Government & Not-For-Profit Accounting |\ |\ |\ |\
Exam 2 Review questions with answers |\ |\ |\ |\ |\
What is the distinction between expenditures and expenses as
|\ |\ |\ |\ |\ |\ |\ |\ |\
the terms are used in governmental accounting? - CORRECT
|\ |\ |\ |\ |\ |\ |\ |\ |\
ANSWERS ✔✔Expenditures are decreases in net financial |\ |\ |\ |\ |\ |\ |\
resources whereas expenses are reductions in overall net assets.
|\ |\ |\ |\ |\ |\ |\ |\
Under pressure to balance their budgets, governments at all
|\ |\ |\ |\ |\ |\ |\ |\ |\
levels have resorted to fiscal gimmicks, such as delaying wages
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
and salaries of government employees from the last day of the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
month to the first day of the following month. In the year of the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
change they thereby had one fewer pay periods. How would the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
change affect the reported expenditures of a governmental fund
|\ |\ |\ |\ |\ |\ |\ |\ |\
under GAAP? - CORRECT ANSWERS ✔✔Wages and salaries are
|\ |\ |\ |\ |\ |\ |\ |\ |\
accounted for on an accrual basis, therefore it would have no
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
effect on reported expenditures under GAAP.
|\ |\ |\ |\ |\
When accounting for pension costs, the actuaries estimates and
|\ |\ |\ |\ |\ |\ |\ |\ |\
the budget may differ. Which should the entity report for pension
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
costs? - CORRECT ANSWERS ✔✔Only the amount of the pension
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
obligation that it intends to liquidate with available resources.
|\ |\ |\ |\ |\ |\ |\ |\
A city's electric utility transfers $40 million to its general fund. Of
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
this amount, $30 million is a return of the general fund's initial
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
contribution of "start-up capital." The balance is a payment in |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
lieu of property taxes that a private utility operating in the city
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
would have had to pay. Explain how each element of the transfer
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
would be reported in the general fund's operating statement. -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
,CORRECT ANSWERS ✔✔Both the $30 million return of capital and
|\ |\ |\ |\ |\ |\ |\ |\ |\
the $10 million payment in lieu of taxes would be reported as
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
nonreciprocal transfers since they represent payments for which |\ |\ |\ |\ |\ |\ |\ |\
no goods or services of equivalent value have been received and
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
for which there is no requirement for repayment. They would be
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
reported in the statement of revenues, expenditures, and
|\ |\ |\ |\ |\ |\ |\ |\
changes in fund balance in the section "other financing sources
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
and uses." |\
Nolanville's payroll for one of its departments is $15K per week. |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
It pays its employees on the Thursday of the week following that
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
in which the wages & salaries are earned.
|\ |\ |\ |\ |\ |\ |\ |\
In 2021, December 31 fell on a Friday. For the workweek
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
beginning Monday, December 27, 2021, and ending Friday, Dec
|\ |\ |\ |\ |\ |\ |\ |\ |\
31, 2021, employees were paid on Friday, January 7, 2022.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
For fiscal year 2021, what amount should the city recognize as
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
wage and salary expenditure pertaining to the week ending
|\ |\ |\ |\ |\ |\ |\ |\ |\
Friday, December 31, 2021, in its fund statements and in the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
government wide statements? - CORRECT ANSWERS ✔✔Fund |\ |\ |\ |\ |\ |\ |\
Statements: $15,000 |\
Gov't-Wide Statements: $15,000 |\ |\
In its fund financial statements, the city would recognize the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
receipt of a new computer (to be used for general admin
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
purposes) that it had ordered the previous year as an... -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔Expenditure |\ |\
, 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... - CORRECT ANSWERS ✔✔$0 - no
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
obligation until someone is sick
|\ |\ |\ |\ |\
Assume the same facts as the previous question. The amount
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
that city should add to the liability account in the government-
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
wide statement of net position as of year-end 2021 is... -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔$0.1 million |\ |\ |\
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 a fund-statement liability
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
account as of year-end 2021 is - CORRECT ANSWERS ✔✔$0
|\ |\ |\ |\ |\ |\ |\ |\ |\
Assuming the same facts, 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 - CORRECT ANSWERS ✔✔$3.4
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
million
Exam 2 Review questions with answers |\ |\ |\ |\ |\
What is the distinction between expenditures and expenses as
|\ |\ |\ |\ |\ |\ |\ |\ |\
the terms are used in governmental accounting? - CORRECT
|\ |\ |\ |\ |\ |\ |\ |\ |\
ANSWERS ✔✔Expenditures are decreases in net financial |\ |\ |\ |\ |\ |\ |\
resources whereas expenses are reductions in overall net assets.
|\ |\ |\ |\ |\ |\ |\ |\
Under pressure to balance their budgets, governments at all
|\ |\ |\ |\ |\ |\ |\ |\ |\
levels have resorted to fiscal gimmicks, such as delaying wages
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
and salaries of government employees from the last day of the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
month to the first day of the following month. In the year of the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
change they thereby had one fewer pay periods. How would the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
change affect the reported expenditures of a governmental fund
|\ |\ |\ |\ |\ |\ |\ |\ |\
under GAAP? - CORRECT ANSWERS ✔✔Wages and salaries are
|\ |\ |\ |\ |\ |\ |\ |\ |\
accounted for on an accrual basis, therefore it would have no
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
effect on reported expenditures under GAAP.
|\ |\ |\ |\ |\
When accounting for pension costs, the actuaries estimates and
|\ |\ |\ |\ |\ |\ |\ |\ |\
the budget may differ. Which should the entity report for pension
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
costs? - CORRECT ANSWERS ✔✔Only the amount of the pension
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
obligation that it intends to liquidate with available resources.
|\ |\ |\ |\ |\ |\ |\ |\
A city's electric utility transfers $40 million to its general fund. Of
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
this amount, $30 million is a return of the general fund's initial
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
contribution of "start-up capital." The balance is a payment in |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
lieu of property taxes that a private utility operating in the city
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
would have had to pay. Explain how each element of the transfer
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
would be reported in the general fund's operating statement. -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
,CORRECT ANSWERS ✔✔Both the $30 million return of capital and
|\ |\ |\ |\ |\ |\ |\ |\ |\
the $10 million payment in lieu of taxes would be reported as
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
nonreciprocal transfers since they represent payments for which |\ |\ |\ |\ |\ |\ |\ |\
no goods or services of equivalent value have been received and
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
for which there is no requirement for repayment. They would be
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
reported in the statement of revenues, expenditures, and
|\ |\ |\ |\ |\ |\ |\ |\
changes in fund balance in the section "other financing sources
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
and uses." |\
Nolanville's payroll for one of its departments is $15K per week. |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
It pays its employees on the Thursday of the week following that
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
in which the wages & salaries are earned.
|\ |\ |\ |\ |\ |\ |\ |\
In 2021, December 31 fell on a Friday. For the workweek
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
beginning Monday, December 27, 2021, and ending Friday, Dec
|\ |\ |\ |\ |\ |\ |\ |\ |\
31, 2021, employees were paid on Friday, January 7, 2022.
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
For fiscal year 2021, what amount should the city recognize as
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
wage and salary expenditure pertaining to the week ending
|\ |\ |\ |\ |\ |\ |\ |\ |\
Friday, December 31, 2021, in its fund statements and in the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
government wide statements? - CORRECT ANSWERS ✔✔Fund |\ |\ |\ |\ |\ |\ |\
Statements: $15,000 |\
Gov't-Wide Statements: $15,000 |\ |\
In its fund financial statements, the city would recognize the
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
receipt of a new computer (to be used for general admin
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
purposes) that it had ordered the previous year as an... -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔Expenditure |\ |\
, 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... - CORRECT ANSWERS ✔✔$0 - no
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
obligation until someone is sick
|\ |\ |\ |\ |\
Assume the same facts as the previous question. The amount
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
that city should add to the liability account in the government-
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
wide statement of net position as of year-end 2021 is... -
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
CORRECT ANSWERS ✔✔$0.1 million |\ |\ |\
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 a fund-statement liability
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\ |\
account as of year-end 2021 is - CORRECT ANSWERS ✔✔$0
|\ |\ |\ |\ |\ |\ |\ |\ |\
Assuming the same facts, 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 - CORRECT ANSWERS ✔✔$3.4
|\ |\ |\ |\ |\ |\ |\ |\ |\ |\
million
