Accy 161 Exam 2-2.txt

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Accy 161 Exam 2-2.txt
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Accy 161 Exam 2
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  1. Accountability for general capital asset expenditures funded by tax receipts of a government should be established in
    A. a. and b. and c. are all correct answers
    B. The governmental activities accounts at the government-wide level.
    C. Both b. and c.
    D. The capital projects fund
    E. The appropriate governmental funds.
    D. The capital projects fund
    (this multiple choice question has been scrambled)
  2. Which of the following funds of a government uses the modified accrual basis of accounting?
    A. Private-purpose trust fund.
    B. Enterprise.
    C. Capital projects.
    D. Internal service.
    C. Capital projects.
    (this multiple choice question has been scrambled)
  3. The city of Columbus issued bonds at par for the construction of a new city office building. Receipt of the bond proceeds would result in journal entries in which funds? Select the best answer.
    A. Capital Projects Fund: No; Debt Service Fund: No
    B. None of these answers would be appropriate
    C. Capital Projects Fund: Yes; Debt Service Fund: No
    D. Capital Projects Fund: No; Debt Service Fund: Yes
    E. Capital Projects Fund: Yes; Debt Service Fund: Yes
    C. Capital Projects Fund: Yes; Debt Service Fund: No
    (this multiple choice question has been scrambled)
  4. With regard to depreciation of general capital assets
    A. Depreciation expense should be charged in the appropriate governmental funds, and reported in the governmental activities accounts.
    B. Depreciation expense must be recorded in the governmental fund, but no depreciation expense can be recorded in the governmental activities accounts.
    C. No depreciation can be recorded in any governmental fund, but depreciation expense must be reported in the governmental activities accounts.
    D. No depreciation can be recorded in any governmental fund, nor is it permissible to record depreciation expense in the governmental activities accounts.
    C. No depreciation can be recorded in any governmental fund, but depreciation expense must be reported in the governmental activities accounts.
    (this multiple choice question has been scrambled)
  5. Interfund transfers from the General Fund to a capital projects fund to provide partial financing of a capital project would be reported by the capital projects fund as a (an)
    A. Current liability.
    B. Other financing source.
    C. Could be b. or c.
    D. Fund balance addition.
    E. Revenue.
    B. Other financing source.
    (this multiple choice question has been scrambled)
  6. For which of the following assets can the "modified approach" be elected in lieu of depreciation?
    A. Eligible infrastructure assets.
    B. Newly acquired general capital assets.
    C. All capital assets.
    D. a. and b. and c. are all correct.
    E. Just a. and c.
    A. Eligible infrastructure assets
    (this multiple choice question has been scrambled)
  7. A debt service fund is a (an)
    A. Proprietary fund.
    B. Governmental fund.
    C. Nonexpendable fund.
    D. Fiduciary fund.
    B. Governmental fund.
    (this multiple choice question has been scrambled)
  8. Which of the following resource inflows would be recorded as a revenue of a debt service fund?
    A. Taxes collected by the General Fund and transferred to the debt service fund
    B. Property taxes levied by the debt service fund for debt service purposes.
    C. a. and b. and c. are all correct.
    D. Both a. and b. are correct
    E. Transfer of the residual equity of a capital project from a capital projects fund to the debt service fund.
    B. Property taxes levied by the debt service
    (this multiple choice question has been scrambled)
  9. Transactions related to capital assets such as acquisitions and disposals are reported in:
    A. the government-wide financial statements
    B. the fund financial statements
    C. both the government-wide and fund financial statements
    C. both the government-wide and fund financial statements
    (this multiple choice question has been scrambled)
  10. Interest expenditures on bonds payable should be recorded in a debt service fund
    A. When bonds are paid off.
    B. When legally payable.
    C. At the end of the fiscal period if the interest due date does not coincide with the end of the fiscal period.
    D. When paid.
    e. All the above are correct depending on the circumstances
    B. When legally payable.
    (this multiple choice question has been scrambled)
  11. Which of the following debt service fund accounts would not be closed at the end of each fiscal year?
    A. Revenues.
    B. Expenditures—Bond Interest.
    C. Estimated Revenues.
    D. They would all be closed at the end of the year.
    E. Fund Balance.
    E. Fund Balance.
    (this multiple choice question has been scrambled)
  12. Debt service funds are used to account for which of the following
    A. Payment of interest only on general long-term debt.
    B. Payment of principal and interest on general long-term debt.
    C. Payment of principal and interest on all debt of the government, including that of enterprise funds.
    D. Payment of principal only on general long-term debt.
    B. Payment of principal and interest on general long-term debt.
    (this multiple choice question has been scrambled)
  13. Which of the following is a true statement regarding in-substance defeasance of bonds?
    A. The government must pledge to transfer amounts to an escrow agent prior to the due date for each interest and principal payment for the debt being defeased.
    B. The government must agree to maintain sufficient cash and investment balances in its debt service fund to cover all interest and principal payments for the debt being defeased.
    C. The government must place cash or other assets in an irrevocable trust sufficient to pay all future interest and principal payments for the debt being defeased.
    d. Any of the above approaches are acceptable under GAAP.
    C. The government must place cash or other assets in an irrevocable trust sufficient to pay all future interest and principal payments for the debt being defeased.
    (this multiple choice question has been scrambled)
  14. When bonds are issued there will be
    a: a. credit to a bonds payable account on the capital projects funds accounts
    b. credit to a bonds payable account on the general funds accounts
    c. credit to other financing sources account
    d. a. and c. are both correct e. b. and c. are both correct
    c. credit to other financing sources account
  15. When the budget is recorded for City of Caitlin for the sale of the bonds
    A. no entries are required on the debt service fund
    B. a. and c. are correct
    C. there will be a credit to estimated other financing sources in the general fund
    D. there will be a credit to estimated revenues in the general fund
    E. a. and b. are correct
    A. no entries are required on the debt service fund
    (this multiple choice question has been scrambled)
  16. When the bonds were sold, there was a (an):
    A. a debit to cash in the general fund accounts
    B. debit to cash in the debt service fund accounts
    C. both b. and c. are correct
    D. a credit to other financing uses
    E. both a. and c. are correct
    A. a debit to cash in the general fund accounts
    (this multiple choice question has been scrambled)
  17. Since the bond repayment are managed by the debt service fund, when debt repayment transaction occurs:
    A. there will be a credit to other financing uses
    B. only b. and c. are correct
    C. there will be a credit to appropriations
    D. there will be no entry on the governmental activities accounts
    e. none of the above are correct
    A. there will be a credit to other financing uses
    (this multiple choice question has been scrambled)
  18. The term "asset management system" applies to:
    A. all capital assets
    B. government-wide financial statements
    C. modified accrual accounting
    D. infrastructure assets
    D. infrastructure assets
    (this multiple choice question has been scrambled)
  19. In the section in the text on "Capital Projects Funds" the authors point out that the capital projects have a:
    A. there is no "life" discussion in that section in the text
    B. "year-to-year" life similar to the special revenue funds
    C. "project life"
    C. "project life"
    (this multiple choice question has been scrambled)
  20. Bond anticipation notes:
    A. can be either current or noncurrent liabilities
    B. are noncurrent liabilities
    C. are current liabilities
    A. can be either current or noncurrent liabilities
    (this multiple choice question has been scrambled)
  21. Overlapping debt refers to:
    A. public debt having differing payment periods
    B. situations where the primary government combines private and pubic debt
    C. a combination of debt that is both current and noncurrent
    D. debt from differing taxing authorities
    D. debt from differing taxing authorities
    (this multiple choice question has been scrambled)
  22. The debt margin is:
    A. can be greater than the debt limit
    B. less than the debt limit
    C. is the governmental accounting term for the current portion of long-term debt
    D. is not related to the debt limit
    B. less than the debt limit
    (this multiple choice question has been scrambled)
  23. Defeasance relates to:
    A. debt covenants
    B. only found in the government-wide financial statements
    C. repayment of debt
    D. capital projects
    C. repayment of debt
    (this multiple choice question has been scrambled)
  24. Generally speaking, "interest payable" could be found in:
    A. the capital projects fund
    B. both a. and c. are correct
    C. a. and b. and c. are all correct
    D. the government-wide financial statements
    E. the debt service fund
    D. the government-wide financial statements
    (this multiple choice question has been scrambled)
  25. Accountability for capital assets used by departments accounted for by the governmental funds of a government should be established in:
    A. the capital projects fund
    B. both b. and c.
    C. the appropriate governmental funds
    D. the governmental activities accounts at the government-wide level
    E. a. and b. and c. are all correct answers
    D. the governmental activities accounts at the government-wide level
    (this multiple choice question has been scrambled)
  26. Which of the following would be considered a general capital asset?
    A. a vehicle purchased from general fund revenues
    B. a vehicle purchased and maintained by an enterprise fund
    C. a computer purchased from revenues of an internal service fund and used by the supplies department
    D. a. and b. and c. are all correct
    E. real estate purchased with the assets of a pension trust fund
    A. a vehicle purchased from general fund revenues
    (this multiple choice question has been scrambled)
  27. The following items were included in the City of Lone Pine's General Fund expenditures for the year ended June:

    Personal computer for the city treasurer  $9,000
    Furniture for the mayor's office             $16,000

    How much should be classified as capital assets in Lone Pine's General Fund balance sheet at June 30?
    A. $9,000
    B. $25,000
    C. $16,000
    D. $0 - capital assets are not in the fund statements
    e. none of the above are correct
    D. $0 - capital assets are not in the fund statements
    (this multiple choice question has been scrambled)
  28. Which of the following is one of the requirements that must be met to elect not to depreciate certain eligible infrastructure assets?
    A. the government maintains the assets in a condition level that far exceeds the prescribed level
    B. the government manages the assets using an asset management system that meets specific criteria
    C. the government omits the cost of the assets from the government-wide statement of net assets
    D. the government gets permission of the Government Accounting Standards Board
    B. the government manages the assets using an asset management system that meets specific criteria
    (this multiple choice question has been scrambled)
  29. Which of the following are properly accounted for in the governmental fund accounts?
    a. tax-supported general obligation bonds
    b. obligations under capital leases used to finance general capital assets
    c. the long-term portion of judgments and claims
    d. all of the above
    e. none of the above
    e. none of the above
  30. On the due date for bond interest, the debt service fund journal entry (or entries) will include (there may be other entries as well, but will include):
    A. a credit to Encumbrances
    B. a debit to Expenditures - Bond Interest
    C. a. and b. and c. are all correct
    D. a debit to Interest Payable
    E. a debit to Interest Expense
    B. a debit to Expenditures - Bond Interest
    (this multiple choice question has been scrambled)
  31. Interest expenditures on bonds payable should be recorded in a debt service fund:
    A. at the end of a fiscal period if the interest due date does not coincide with the end of the fiscal period
    B. when legally payable
    C. when bonds are issued
    D. when paid
    B. when legally payable
    (this multiple choice question has been scrambled)
  32. The liability for general obligation bonds should be recorded in:
    A. capital projects fund
    B. governmental activities journal
    C. General Fund
    D. debt service fund
    B. governmental activities journal
    (this multiple choice question has been scrambled)
  33. Proceeds from general obligation bonds should be recorded in the:
    A. debt service fund
    B. capital projects fund
    C. general obligation bond fund
    D. permanent fund
    B. capital projects fund
    (this multiple choice question has been scrambled)
  34. Which of the following assets would not be found in the balance sheet of a debt service fund?
    A. interest receivable
    B. cash
    C. equipment
    D. investments
    e. all of the above
    C. equipment
    (this multiple choice question has been scrambled)
  35. Which of the following is a difference between enterprise funds and internal service funds?
    A. the use of cost accounting by enterprise funds but not internal service funds
    B. the measurement focus on economic resources for enterprise funds and current financial resources for internal service funds
    C. the number of basic financial statements required
    D. the identity of those who benefit from the fund's service
    D. the identity of those who benefit from the fund's service
    (this multiple choice question has been scrambled)
  36. Depreciation on capital assets used by an enterprise fund of a government:
    A. should be recorded in the enterprise fund by a debit to an expense account
    B. should be recorded in the governmental activities accounts
    C. should be recorded in the General Fund as an expenditure
    D. should not be recorded for infrastructure assets
    A. should be recorded in the enterprise fund by a debit to an expense account
    (this multiple choice question has been scrambled)
  37. An internal service fund normally uses which of the following budgetary accounts?
    a. estimated revenues
    b. appropriations
    c. encumbrances
    d. a. and b. and c. are all used for an internal service fund
    e. none of the above
    e. none of the above
  38. Which of the following is a valid reason for establishing a tax agency fund and charging a collection fee to other governments?
    A. to avoid overlapping taxes
    B. to realize administrative efficiencies from centralizing tax billing and collection activities
    C. to help eliminate a General Fund deficit
    D. to increase the total amount of taxes levied
    B. to realize administrative efficiencies from centralizing tax billing and collection activities
    (this multiple choice question has been scrambled)
  39. Which of the following accounts is least likely to be used by a tax agency fund?
    A. revenues
    B. due to other funds and units
    C. taxes receivable for other funds and units
    D. cash
    A. revenues
    (this multiple choice question has been scrambled)
  40. A difference between the accounting for agency funds and governmental funds is:
    A. agency funds do not report fund balances; only assets and liabilities
    B. b. and c. are correct
    C. agency funds are not included on any fund financial statements
    D. agency funds use a different basis of accounting
    B. b. and c. are correct
    (this multiple choice question has been scrambled)
  41. Which of the following is the appropriate measurement focus for agency funds?
    A. economic resources
    B. current financial resources
    C. cash and cash equivalents
    d. none of the above
    A. economic resources
    (this multiple choice question has been scrambled)
  42. Which of the following would not be included within the financial section of the comprehensive annual financial report (CAFR)?
    A. management's discussion and analysis (MD&A)
    B. required supplementary information (RSI)
    C. independent auditor's report
    D. management's letter of transmittal
    D. management's letter of transmittal
    (this multiple choice question has been scrambled)
  43. What constitutes the basic financial statements of a government?
    A. government-wide financial statements plus fund financial statements plus notes
    B. government-wide financial statements plus notes
    C. government-wide financial statements plus fund financial statements plus fund financial statements plus notes plus required supplementary information (RSI)
    D. financial section of the comprehensive annual finical report (CAFR)
    A. government-wide financial statements plus fund financial statements plus notes
    (this multiple choice question has been scrambled)
  44. The term that is defined as determining whether current-year revenues are sufficient to pay for the services provided that year and whether future taxpayers will be required to assume burdens for services previously provided is:
    A. none of these terms
    B. financial condition
    C. financial position
    D. interperiod equity
    D. interperiod equity
    (this multiple choice question has been scrambled)
  45. The term that is closely related to the concept of liquidity is:
    A. financial condition
    B. interperiod equity
    C. financial position
    D. none of these terms
    C. financial position
    (this multiple choice question has been scrambled)
  46. Which of the following finical concepts has been defined by the GASB as "the probability that a government will meet both its financial obligations to creditors, consumers, employees, taxpayers, suppliers, constituents, and others as they become due and its service obligation to constituents, both currently and in the future?"
    A. financial condition
    B. financial position
    C. financial leverage
    D. liquidity
    A. financial condition
    (this multiple choice question has been scrambled)
  47. A term that describes a government's ongoing ability and willingness to raise revenues, incur debt, and meet its finical obligations as they become due is:
    A. financial condition
    B. financial position
    C. economic condition
    D. fiscal capacity
    D. fiscal capacity
    (this multiple choice question has been scrambled)
  48. When bonds are sold, there will be a: 
    A. debit to cash in the debt service fund accounts
    B. a debit to cash in the General Fund account 
    C. both b. and c. are correct
    D. a credit to other financing uses
    E. both a. and c. are correct
    B. a debit to cash in the General Fund account
    (this multiple choice question has been scrambled)
  49. One of the accounting entries made at the start of the year is to: 
    A. #2 reestablish the unexpended encumbrances with a debit entry
    B. both #1 and #3 are correct
    C. #3 close out the reserve for encumbrances
    D. #1 reestablish the unexpended encumbrances with a credit entry
    E. both #2 and #3 are correct
    A. #2 reestablish the unexpended encumbrances with a debit entry
    (this multiple choice question has been scrambled)
  50. Transactions for encumbrances capital assets can be found in:
    A. the government-wide financial statements
    B. the fund financial statements
    C. both the fund financial statements and the
    government-wide financial statements
    C. both the fund financial statements and the government-wide statements
    (this multiple choice question has been scrambled)
  51. Transactions for capital assets can be found in:
    A. both the fund financial statements and the government-wide financial statements
    B. the fund financial statements
    C. the government-wide financial statements
    C. the government-wide financial statements
    (this multiple choice question has been scrambled)
  52. Transactions for the fiduciary funds can be found in:
    A. the government-wide financial statements
    B. both the fund financial statements and the
    C. the fund financial statements
    government-wide financial statements
    C. the fund financial statements
    (this multiple choice question has been scrambled)
  53. The accounting term “original cost” refers to:
    A. the modified approach
    B. accounting for utilities
    C. toll road and toll bridges
    D. a. and b. and c. are all correct
    B. accounting for utilities
    (this multiple choice question has been scrambled)
  54. If a capital projects fund starts construction of a building in one year and finishes it in a subsequent year no entry need be made in the governmental activities accounts until the building is completed, inspected, and accepted.
    a. true
    b. false
    b. false
  55. If a general capital asset is disposed of without revenue or expenditure to the governmental unit, the event need be recorded only in the governmental activities accounts.
    a. true
    b. false
    a. true
  56. a governmental unit must capitalize the cost of improvements such as roads, bridges, sidewalks, and so forth, because the GASB required disclosure of the cost of such assets in the basic financial statements.
    a. true
    b. false
    a. true
  57. A certified public accountant should issue a qualified audit opinion on financial statements in which general capital assets are recorded at estimated cost.
    a. true
    b. false
    b. false
  58. Property, plant and equipment constructed or acquired by use of special assessment financing is not recorded in the governmental activities accounts because the assets belong to the property owners who paid for them and are not assets of the reporting entity.
    a. true
    b. false
    b. false
  59. In addition to required disclosures about general capital assets, a governmental unit must allocate the depreciation expense on those capital assets to the functional categories in which the assets are used.
    a. true
    b. false
    a. true
  60. Another required disclosure about general capital assets is the additions to, and deductions from, general capital assets during the course of a fiscal year.
    a. true
    b. false
    a. true
  61. Which of the following would not be considered a general capital asset?
    A. a vehicle purchased and maintained by an enterprise fund
    B. lighting on sidewalks constructed form special assessments
    C. a computer purchased from grant revenues of a special revenue fund and used by the police department
    D. a vehicle purchased from general fund revenues
    A. a vehicle purchased and maintained by an enterprise fund
    (this multiple choice question has been scrambled)
  62. A capital projects fund might be used to account for which of the following activities?
    A. building a park or addition to the city council building
    B. servicing long-term debt
    C. providing water and sewer services
    D. maintaining roads and bridges
    A. building a park or addition to the city council building
    (this multiple choice question has been scrambled)
  63. The budgetary account recommended for use by a capital projects fund is:
    A. encumbrances
    B. estimated revenues
    C. appropriations
    D. estimated other financing sources
    A. encumbrances
    (this multiple choice question has been scrambled)
  64. Both general capital assets acquired or constructed from the proceeds of special assessment debt, and the long-term liability, are accounted for in the governmental activities accounts.
    a. true
    b. false
    a. true
  65. Debt backed by both special assessments and full faith and credit of a governmental unit should be reported in the CAFR in the business-type activities accounts.
    a. true
    b. false
    b. false
  66. Issuance of tax supported debt having a maturity of more than one year from date of issue must be recorded only in the governmental activities accounts.
    a. true
    b. false
    b. false
  67. Debt margin is a term used to denote the total amount of indebtedness of specified kinds that is allowed by law to be outstanding at any one time.
    a. true
    b. false
    b. false
  68. Debt margin is the difference between the debt limit and the amount of outstanding debt subject to the limitation.
    a. true
    b. false
    a. true
  69. Notes to the financial statements of a state or local government should include a schedule, or summary, of annual debt service requirements (principal and interest payments) for the year following the balance sheet date and for all subsequent years until the final maturity of debt outstanding on balance sheet date.
    a. true
    b. false
    a. true
  70. Debt service funds exist to accumulate resources to pay tax supported bond issues at maturity. Interest on such bonds is paid from General Fund appropriations, not from debt service fund appropriations.
    a. true
    b. false
    b. false
  71. All long-term debt, including bonds, notes, or warrants, and various other long-term obligations, intended to be repaid from tax levies or special assessments are accounted for in debt service funds.
    a. true
    b. false
    b. false
  72. At year-end, budgetary and operating statement accounts of a debt service fund are closed in the same manner as is true for a General Fund or for special revenue funds.
    a. true
    b. false
    a. true
  73. Expenditures for interest on tax supported long-term debt are not accrued, even though debt service funds are accounted for on the modified accrual basis.
    a. true
    b. false
    a. true
  74. Which of the following are properly accounted for in the governmental activities accounts?
    a. tax-supported general obligation bonds
    b. obligations under capital leases used to finance general capital assets
    c. the long-term portion of judgments and claims
    d. all of the above
    d. all of the above
  75. The liability for special assessment bonds that carry a secondary pledge of a city's general credit, if reported in conformity with GAAP, should be reported in the balance sheet(s) of:
    A. a debt service fund
    B. the governmental activities accounts
    C. and agency find
    D. an agency fund and disclosed in the notes to the financial statements
    B. the governmental activities accounts
    (this multiple choice question has been scrambled)
  76. General obligation bonds issued for the benefit of enterprise funds, with the intent of paying bond principal and interest from revenues of the enterprise fund, should be reported as a liability in the balance sheet of the:
    A. enterprise fund
    B. enterprise fund and a note to the financial statements explaining the contingent liability of the general government if enterprise funds are insufficient to pay principal and interest
    C. both the enterprise fund and the governmental activities accounts
    D. governmental activities
    B. enterprise fund and a note to the financial statements explaining the contingent liability of the general government if enterprise funds are insufficient to pay principal and interest
    (this multiple choice question has been scrambled)
  77. Which of the following budgetary accounts is typically used by a debt service fund?
    A. appropriations
    B. both a. and b.
    C. encumbrances
    d. none of the above
    A. appropriations
    (this multiple choice question has been scrambled)

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