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Question 1 2 points Save A primary characteristic

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Question 1 2 points...
Question 1 2 points Save A primary characteristic that distinguishes governmental entities from business entities is The need to generate revenues equal to or in excess of expenditures/expenses. The importance of the budget in the governing process. The need to provide goods or services. The correlation between revenues generated and demand for goods or services. Question 2 2 points Save Which of the following statements is true? Governments may engage in activities similar to activities engaged in by for-profit entities. There are a limited number of different types of governments. All governmental entities engage in the same activities. Managers may have a long-term focus and thereby sacrifice the short-term liquidity of the entity. Question 3 2 points Save To obtain a comprehensive understanding of a government’s fiscal health, a financial analyst should obtain an understanding of which of the following? All of the resources owned by the governmental entity. All of the resources which may be summoned by a governmental entity. Demographic data about the residents served by the governmental entity. All of the above. Question 4 2 points Save Which of the following is NOT generally considered a main user of government and not-for-profit entity external financial statements? Investors and creditors. Taxpayers. Donors. Internal managers. Question 5 2 points Save Which of the following objectives is considered to be the cornerstone of financial reporting by a governmental entity? Accountability. Budgetary compliance. Interperiod equity. Service efforts and accomplishments. Question 6 2 points Save The Governmental Accounting Standards Board is the primary standard-setting body for: All governments. All state and local governments. All governments and all not-for-profit entities. All state and local governments and all not-for-profit entities. Question 7 2 points Save As used by GASB, interperiod equity refers to which of the following? Financial reporting should: Demonstrate compliance with finance-related contractual requirements. Provide information to determine whether current-year revenues were sufficient to pay for current-year services. Demonstrate whether resources were obtained and used in accordance with the entity’s legally adopted budget. Provide information to assist users in assessing the government’s economy, efficiency, and effectiveness. Question 8 2 points Save Which of the following is NOT a purpose of external financial reporting by governments? External financial reports should allow users to Assess financial condition. Compare actual results with the budget. Assess the ability of elected officials to effectively manage people. Evaluate efficiency and effectiveness. Question 9 2 points Save What is the primary reason that governmental entities use fund accounting? Fund accounting is required by law. Fund accounting is required by GAAP. Fund accounting promotes control and accountability over restricted resources. Fund accounting promotes better control over operating activities. Question 10 2 points Save Which of the following funds is a fiduciary fund? Permanent fund. Agency fund. Capital project fund. Debt service fund. Question 11 2 points Save A city receives a donation from a citizen who specifies that the principal must be invested and the earnings must be used to support operations of a city-owned recreational facility. The principal of this gift should be accounted for in which of the following funds? Trust fund. Special revenue fund. Permanent fund. Internal service fund. Question 12 2 points Save Which of the following funds is a proprietary fund? Internal service fund. Special revenue fund. Capital project fund. Permanent fund. Question 13 2 points Save The state collects a gasoline tax that must be used to support highway construction and maintenance. The gasoline tax revenue should be accounted for in which of the following funds? General fund. Special revenue fund. Debt service fund. Internal service fund. Question 14 2 points Save Riverside Golf Course is a City-owned golf course that collects greens fees in amounts sufficient to cover its expenses. Riverside Golf Course should be accounted for in which of the following funds? Internal service fund. Enterprise fund. General fund. Special revenue fund. Question 15 2 points Save The Basic Financial Statements of a city do not include which of the following? Government-wide Statement of Net Assets. Government-wide Statement of Activities. Government-wide Statement of Cash Flows. Separate balance sheets for governmental and proprietary funds. Question 16 2 points Save Under the GASB Statement No. 34 reporting model for governmental entities, which of the following is required? Only one set of financial statements, prepared on the full accrual basis of accounting. Only one set of financial statements, prepared on the modified accrual basis of accounting. Two sets of financial statements, one that views the government as a collection of separate funds and reports using the current financial resources measurement focus and modified accrual basis of accounting for governmental funds and one that views the government as a whole by combining all governmental activities in one column and all business-type activities in another column using the full accrual basis of accounting for both columns. Two sets of financial statements, one that views the government as a whole using the current financial resources measurement focus and modified accrual basis of accounting and one that views the government by function and combines all governmental activities in one column and all business-type activities in another column using the full accrual basis of accounting for both columns. Question 17 2 points Save Property taxes levied on the citizens of the Hill County would most appropriately be budgeted in which of the following budgets? Operating budget. Capital budget. Flexible budget. All of the above. Question 18 2 points Save Which branch of local (city and county) government most commonly prepares the budget? Executive branch. Legislative branch. Judicial branch. None of the above. Question 19 2 points Save The City of Lakeview adopts its budget on a basis of accounting that permits outstanding purchase commitments to be charged against the budget in the year that the goods are ordered instead of in the year they are received. During the year the City ordered and received $4,000 of supplies (of which $3,000 had been paid and $1,000 was unpaid) and had $500 of outstanding purchase commitments for supplies at year-end. In the Statement of Budget to Actual, the expenditures for supplies would be: $3,000. $3,500. $4,000. $4,500. Question 20 2 points Save A governmental entity has formally integrated the budget into its accounting records. At the end of the third quarter the ledger account “Expenditures--Salaries” has a $100,000 debit balance. Which of the following is a true statement? The entity has $100,000 available to spend on salaries. The entity has incurred salaries in the amount of $100,000. The entity had paid salaries in the amount of $100,000. The entity has overspent its budget for salaries by $100,000. Question 21 2 points Save A county general fund budget includes budgeted revenues of $600 and budgeted expenditures of $595. Actual revenues for the year were $610. To close the Estimated Revenues account at the end of the year Debit Estimated Revenues $10 Credit Estimated Revenue $10 Debit Estimated Revenues $600 Credit Estimated Revenues $600 Question 22 2 points Save A county previously encumbered $10,000 for the acquisition of supplies. The supplies were received at a total cost of $9,800. To recognize this event the county should make which of the following entries? Debit Reserve for Encumbrances $10,000; Credit Encumbrances $10,000. Debit Reserve for Encumbrances $9,800; Credit Encumbrances $9,800. Debit Encumbrances $10,000; Credit Reserve for Encumbrances $10,000. Debit Encumbrances $9,800; Credit Reserve for Encumbrances $9,800. Question 23 2 points Save A review of Park City’s books shows the following information: I. $2,500 of outstanding vouchers payable II. $3,000 of outstanding purchase order amounts Which of these amounts would you expect to see in the general fund’s encumbrances account? $2,500 $3,000 $5,500 $500 Question 24 2 points Save To close Encumbrances at the end of the year which of the following entries should be made? Debit Encumbrances; Credit Fund Balance. Debit Reserve for Encumbrances; Credit Encumbrances. Debit Fund Balance; Credit Encumbrances. No closing entry needed. Question 25 2 points Save For fund financial statements, the measurement focus and basis of accounting used by governmental fund types are current financial resources and modified accrual accounting. economic resources and modified accrual accounting. financial resources and full accrual accounting. economic resources and full accrual accounting. Question 26 2 points Save Under the modified accrual basis of accounting, the amount of property tax revenues that should be recognized by a governmental entity in the current year related to the current year levy will be the total amount of the levy. the expected collectible portion of the levy. the portion of the levy collected. the portion of the levy collected in the current year or within sixty days of the fiscal period. Question 27 2 points Save Under the accrual basis of accounting, gains and losses on disposal of fixed assets are not recognized. are recognized when the proceeds (cash) of the sale are received (on the installment basis). are recognized only if there is a gain. are recognized when the sale occurs, regardless of when the cash is collected. Question 28 2 points Save A city that has a 12/31 fiscal year end has adopted a policy of recognizing the maximum amount of property tax revenue allowable under GAAP. Property taxes of $600,000 (of which 10% are estimated to be uncollectible) are levied in October 2007 to finance the activities of the fiscal year 2008. During 2008, cash collections related to property taxes levied in October 2007 were $500,000. In 2009 the following amounts related to the property taxes levied in October 2007 were collected: January $25,000; March, $5,000. For the fiscal year ended 12/31/08, what amount should be recognized as property tax revenues related to the 2007 levy on the governmental fund financial statements? $600,000. $540,000. $525,000. $500,000. Question 29 2 points Save Reimbursement-type grant revenues are recognized in the accounting period in which the award is made. the cash is received. the grantee is notified of the award. expenditures are recorded on grant-related activities. Question 30 2 points Save Payments made to a state pension plan by the state government on behalf-of a local government should not be displayed or disclosed in the local government financial statements. be displayed as a revenue in the local government financial statements. be displayed as both a revenue and an expenditure in the local government financial statements. should be disclosed, but not displayed, in the local government financial statements. Question 31 2 points Save Under GAAP, investment income for governmental entities must include only dividends and interest received during the period. only dividends and interest earned during the period. only realized gains and losses. dividends and interest received during the period and both realized and unrealized gains and losses. Question 32 2 points Save Governmental entities should recognize revenue from donated fixed assets that will be sold to support programs of the entity at which amount in their government-wide financial statements? historical cost to the donor. book value in the hands of the donor. fair value of the donated assets. zero. Question 33 2 points Save Which of the following is a derived tax revenue? Income taxes Sales taxes Both of the above Neither of the above Question 34 2 points Save As used in governmental accounting, expenditures are decreases in Net Assets. Net Financial Resources. Net Cash. Net Economic Resources. Question 35 2 points Save Assume that the City of Juneau maintains its books and records to facilitate the preparation of its fund financial statements. The City pays its employees bi-weekly on Friday. The fiscal year ended on Wednesday, June 30. Employees had been paid on Friday, June 25. The employees paid from the General Fund had earned $120,000 on Monday, Tuesday, and Wednesday (June 28, 29, and 30). What entry, if any, should be made in the City’s General Fund? Debit Expenditures; Credit Wages and Salaries Payable. Debit Expenses; Credit Wages and Salaries Payable. Debit Expenditures; Credit Encumbrances. No entry is required. Question 36 2 points Save Employees of the City of Orleans earn ten days paid leave for each 12 months of employment. The City has a policy that employees must take their vacation days during the year following the year in which it is earned. If they do not take vacation in the allotted period, they forfeit the vacation pay benefit. Traditionally, employees have taken 80% of the vacation days earned. During the current year, employees of the City of Orleans earned $400,000 in vacation pay. Assuming the city maintains its books and records in a manner to facilitate the preparation of its fund financial statements, which of the following entries is the correct entry in the General Fund to record the vacation pay earned during the current period? Debit Expenditures $400,000; Credit Vacation Payable $400,000. Debit Expenses $400,000; Credit Vacation Payable $400,000. Debit Expenditures $320,000; Credit Vacation Pay Payable $320,000. No entry required. Question 37 2 points Save State Community College, a public college, grants faculty members a one-year sabbatical leave after each seven years of service. There are no requirements for research, study or service during the compensated sabbatical leave. A particular faculty member earns $40,000 per year. Assuming that the college maintains its books and records in a manner that facilitates the preparation of the fund financial statements and assuming that any appropriate accruals have been made, what is the appropriate entry to record the employee’s salary paid while on sabbatical? Debit Expenditures $40,000; Credit Cash $40,000. Debit Sabbatical Leave Payable $40,000; Credit Cash $40,000. Debit Expenditures $40,000; Credit Sabbatical Leave Payable $40,000. No entry required. Question 38 2 points Save The amount of pension expenditures that should be recognized in the General Fund financial statements during the current year is The amount paid. The amount paid plus the amount that will be paid with available expendable financial resources. The amount paid so long as it does not exceed the actuarially determined amount. The actuarially determined amount. Question 39 2 points Save This year, Port City was sued for injuries sustained when a citizen slipped and broke her hip on the icy City Hall steps. The City attorney estimates the City will be held liable by the courts and a judgment of $200,000 will result. Because of the nature of the case it will likely be four years before the City makes any payment related to the accident. The present value of the likely future payment is $167,000. In the General Fund, at the end of the current fiscal year, Port City should recognize a liability of $200,000. $167,000. $0. $50,000. Question 40 2 points Save Several years ago, Grant County was sued by a former County employee for wrongful discharge. Although it was to be contested by the County, at the time of the lawsuit the attorneys believed that the County was likely to lose and the estimated amount of the ultimate judgment would be $100,000. This year, the case was finally settled with a judgment against the County of $150,000, which was paid. Assuming that the County maintains its books and records in a manner to facilitate the preparation of its government-wide financial statements, the entry in the current year should be Debit Expenditures $150,000; Credit Cash $150,000. Debit Expenses $150,000; Credit Cash $150,000. Debit Expenditures $50,000 and Claims Payable $100,000; Credit Cash $150,000. Debit Expenses $50,000 and Claims Payable $100,000; Credit Cash $150,000. Question 41 2 points Save Shoshone County uses the consumption method to account for supplies. At the beginning of the year the City had no supplies on hand. During the year the City purchased $600,000 of supplies for use by activities accounted for in the General Fund. The City used $400,000 of those supplies during the year. At fiscal year-end, the appropriate account balances on the General Fund financial statements would be Expenditures $600,000; Supplies Inventory $200,000. Expenditures $600,000; Supplies Inventory $0. Expenditures $400,000; Supplies Inventory $200,000. Expenditures $400,000; Supplies Inventory $0. Question 42 2 points Save On July 1, Gilbert County bought computer equipment for use in the administrative offices of the County. The equipment has an estimated useful life of three years and salvage of $10,000. Gilbert County has a 6/30 fiscal year-end. Assuming that the County maintains its books and records in a manner that facilitates the preparation of fund financial statements, the $70,000 cost of this equipment would require which of the following entries? Debit Expenditures $70,000; Credit Cash $70,000. Debit Equipment $70,000; Credit Cash $70,000. Debit Expenses $70,000; Credit Cash $70,000. No entry in the City’s governmental funds. Question 43 2 points Save Pocahontas School District, an independent public school district, financed the acquisition of a new school bus by signing a note for $90,000 plus interest on the unpaid balance at 6%. Annual principal payments of $30,000, plus interest, are due each July 1. Assuming that the District maintains its books and records in a manner that facilitates the preparation of the government-wide financial statements, the appropriate entry at the date of acquisition is Debit Expenditures $90,000; Credit Notes Payable $90,000. Debit Fixed Assets $90,000; Credit Notes Payable $90,000. Debit Expenditures $90,000; Credit Other Financing Sources $90,000. Debit Fixed Assets $90,000; Credit Other Financing Sources $90,000. Question 44 2 points Save Other financing sources/uses would appear on which of the following statements? Balance sheet. Statement of Revenues, Expenditures, and Changes in Fund Balance. Cash flow statement. None of the above. Question 45 2 points Save With regard to the resources dedicated to the acquisition of fixed assets that will be used in general government activities, which of the following is true? Governments MUST maintain capital projects funds for resources that are legally restricted to the acquisition of fixed assets. Governments MAY maintain capital projects funds for resources that are legally restricted to the acquisition of fixed assets. Governments may account for any resources dedicated (whether legally or not) to the acquisition of fixed assets in any of the governmental funds. Government must account for all resources set aside for fixed asset acquisition in a capital projects fund. Question 46 2 points Save A City issued bonds for the purpose of financing a major capital improvement. Which fund is the most appropriate fund in which to record the receipt of the bond proceeds? General Fund. Special Revenue Fund. Capital Projects Fund. Debt Service Fund. Question 47 2 points Save Use of a Debt Service Fund is required When financial resources are being accumulated for the purpose of paying for capital asset acquisition. When financial resources are being accumulated for the purpose of paying principal and interest when it matures. For all bonded debt service payments. For all debt service payments. Question 48 2 points Save Harbor City issued 6% tax-exempt bonds and used the proceeds to acquire federal government securities yielding 7%. After paying the interest on the tax-exempt bonds, the City cleared 1%. This is an example of An illegal act. Poor fiscal management. Arbitrage. Debt refunding. Question 49 2 points Save The City of St. Joe had outstanding $5 million of 6% bonds with a call provision. Due to changes in the prevailing interest rates, the City issued new bonds at 4.5% and used the proceeds to call the 6% bonds. This is an example of Debt retirement. Debt refunding. In-substance defeasance. Economic defeasance. Question 50 2 points Save Assuming that the government is not obligated in any manner, the debt service transactions of a special assessment bond issue should be reported in a(n) Debt service fund Enterprise fund Special revenue fund Agency fund
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