚ false Version 1 20 53) The minimum requirements for general purpose external financial reporting are (1) management's discussion and analysis (MD&A), (2) the basic financial statements, including the notes to the financial statements, and (3) combining and individual fund financial statements. ⊚ true ⊚ false 54) The Financial Accounting Foundation has oversight over both the FASB and the GASB. ⊚ true ⊚ false 55) In addition to financial statements and notes, the GASB requires governments to provide information on service efforts and accomplishments (SEA) in their reports to the public. ⊚ true ⊚ false 56) Providing information on accountability is the primary financial reporting objective for both governments and not-for-profit entities. Version 1 21 ⊚ true ⊚ false 57) A difference in the financial reporting objectives for government entities and not-forprofit entities is that government entities report on compliance with laws, regulations, and rules that impact financial reports. ⊚ true ⊚ false 58) Since neither governments nor not-for-profit entities have investors, the financial reporting objectives are the same for both types of entities. ⊚ true ⊚ false 59) The GASB provides optional guidance for those entities providing service efforts and accomplishments (SEA) reports to the public. ⊚ true ⊚ false Version 1 22 60) The Office of Management and Budget (OMB) requires major federal departments and agencies to prepare an annual performance report. ⊚ true ⊚ false 61) The FASB standards require not-for-profit entities to report net assets in three categories: unrestricted, temporarily restricted, and permanently restricted. ⊚ true ⊚ false 62) The FASB standards require not-for-profit entities to separately report program expenses and support expenses. ⊚ true ⊚ false Version 1 23 63) The governmental fund financial statements are intended to report on fiscal accountability. ⊚ true ⊚ false 64) The governmental fund financial statements are useful in assessing operational accountability. ⊚ true ⊚ false 65) Government-wide financial statements are prepared using the accrual basis of accounting. ⊚ true ⊚ false 66) A public college or university would be an example of a special purpose government. ⊚ true ⊚ false Version 1 24 67) A primary objective of financial reporting for governments and not-for-profit organizations is to provide information that can be used in assessing the ability to provide services. ⊚ true ⊚ false 68) Operational accountability requires providing information that can be used to help assess whether resources are being used efficiently and effectively. ⊚ true ⊚ false 69) The federal government has an open data website called Open Government that provides access to state and local data websites. ⊚ true ⊚ false 70) Both the GASB and the FASB require entities to include a management discussion and analysis in the financial reports. Version 1 25 ⊚ true ⊚ false 71) Similar to for-profit entities, net income serves as a good measure of a government’s performance. ⊚ true ⊚ false Version 1 26 Answer Key Test name: Reck ch01 11) B 12) D 13) A 14) B 15) C 16) A 17) B 18) A 19) A 20) A 21) B 22) D Version 1 27 23) A 24) D 25) C 26) B 27) A 28) D 29) B 30) C 31) A 32) B 33) D 34) B 35) B 36) C Version 1 28 37) B 38) D 39) D 40) C 41) B 42) TRUE 43) FALSE 44) TRUE 45) FALSE 46) FALSE 47) TRUE 48) TRUE 49) FALSE 50) TRUE Version 1 29 51) FALSE 52) TRUE 53) FALSE 54) TRUE 55) FALSE 56) FALSE 57) TRUE 58) FALSE 59) TRUE 60) TRUE 61) FALSE 62) TRUE 63) TRUE 64) FALSE Version 1 30 65) TRUE 66) TRUE 67) FALSE 68) TRUE 69) TRUE 70) FALSE 71) FALSE Version 1 1 Student name:__________ 1) List the basic financial statements required by GASB standards and briefly explain their purposes. 2) "The primary purpose of an accounting system for a state or a local government is to make it possible for financial statements to demonstrate compliance with finance-related legal and contractual provisions." Explain why you believe this statement to be correct or incorrect. 3) Explain the difference between measurement focus and basis of accounting. Also, explain the difference between the economic resources measurement focus and the current financial resources measurement focus as well as the difference between the accrual and modified accrual bases of accounting. Which funds and government-wide activities use each focus and each basis? 4) List the seven fund financial statements that are required as part of the basic financial statements by GASB standards. What measurement focus and basis of accounting should be used in preparing each of these statements? Version 1 2 5) Explain the nature of the three major activity categories of a state or local government: governmental activities, business-type activities, and fiduciary activities. Provide examples of each. 6) Expenditures and expenses are classified as which of the following elements under GASB concepts statements? A) Deferred outflows of resources. B) Outflows of resources. C) Change in net position. D) Deferred inflows of resources. 7) Which of the following is not an element defined by GASB Concepts Statement No. 4? A) Asset. B) Net position. C) Deferred inflows of resources. D) Revenues. Version 1 3 8) Which of the following is a primary objective of financial reporting by state and local governments? A) To provide information that can be used for capital allocation decisions made by external investors. B) To report on the legal requirements imposed on the government by its elected officials. C) To provide information that can be used to assess a government's accountability. D) To fulfill the government's statutory duty to report on cash received and cash disbursed. 9) According to the GASB definition, which of the following represents an inflow of resources? A) Expenditures. B) Revenues. C) Assets. D) Deferred inflows. 10) According to the GASB, information that is essential and useful to placing information in the correct context should be reported as which of the following? A) Required supplementary information. B) Supplementary information. C) Notes to the financial statements. D) A line item on the financial statements. 11) Which of the following is not one of the methods recommended by the GASB Concepts Statement 3 for communicating information to external users of government financial reports? Version 1 4 A) Providing a popular report. B) Recognition in the financial statements. C) Presentation as required supplementary information. D) Disclosure in the notes to the financial statements. 12) Which of the following activities is considered a core government activity? A) Finance and budget. B) Central purchasing. C) Culture and recreation. D) Employee pension fund. 13) Which of the following is true regarding financial reporting for internal service funds? A) Internal service funds are reported in the governmental fund financial statements. B) Internal service funds are aggregated and reported as a major fund in the proprietary fund financial statements. C) Internal service funds are generally reported in the Business-type Activities column of the government-wide financial statements. D) Internal service funds are generally reported in the Governmental Activities column of the government-wide financial statements. 14) Which of the following is not a characteristic of a fund as defined by GASB standards? A) An accounting entity. B) A fiscal entity. C) A reporting entity. D) A self-balancing set of accounts. Version 1 5 15) In accounting for state and local governments the modified accrual basis is required for A) Proprietary and fiduciary funds. B) Governmental funds. C) Governmental and fiduciary funds. D) Governmental and internal service funds. 16) Under the modified accrual basis of accounting, revenues should be recognized when A) Earned. B) Collected in cash. C) Authorized by the budget ordinance. D) Measurable and available. 17) Which of the following funds is a governmental fund-type? A) Private-purpose trust fund. B) Internal service fund. C) Permanent fund. D) Enterprise fund. 18) Financial resources set aside to pay principal and interest on general long-term debt may be accounted for in which of the following fund types? A) Private-purpose trust fund. B) Debt service fund. C) Principal and interest trust fund. D) Internal service fund. 19) Which of the following is a proprietary fund? Version 1 6 A) Special revenue fund. B) Investment trust fund. C) Debt service fund. D) Internal service fund. 20) Which of the following is not a fund financial statement? A) Statement of activities. B) Balance sheet. C) Statement of revenues, expenses, and changes in net position. D) Statement of changes in net position. 21) Which of the following is a fiduciary fund? A) Investment trust fund. B) Special revenue fund. C) Debt service fund. D) Enterprise fund. 22) Which of the following funds would be most appropriate when accounting for an activity that provides goods or services to the public for a fee that is intended to make the activity selfsupporting? A) Investment trust fund. B) Enterprise fund. C) Internal service fund. D) Special revenue fund. Version 1 7 23) Which of the following funds should be used if resources provided by a federal grant must be set aside and used for counseling youthful offenders? A) Private-purpose trust fund. B) Enterprise fund. C) Internal service fund. D) Special revenue fund. 24) Which of the following funds would be used to account for an activity that provides centralized purchasing and sales of goods or services to other departments or agencies of the government on a cost-reimbursement basis? A) Enterprise fund. B) Fiduciary fund. C) Internal service fund. D) Permanent fund. 25) Which of the following funds would record depreciation of capital assets? A) Special revenue fund. B) Permanent fund. C) Internal service fund. D) Custodial fund. 26) Capital assets used by departments accounted for by the General Fund of a governmental unit should be accounted for in which of the following? A) The General Fund. B) The governmental activities journal. C) The business-type activities journal. D) The general capital assets fund. Version 1 8 27) Capital assets used by an enterprise fund should be accounted for in the A) Enterprise fund and depreciation on the capital assets should be recorded. B) Business-type activities journal but no depreciation on the capital assets should be recorded. C) Governmental activities journal and depreciation on the capital assets should be recorded. D) Enterprise fund but no depreciation on the capital assets should be recorded. 28) Which of the following funds are proprietary funds? A) Enterprise funds, investment trust funds, pension trust funds, and the General Fund. B) Enterprise funds and internal service funds. C) Internal service funds, special revenue funds, and enterprise funds. D) Proprietary funds are not used in governmental accounting. 29) Which of the following funds are governmental funds? A) General Fund, special revenue funds, capital projects funds, debt service funds, and private-purpose trust funds. B) General Fund, special revenue funds, private-purpose trust funds. C) General Fund, special revenue funds, debt service funds, capital projects funds, and permanent funds. D) General Fund, special revenue funds, capital projects funds, debt service funds, and internal service funds. 30) In what fund would the activities of a water utility department, which offers its services to the general public on a user charge basis be recorded? Version 1 9 A) An enterprise fund. B) A special revenue fund. C) The General Fund. D) An internal service fund. 31) The measurement focus and basis of accounting that are most unlike those used by business entities are those used by A) Governmental funds. B) Fiduciary funds. C) Proprietary funds. D) Contribution funds. 32) Which of the following governmental funds must be reported as a major fund? A) The General Fund. B) Any fund with total assets, liabilities, revenues, or expenditures that are 10% or more of the General Fund and 5% or more of total General Fund and Business-type Activities. C) The government may opt to include or exclude any fund it choses as a major fund. D) Only the General Fund and special revenue funds that meet the 10% and 5% size criteria. 33) Which of the following bases of accounting should be used in preparing fund financial statements? Governmental funds Proprietary funds Fiduciary funds A) Modified accrual Accrual Modified accrual B) Modified accrual Modified accrual Modified accrual C) Modified accrual Accrual Accrual D) Accrual Accrual Accrual Version 1 10 A) Choice A B) Choice B C) Choice C D) Choice D 34) A major governmental fund is one that has one or more elements (e.g., assets, liabilities, revenues, or expenditures) that is at least: A) Five percent of the corresponding element(s) of total governmental funds and 10 percent of the corresponding element(s) of total governmental and enterprise funds combined. B) Ten percent of the corresponding element(s) of total governmental funds and 10 percent of the corresponding element(s) of total governmental and enterprise funds combined. C) Five percent of the corresponding element(s) of total governmental funds and five percent of the corresponding element(s) of total governmental and enterprise funds combined. D) Ten percent of the corresponding element(s) of total governmental funds and 5 percent of the corresponding element(s) of total governmental and enterprise funds combined. 35) A city received resources that the state indicates can only be used for public works projects, such as road construction. Assuming the resources have not been expended by year end, how would the resources the city received be shown in the city’s fund balances? A) Designated Fund Balance. B) Committed Fund Balance. C) Restricted Fund Balance. D) Assigned Fund Balance. 36) Which of the following would be reported as a nonspendable fund balance? Version 1 11 A) Inventory. B) Restricted assets. C) Assets whose use is limited. D) Capital assets. 37) Under GASB standards which of the following funds can report a positive amount for unassigned fund balance? A) Capital projects fund. B) Special revenue fund. C) General Fund. D) All of the options. 38) Use the following information to determine whether the Development Special Revenue and the Debt Service Funds should be reported as major funds based on asset amounts provided. Development Special Revenue Fund Assets $740,000 Debt Service Fund Assets $150,000 Total Governmental Fund Assets $7,500,000 Total Governmental Fund and Enterprise Fund Assets $8,750,000 A) The Development Special Revenue Fund should be reported as major. B) The Debt Service Fund should be reported as major. C) Both the Development Special Revenue Fund and the Debt Service Fund should be reported as major. D) Neither the Development Special Revenue Fund nor the Debt Service Fund should be reported as major. 39) Use the following information to determine whether the Fire House Capital Projects Fund should be reported as a major fund based on expenditure amounts provided. Fire House Capital Projects Fund expenditures $2,740,000 General Fund expenditures $27,150,000 Version 1 12 Total of all other governmental fund expenditures 1,433,000 Total of enterprise fund expenditures $7,500,000 A) Yes, it is more than 10 percent of the General Fund expenditures. B) No, it is less than 10 percent of the total governmental fund expenditures. C) Yes, it is more than 5 percent of the total governmental fund expenditures. D) There is insufficient information to determine if the major fund criteria are met. 40) Which of the following is not one of the seven elements defined by the GASB concept statements? A) Deferred inflows of resources. B) Expenses. C) Assets. D) Net position. 41) The GASB concept statements indicate that in certain instances a remeasured value for an asset or liability should be reported on the financial statements. Which of the following is not one of the methods recommended by the GASB for remeasured amounts? A) Historical cost. B) Lower of cost or market. C) Fair value. D) Replacement cost. 42) The GASB recommends that budget-to-actual comparison information be provided as which of the following? A) A stand-alone financial statement. B) A schedule in the notes to the financial statements. C) As a part of the basic financial statements. D) As a required supplementary information schedule. Version 1 13 43) The GASB requires budget-to-actual comparison information for which of the following? A) The General Fund. B) All governmental funds. C) The General Fund and major special revenue funds with legally adopted budgets. D) All special revenue, debt service and capital projects funds with legally adopted budgets. 44) Following are some of the county’s governmental funds. The county has asked you to determine if any of the funds listed should be classified as major funds based on the GASB size criteria. Clearly indicate which fund(s) you believe should be classified as major and provide support for your choice(s). General Fund Special Revenue Fund Debt Service Fund Total of all Government al Funds Total of all Governmenta l & Enterprise Funds Assets 12,000,0 00 1,000,0 00 500,000 15,000,0 00 21,000,0 00 Liabilities 3,000,00 0 250,000 30,000 4,580,00 0 5,890,00 0 Revenues 10,000,0 00 600,000 1,450,0 00 13,770,0 00 17,123,0 00 Expenditures/Expen ses 9,859,00 0 725,000 1,300,0 00 13,460,0 00 16,665,0 00 Version 1 14 45) According to the guidance of GASB Concepts Statement 3, financial information can be communicated by recognition in the financial statements, disclosure in the notes to the financial statements, presentation as required supplementary information, or presentation as supplementary information. ⊚ true ⊚ false 46) According to GASB Concepts Statement 1 a primary objective of financial reports is to provide information useful in determining the accountability of the government. ⊚ true ⊚ false 47) Activities a local government can engage in are classified as governmental, businesstype, or fiduciary. ⊚ true ⊚ false 48) Governmental funds are identical to governmental activities, proprietary funds are identical to business-type activities, and fiduciary funds are identical to fiduciary activities of a government. ⊚ true ⊚ false 49) Only those governmental and proprietary funds that meet the GASB size criteria for major funds are reported in separate columns of the governmental and proprietary fund financial statements. ⊚ true ⊚ false Version 1 15 50) Economic resources are cash or items expected to be converted into cash during the current period, or soon enough thereafter to pay current period liabilities. ⊚ true ⊚ false 51) Governmental funds account for current and long-term liabilities. ⊚ true ⊚ false 52) The types of funds that may be used in governmental accounting are classified into the three categories of governmental, proprietary, and fiduciary. ⊚ true ⊚ false 53) The governmental funds category includes the General Fund, special revenue funds, debt service funds, capital projects funds, and internal service funds. ⊚ true ⊚ false 54) Governments can, in part, demonstrate operational accountability by using an economic resources measurement focus and the accrual basis of accounting for reporting. ⊚ true ⊚ false 55) All capital assets acquired by or used by a fund should be reported in the fund balance sheet or statement of net position. ⊚ true ⊚ false Version 1 16 56) Because budgetary accounts are used by governments, government financial statements can never be said to be in accord with generally accepted accounting principles. ⊚ true ⊚ false 57) The maximum number of financial statements prepared by any of the three fund categories of government is three. ⊚ true ⊚ false 58) When revenues are legally restricted by external resource providers or committed by enabling legislation for particular operating purposes, a private purpose trust fund is created. ⊚ true ⊚ false 59) A debt service fund is used to account for financial resources set aside for the purpose of making principal and interest payments on general long-term debt. ⊚ true ⊚ false 60) A deferred inflow of resources is defined as “an acquisition of net assets by the government that is applicable to a future reporting period.” ⊚ true ⊚ false 61) Expenditures are never recorded in governmental funds. Version 1 17 ⊚ true ⊚ false 62) Deferred outflows of resources is a type of asset that is unique to government. ⊚ true ⊚ false 63) Revenues are an example of what the GASB terms an inflow of resources. ⊚ true ⊚ false 64) An expenditure is an example of what the GASB terms an outflow of resources. ⊚ true ⊚ false 65) Deferred inflows of resources and deferred outflows of resources would be shown in separate sections of a government’s statement of net position. ⊚ true ⊚ false 66) In accordance with GASB standards, a deferred inflow of resources is reported in the liabilities section of the financial statement. ⊚ true ⊚ false 67) The GASB concept statements indicate that an asset that is going to be converted to cash should be reported at a remeasured amount at the financial statement date. Version 1 18 ⊚ true ⊚ false 68) Proprietary funds primarily provide services to the general public for a fee. ⊚ true ⊚ false 69) A permanent endowment is an example of a nonspendable fund balance. ⊚ true ⊚ false 70) Assigned fund balances can be either positive or negative. ⊚ true ⊚ false 71) The General Fund is the only fund that can have a positive unassigned fund balance. ⊚ true ⊚ false 72) The positive fund balance in a special revenue fund must at a minimum be reported as assigned. ⊚ true ⊚ false 73) Nonmajor funds are not reported on the fund financial statements. ⊚ true ⊚ false Version 1 19 74) There are four major activity categories reported by state and local governments: governmental, government-wide, proprietary, and fiduciary. ⊚ true ⊚ false 75) Governmental activities include the core services provided by a government, such as public safety. ⊚ true ⊚ false 76) The statement of net position is a governmental fund financial statement. ⊚ true ⊚ false 77) The only difference between the modified accrual basis of accounting and the accrual basis is that one records expenditures and the other records expenses. ⊚ true ⊚ false 78) Nonmajor funds are all reported in the same column on the governmental fund financial statements. ⊚ true ⊚ false Version 1 20 Answer Key Test name: Reck ch00 2 6) B 7) D 8) C 9) B 10) A 11) A 12) C 13) D 14) C 15) B 16) D 17) C 18) B 19) D 20) A 21) A 22) B 23) D 24) C 25) C 26) B 27) A 28) B 29) C 30) A 31) A Version 1 21 32) A 33) C 34) D 35) C 36) A 37) C 38) D 39) B 40) B 41) B 42) D 43) C 45) TRUE 46) TRUE 47) TRUE 48) FALSE 49) FALSE 50) FALSE 51) FALSE 52) TRUE 53) FALSE 54) TRUE 55) FALSE 56) FALSE 57) TRUE 58) FALSE 59) TRUE 60) TRUE 61) FALSE 62) FALSE Version 1 22 63) TRUE 64) TRUE 65) TRUE 66) FALSE 67) TRUE 68) FALSE 69) TRUE 70) FALSE 71) TRUE 72) TRUE 73) FALSE 74) FALSE 75) TRUE 76) FALSE 77) FALSE 78) TRUE Version 1 1 Student name:__________ 1) Define the term revenue and distinguish between revenue and other financing sources. 2) Explain the difference between an expenditure and an expense. 3) What benefits do financial statement users derive from the net (expense) revenue format used for the government-wide statement of activities? 4) How should depreciation expense be reported in the government-wide statement of activities? Version 1 2 5) How does the use of encumbrance procedures improve budgetary control over expenditures? 6) Which of the following best describes the recommended format for the government-wide statement of activities? A) Program revenues minus expenses minus other revenues and expenses equals change in net position. B) Program revenues plus general revenues minus expenses equals change in net position. C) Program revenues minus expenses plus general revenues equals change in net position. D) Expenses minus program revenues plus general revenues equals change in net position. 7) Which of the following is generally not an expense allocated to a government function or program? A) Inventory of supplies expense. B) Administrative payroll. C) Interest on general long-term liabilities. D) Depreciation expense on capital assets. 8) Which of the following is not a category of program revenue reported on the statement of activities at the government-wide level? Version 1 3 A) General program revenues. B) Charges for services. C) Operating grants and contributions. D) Capital grants and contributions. 9) Which of the following best defines net (expense) revenue as reported on the government-wide statement of activities? A) Expenses minus the total of program and general revenues. B) Expenses minus program revenues. C) The total of program and general revenues minus expenses. D) Program revenues minus expenses. 10) Extraordinary items and special items are reported on the government-wide statement of activities: A) With normal recurring general revenues. B) As separate line items in the Function/Programs section of the statement of activities. C) As separate line items below General Revenues in the statement of activities. D) As separate line items above General Revenues. 11) Which of the following expenses would most likely be reported as a separate line item on the statement of activities? A) Interest on long-term debt. B) Inventory costs. C) Administrative expenses. D) Capital outlays. Version 1 4 12) Which of the following wouldnot be reported as charges for services on the statement of activities? A) Parking fines. B) Business permits. C) Registration fees. D) Grant for summer programs. 13) Which of the following items would not appear in a statement of revenues, expenditures, and changes in fund balances prepared for a governmental fund? A) Depreciation expense. B) Interfund transfers in. C) Revenues from property taxes. D) Expenditures for employee salaries. 14) Which of the following would always be classified as a general revenue? A) Grant proceeds. B) Special assessment charges for snow removal. C) Library fines. D) Fuel taxes earmarked for maintenance of roads and bridges. 15) The cost to purchase a good or service is the definition of an A) Expenditure. B) Expense. C) Other financing use. D) Interfund transfer out. Version 1 5 16) Which of the following would not appear on a governmental fund balance sheet? A) Accounts receivable. B) Inventory. C) Vouchers payable. D) Bonds payable. 17) When the budget for the General Fund is recorded, the required journal entry will include which of the following? A) A credit to Estimated Revenues. B) A debit to Encumbrances. C) A credit to Appropriations. D) A credit to Fund Balance. 18) When the budget of a government is recorded and Appropriations exceeds Estimated Revenues, how is the Budgetary Fund Balance account recorded? A) Credited at the beginning of the year and debited at the end of the year. B) Credited at the beginning of the year and no entry is made at the end of the year. C) Debited at the beginning of the year and no entry is made at the end of the year. D) Debited at the beginning of the year and credited at the end of the year. 19) Which of the following accounts is a budgetary account of a governmental fund? A) Fund Balance. B) Appropriations. C) Expenditures. D) Other Financing Sources. Version 1 6 20) The Estimated Revenues control account of a government is credited when: Budgetary accounts are closed Revenues are recorded A) Yes No B) No No C) No Yes D) Yes Yes A) Choice A. B) Choice B. C) Choice C. D) Choice D. 21) Under the modified accrual basis of accounting used by the General Fund, financial resources are considered available if the revenue or other financing source is expected to be collected A) Within 60 days after year-end. B) Within 90 days after year-end. C) During the current fiscal period. D) During the current fiscal period or soon enough after year-end to pay current period obligations. 22) Which of the following accounts of a government is credited when a purchase order is approved? A) Encumbrances. B) Encumbrances Outstanding. C) Vouchers Payable. D) Appropriations. Version 1 7 23) The Expenditures control account of a government is debited when: A) The supplies budget is recorded. B) Supplies are ordered. C) Supplies previously encumbered are received. D) The invoice for supplies is paid. 24) Which of the following is true regarding other financing sources and other financing uses? A) Both must be reported separately from revenues and expenditures in the statement of revenues, expenditures, and changes in fund balances. B) These terms are used to distinguish program revenues or expenses from general revenues or expenses. C) These terms are used for minor revenue or expenditure items that are peripheral to the government's mission. D) Other financing sources are equivalent to gains and other financing uses are equivalent to losses. 25) Under which basis of accounting for a government should revenues be recognized in the period when they are measurable and available? Accrual basis Modified accrual basis A) Yes No B) No No C) No Yes D) Yes Yes A) Choice A. B) Choice B. C) Choice C. D) Choice D. Version 1 8 26) The expenditure classification "Public Safety" is an example of which of the following types of classifications? A) Activity. B) Function. C) Character. D) Object. 27) When supplies ordered for use in an activity accounted for in the General Fund are received at an actual price that is more than the estimated price on the purchase order, the Encumbrance account is: A) Debited for the estimated price on the purchase order. B) Credited for the estimated price on the purchase order. C) Debited for the actual price for the supplies received. D) Credited for the actual price for the supplies received. 28) A statement of revenues, expenditures, and changes in fund balances—budget and actual is: A) Required by GAAP for the General Fund, special revenue funds, and all other governmental fund types for which an annual budget has been adopted. B) Required by GAAP for internal management reports only; not permitted for external financial reporting. C) Required by GAAP for all governmental fund types. D) Optional under GAAP, as long as a budgetary comparison schedule is presented. 29) The account "Interfund Transfers In" would be classified in a General Fund statement of revenues, expenditures, and changes in fund balance as a(an): Version 1 9 A) Revenue. B) Other financing use. C) Other financing source. D) Current liability. 30) The expenditure classification "City Attorney" is an example of which of the following types of classification? A) Function. B) Organization unit. C) Character. D) Program. 31) When the budget of a government is adopted and Estimated Revenues exceed Appropriations, the excess is: A) Credited to Budgetary Fund Balance. B) Debited to Budgetary Fund Balance. C) Debited to Encumbrances Outstanding. D) Credited to Encumbrances Outstanding. 32) Which of the following depict the typical order of steps in the acquisition of goods and services by an activity recorded in the General Fund? A) Appropriation, disbursement, encumbrance, expenditure. B) Appropriation, encumbrance, expenditure, disbursement. C) Encumbrance, appropriation, expenditure, disbursement. D) Encumbrance, expenditure, appropriation, disbursement. Version 1 10 33) When equipment that is to be used by the General Fund is received, how should it be recorded? A) Capital Asset. B) Appropriation. C) Encumbrances. D) Expenditure. 34) The journal entry to record budgeted revenues will include which of the following? A) A debit to Estimated Revenues. B) A credit to Estimated Revenues. C) A debit to Revenues Receivable. D) Only a memorandum entry is necessary. 35) The County Commission of Seminole County adopted its General Fund budget for the year ending June 30, comprising estimated revenues of $13,200,000 and appropriations of $12,900,000. The journal entry Seminole County makes to record the budget will include which of the following? A) A credit to Appropriations, $12,900,000. B) A credit to Encumbrances, $12,900,000. C) A debit to Estimated Expenditures, $12,900,000. D) A credit to Budgetary Fund Balance, $12,900,000. 36) One characteristic that distinguishes other financing sources from revenues is that other financing sources: A) Arise from debt issuances or interfund transfers in. B) Increase fund balances when they are closed at year-end. C) Provide financial resources for the recipient fund. D) Have a normal credit balance. Version 1 11 37) What is the process by which a legal valuation is placed on taxable property called? A) An appropriation. B) A property tax levy. C) Property assessment. D) Ad valorem determination. 38) The County Commission of Canyon County adopted its General Fund budget for the year ending June 30, comprising estimated revenues of $13,200,000 and appropriations of $12,900,000. The budgeted excess of estimated revenues over appropriations will be recorded as which of the following? A) A credit to Surplus Revenues, $300,000. B) A debit to Estimated Excess Revenues, $300,000. C) A credit to Budgetary Fund Balance, $300,000. D) A memorandum entry only. 39) When the budget for the General Fund is recorded, the required journal entry will include which of the following? A) A credit to Estimated Revenues. B) A debit to Encumbrances. C) A debit to Appropriations. D) Either a debit or credit to Budgetary Fund Balance, as appropriate. 40) Which of the following accounts is not closed at the end of the reporting period? Version 1 12 A) Deferred inflows of resources. B) Revenues. C) Expenditures. D) Other financing sources. 41) The expenditure classification "Current Expenditures" is an example of which of the following types of classifications? A) Activity. B) Character. C) Function. D) Object. 42) Which of the following statements is true regarding the required disclosure of budgetary information? A) All budgetary disclosures should be presented in the notes to the financial statements. B) There is one specific format for presenting the budgetary comparison statement. C) Budgetary comparisons may be presented as a statement or as required supplementary information (RSI). D) The budgetary reconciliation must focus on the operating statement, not the statement of position. 43) When is the Encumbrances control account of a city decreased? Goods are ordered Goods are received A) Yes No B) No No C) No Yes D) Yes Yes Version 1 13 A) Choice A. B) Choice B. C) Choice C. D) Choice D. 44) Under the modified accrual basis of accounting, expenditures generally are not recognized until: A) They are paid in cash. B) An obligation is incurred that will be paid from currently available financial resources. C) Goods or services are ordered. D) They are approved by the legislative body. 45) Which of the following fund types uses the current financial resources measurement focus and modified accrual basis of accounting? A) Enterprise fund. B) Special revenue fund. C) Investment trust fund. D) Pension trust fund. 46) Which of the following will increase the fund balance of a government at the end of the fiscal year? Version 1 14 A) The sum of revenues and other financing sources is more than the sum of expenditures and other financing uses. B) Expenditures are more than the difference between revenues and the excess of other financing sources over other financing uses. C) Revenues are less than the sum of expenditures, other financing sources, and other financing uses. D) The sum of fund balance, revenues, and other financing sources is more than the sum of expenditures and other financing uses. 47) A liability is recorded in governmental funds when: A) Goods or services are ordered. B) Goods or services are received and the invoice is vouchered. C) Invoices are paid. D) The appropriation is reduced. 48) Which of the following terms refers to an actual cost rather than an estimate? A) Budget. B) Encumbrance. C) Expenditure. D) Appropriation. 49) For what funds do budgetary comparisons need to be presented in connection with the basic financial statements? A) General Fund. B) General Fund and all major funds. C) All governmental funds with legally adopted annual budgets. D) General Fund and major special revenue funds for which a budget is legally adopted. Version 1 15 50) When computers are ordered by the mayor's office, the purchase order should be recorded in the General Fund as a debit to which of the following accounts? A) Encumbrances. B) Equipment. C) Expenditures. D) Appropriations. 51) If supplies that were ordered by a department financed by the General Fund are received at an actual price that is less than the estimated price on the purchase order, the department’s available balance of appropriations for supplies will be: A) Decreased. B) Increased. C) Unaffected. D) Either decreased or increased, depending on the department’s specific budgetary control procedures. 52) The Appropriations account of a governmental fund is credited when: A) The budgetary accounts are closed. B) The budget is recorded. C) Supplies are purchased. D) Expenditures are recorded. 53) If a state law requires that local governments prepare General Fund and special revenue fund budgets on a basis that differs from the basis of accounting required by generally accepted accounting principles (GAAP) how should the budgetary comparison schedule be prepared? Version 1 16 A) The actual amounts in the budgetary comparison schedule should be reported using the government's budgetary basis. B) The actual amounts in the budgetary comparison schedule should be reported on the GAAP basis. C) Both the budgeted and actual amounts in the budgetary comparison schedule should be reported on the GAAP basis; a separate budget-basis comparison schedule should be prepared for the appropriate state oversight body. D) Only a budgetary comparison schedule prepared for the appropriate state oversight body is required. 54) The Expenditures control account of a government is credited when: A) Supplies are ordered. B) Supplies previously encumbered are received. C) The budget is recorded. D) Temporary accounts are closed at the end of the year. 55) The Encumbrances account is properly termed a: A) Long-term liability. B) Reservation of unassigned fund balance. C) Budgetary account. D) Current liability if paid within a year; otherwise, long-term debt. 56) The county determined it needed to prepare a budget amendment to reflect a decrease in charges for services of $100,000 and an increase in public safety expenditures of $150,000. What will be the effect of these two adjustments on the Budgetary Fund Balance account? Version 1 17 A) Budgetary Fund Balance will be debited $250,000. B) Budgetary Fund Balance will be credited $250,000. C) Budgetary Fund Balance will be debited $50,000. D) Budgetary Fund Balance will be credited $50,000. 57) The city amended its budget to increase expected grant revenues by $500,000 and increase expected culture and recreation expenditures by $500,000. Which of the following statements concerning the budget amendment journal entry is correct? A) Estimated Revenues will be credited for $500,000. B) Appropriations will be debited for $500,000. C) There will be no net adjustment to Budgetary Fund Balance. D) Expenditures will be debited for $500,000. 58) The government-wide statement of net position displays the net expense or revenue for each function or program of the government. ⊚ true ⊚ false 59) Program revenues are distinguished from general revenues on the government-wide statement of activities under GASB standards. ⊚ true ⊚ false 60) Three categories of program revenues are reported in the statement of activities: charges for services, operating grants and contributions, and capital grants and contributions. ⊚ true ⊚ false Version 1 18 61) All purchases of goods and services and all interfund transfers of the General Fund are recorded as Expenditures. ⊚ true ⊚ false 62) Interfund transfers are shown as general revenues on the government-wide statement of activities. ⊚ true ⊚ false 63) Contributions to permanent funds are shown on a separate line below the general revenues on the government-wide statement of activities. ⊚ true ⊚ false 64) On the government-wide statement of activities, depreciation expense for assets that essentially benefit all functions, such as the city hall, may be reported as a separate line item or on the same line as the General Government or similar function. ⊚ true ⊚ false 65) Other financing sources and uses are disclosed in a separate section below expenditures on the statement of revenues, expenditures, and changes in fund balances. ⊚ true ⊚ false Version 1 19 66) Expenses represent the costs to purchase goods or services, whereas expenditures represent the costs of goods or services consumed or expired during the period. ⊚ true ⊚ false 67) Other financing sources increase fund balance in the same manner as revenues. ⊚ true ⊚ false 68) Budgetary accounts used in the General Fund include Estimated Revenues, Estimated Other Financing Sources, Appropriations, Estimated Other Financing Uses, and Encumbrances. ⊚ true ⊚ false 69) All encumbrances must be closed at year-end. ⊚ true ⊚ false 70) Budgetary entries are made at the fund level and at the government-wide level. ⊚ true ⊚ false 71) Budgetary accounts are temporary accounts that are closed at the end of the fiscal year. ⊚ true ⊚ false Version 1 20 72) Budgetary accounts tend to have the same normal balances as related operating statement accounts. ⊚ true ⊚ false 73) GASB standards require that a variance column be provided in the budgetary comparison schedule. ⊚ true ⊚ false 74) An encumbrance represents the estimated future liability for goods or services resulting from placing a purchase order or signing a contract. ⊚ true ⊚ false 75) GASB standards require that at a minimum all state and local governments present a schedule of revenues, expenditures, and changes in fund balances—budget and actual for the General Fund and major special revenue funds for which annual budgets have been legally adopted. ⊚ true ⊚ false 76) Available means that a revenue or other financing source is expected to be collected during the current fiscal period or within one month of the fiscal year end. ⊚ true ⊚ false 77) Debt service can be classified by character and by object. Version 1 21 ⊚ true ⊚ false 78) The GASB indicates that expenditures should be classified at three levels—fund, function, and source. ⊚ true ⊚ false 79) GASB standards indicate that revenues should be classified by both fund and source. ⊚ true ⊚ false 80) The valuation of taxable property is determined through a property assessment. ⊚ true ⊚ false 81) The legal level of budgetary control represents the administrative level at which expenditures may not exceed appropriations without a formal budgetary amendment. ⊚ true ⊚ false 82) "Available appropriation" is calculated as the difference between appropriations and the sum of expenditures and encumbrances. ⊚ true ⊚ false Version 1 22 83) When goods for which an encumbrance has been recorded are received at an invoiced amount that varies from the amount encumbered, the encumbrance is reversed in the amount of the actual invoiced cost of the goods. ⊚ true ⊚ false 84) An allotment may be described as an internal allocation of funds on a periodic basis usually agreed upon by the department heads and the chief executive. ⊚ true ⊚ false 85) In the GASB reporting model, extraordinary items and special items must be reported as separate line items below General Revenues in the statement of activities to distinguish these nonrecurring items from normal recurring general revenues. ⊚ true ⊚ false 86) The numerical difference between (1) current assets and deferred outflows and (2) current liabilities and deferred inflows recorded in governmental funds is denoted as net position. ⊚ true ⊚ false 87) Encumbrance accounting is required in the accounting for payroll of governmental funds. ⊚ true ⊚ false Version 1 23 88) When an activity accounted for by the General Fund results in issuance of purchase orders or contracts for goods or services a record must be kept, but no journal entries in the General Fund are necessary. ⊚ true ⊚ false 89) Any balance in Encumbrances Outstanding that remains at the end of the fiscal year is reported as a line item under Fund Balances on the governmental funds balance sheet. ⊚ true ⊚ false 90) At the end of the fiscal year Encumbrances is closed to Budgetary Fund Balance with a credit. ⊚ true ⊚ false 91) Public school systems tend to follow the revenue and expenditure classifications of the National Center for Education Statistics rather than the GASB classifications. ⊚ true ⊚ false 92) The fund classification system used by public schools follows the GASB standards. ⊚ true ⊚ false 93) Public school systems prepare their financial reports in accordance with the requirements of the National Center for Education Statistics. ⊚ true ⊚ false Version 1 24 Version 1 25 Answer Key Test name: Reck ch003 6) D 7) C 8) A 9) B 10) C 11) A 12) D 13) A 14) D 15) A 16) D 17) C 18) D 19) B 20) A 21) D 22) B 23) C 24) A 25) C 26) B 27) B 28) D 29) C 30) B 31) A Version 1 26 32) B 33) D 34) A 35) A 36) A 37) C 38) C 39) D 40) A 41) B 42) C 43) C 44) B 45) B 46) A 47) B 48) C 49) D 50) A 51) B 52) B 53) A 54) D 55) C 56) A 57) C 58) FALSE 59) TRUE 60) TRUE 61) FALSE Version 1 27 62) FALSE 63) TRUE 64) TRUE 65) TRUE 66) FALSE 67) TRUE 68) TRUE 69) FALSE 70) FALSE 71) TRUE 72) FALSE 73) FALSE 74) TRUE 75) TRUE 76) FALSE 77) TRUE 78) FALSE 79) TRUE 80) TRUE 81) TRUE 82) TRUE 83) FALSE 84) TRUE 85) TRUE 86) FALSE 87) FALSE 88) FALSE 89) FALSE 90) FALSE 91) TRUE Version 1 28 92) TRUE 93) FALSE Version 1 1 Student name:__________ 1) Beach City received a gift of corporate stock valued at $1,200,000 on the date of the gift. The donor specified that the principal amount of the gift be maintained in perpetuity, but that earnings can be used to acquire works of art to improve the appearance of public buildings. All changes in fair value are to increase or decrease the principal amount of the gift. Assuming that Beach City uses a permanent fund to account for the endowment and a special revenue fund to account for the earmarked earnings from the endowment, explain the accounting process for (1) receipt of the original gift, (2) receipt of quarterly dividends, (3) notification that fair value of the original stock increased by $3,000 during the year, and (4) the effect on fund balances of closing temporary accounts at year-end. (Note: Ignore the effects of the transactions at the governmentwide level). 2) Which of the following financial statement(s) reports both current and noncurrent assets and liabilities? Government-wide Statement of Net Position General Fund Balance Sheet A) No Yes B) No No C) Yes No D) Yes Yes A) Choice A B) Choice B C) Choice C D) Choice D 3) Which of the following should not be reported on the balance sheet of the General Fund? Version 1 2 A) Equipment. B) Vouchers payable. C) Tax anticipation notes payable. D) Due from federal government. 4) When equipment is ordered by a department of the government, the purchase order should be recorded in the General Fund as a debit to: A) Appropriations. B) Equipment. C) Encumbrances. D) Expenditures. 5) The receipt of equipment that had previously been ordered should be recorded in the General Fund as a debit to: A) Appropriations. B) Equipment. C) Encumbrances. D) Expenditures. 6) The City of Kastle purchased a vehicle for the parks department. If the operations of the parks department are financed by general revenues, an asset would be recorded in which journal(s)? General Fund Governmental Activities A) Yes No B) No No C) No Yes D) Yes Yes Version 1 3 A) Choice A. B) Choice B. C) Choice C. D) Choice D. 7) The Town of Heartland levied property taxes in the amount of $1,600,000. The town estimates that 1 percent will be uncollectible. The journal entry to record the tax levy in the General Fund will include: A) A debit to Cash for $1,584,000. B) A credit to Revenues for $1,584,000. C) A debit to Allowance for Uncollectible Current Taxes for $16,000. D) A debit to Estimated Revenues for $1,600,000. 8) The Town of Cumberland levied property taxes in the amount of $1,600,000. The town estimates that 1 percent will be uncollectible. The journal entry to record the tax levy in the Governmental Activities general journal will include: A) A debit to Cash for $1,584,000. B) A credit to Revenues for $1,584,000. C) A debit to Allowance for Uncollectible Current Taxes for $16,000. D) A debit to Estimated Revenues for $1,600,000. 9) Motor City has calculated that General Fund property tax revenues of $5,640,000 are required for the current fiscal year. Over the past several years, the city has collected 94 percent of all property taxes levied. The city levied property taxes in the amount that will generate the required $5,640,000. Which of the following general journal entries would correctly record the property tax levy? A) Version 1 4 General Journal Debit Credit Taxes Receivable