Accy 161 Exam 2-3.txt

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Accy 161 Exam 2-3.txt
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Accy 161 Exam 2-3.txt
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  1. 
    • Accountability for general capital asset expenditures funded by tax receipts of a government should be established in
    • a. The appropriate governmental funds.
    • b. The capital projects fund
    • c. The governmental activities accounts at the government-wide level.
    • d. Both b. and c.
    • e. a. and b. and c. are all correct answers
    • b. The capital projects fund
  2. Which of the following funds of a government uses the modified accrual basis of accounting?
    A. Private-purpose trust fund.
    B. Internal service.
    C. Enterprise.
    D. Capital projects.
    D. 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: Yes; Debt Service Fund: No
    B. None of these answers would be appropriate
    C. Capital Projects Fund: Yes; Debt Service Fund: Yes
    D. Capital Projects Fund: No; Debt Service Fund: No
    E. Capital Projects Fund: No; Debt Service Fund: Yes
    A. 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. No depreciation can be recorded in any governmental fund, nor is it permissible to record depreciation expense in the governmental activities accounts.
    B. No depreciation can be recorded in any governmental fund, but depreciation expense must be reported in the governmental activities accounts.
    C. Depreciation expense should be charged in the appropriate governmental funds, and reported in the governmental activities accounts.
    D. Depreciation expense must be recorded in the governmental fund, but no depreciation expense can be recorded in the governmental activities accounts.
    B. 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. Fund balance addition.
    C. Revenue.
    D. Other financing source.
    E. Could be b. or c.
    D. 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. Just a. and c.
    B. Eligible infrastructure assets.
    C. a. and b. and c. are all correct.
    D. Newly acquired general capital assets.
    E. All capital assets.
    B. Eligible infrastructure assets
    (this multiple choice question has been scrambled)
  7. A debt service fund is a (an)
    A. Fiduciary fund.
    B. Nonexpendable fund.
    C. Governmental fund.
    D. Proprietary fund.
    C. 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. Both a. and b. are correct
    B. a. and b. and c. are all correct.
    C. Property taxes levied by the debt service fund for debt service purposes.
    D. Taxes collected by the General Fund and transferred to the debt service fund
    E. Transfer of the residual equity of a capital project from a capital projects fund to the debt service fund.
    C. 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 fund financial statements
    B. the government-wide 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. At the end of the fiscal period if the interest due date does not coincide with the end of the fiscal period.
    B. When paid.
    C. When bonds are paid off.
    D. When legally payable.
    e. All the above are correct depending on the circumstances
    D. 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. They would all be closed at the end of the year.
    B. Fund Balance.
    C. Estimated Revenues.
    D. Revenues.
    E. Expenditures—Bond Interest.
    B. 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 principal and interest on general long-term debt.
    B. Payment of principal and interest on all debt of the government, including that of enterprise funds.
    C. Payment of interest only on general long-term debt.
    D. Payment of principal only on general long-term debt.
    A. 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 place cash or other assets in an irrevocable trust sufficient to pay all future interest and principal payments for the debt being defeased.
    C. 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.
    d. Any of the above approaches are acceptable under GAAP.
    B. 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. a. and b. are correct
    B. there will be a credit to estimated other financing sources in the general fund
    C. no entries are required on the debt service fund
    D. a. and c. are correct
    E. there will be a credit to estimated revenues in the general fund
    C. 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. debit to cash in the debt service fund accounts
    B. both b. and c. are correct
    C. a credit to other financing uses
    D. a debit to cash in the general fund accounts
    E. both a. and c. are correct
    D. 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 appropriations
    B. there will be no entry on the governmental activities accounts
    C. only b. and c. are correct
    D. there will be a credit to other financing uses
    e. none of the above are correct
    D. 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. modified accrual accounting
    B. infrastructure assets
    C. all capital assets
    D. government-wide financial statements
    B. 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. "project life"
    B. "year-to-year" life similar to the special revenue funds
    C. there is no "life" discussion in that section in the text
    A. "project life"
    (this multiple choice question has been scrambled)
  20. Bond anticipation notes:
    A. are current liabilities
    B. are noncurrent liabilities
    C. can be either current or noncurrent liabilities
    C. can be either current or noncurrent liabilities
    (this multiple choice question has been scrambled)
  21. Overlapping debt refers to:
    A. a combination of debt that is both current and noncurrent
    B. public debt having differing payment periods
    C. debt from differing taxing authorities
    D. situations where the primary government combines private and pubic debt
    C. debt from differing taxing authorities
    (this multiple choice question has been scrambled)
  22. The debt margin is:
    A. is not related to the debt limit
    B. can be greater than the debt limit
    C. is the governmental accounting term for the current portion of long-term debt
    D. less than the debt limit
    D. less than the debt limit
    (this multiple choice question has been scrambled)
  23. Defeasance relates to:
    A. debt covenants
    B. repayment of debt
    C. only found in the government-wide financial statements
    D. capital projects
    B. repayment of debt
    (this multiple choice question has been scrambled)
  24. Generally speaking, "interest payable" could be found in:
    A. both a. and c. are correct
    B. a. and b. and c. are all correct
    C. the debt service fund
    D. the capital projects fund
    E. the government-wide financial statements
    E. 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. a. and b. and c. are all correct answers
    D. the governmental activities accounts at the government-wide level
    E. the appropriate governmental funds
    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 and maintained by an enterprise fund
    B. real estate purchased with the assets of a pension trust fund
    C. a vehicle purchased from general fund revenues
    D. a computer purchased from revenues of an internal service fund and used by the supplies department
    E. a. and b. and c. are all correct
    C. 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. $0 - capital assets are not in the fund statements
    B. $9,000
    C. $16,000
    D. $25,000
    e. none of the above are correct
    A. $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 gets permission of the Government Accounting Standards Board
    C. the government omits the cost of the assets from the government-wide statement of net assets
    D. the government manages the assets using an asset management system that meets specific criteria
    D. 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 debit to Interest Payable
    B. a credit to Encumbrances
    C. a debit to Interest Expense
    D. a debit to Expenditures - Bond Interest
    E. a. and b. and c. are all correct
    D. 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. when bonds are issued
    B. when paid
    C. when legally payable
    D. at the end of a fiscal period if the interest due date does not coincide with the end of the fiscal period
    C. when legally payable
    (this multiple choice question has been scrambled)
  32. The liability for general obligation bonds should be recorded in:
    A. governmental activities journal
    B. debt service fund
    C. capital projects fund
    D. General Fund
    A. governmental activities journal
    (this multiple choice question has been scrambled)
  33. Proceeds from general obligation bonds should be recorded in the:
    A. general obligation bond fund
    B. capital projects fund
    C. debt service 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. investments
    C. cash
    D. equipment
    e. all of the above
    D. 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 number of basic financial statements required
    B. the use of cost accounting by enterprise funds but not internal service funds
    C. the identity of those who benefit from the fund's service
    D. the measurement focus on economic resources for enterprise funds and current financial resources for internal service funds
    C. 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 not be recorded for infrastructure assets
    B. should be recorded in the General Fund as an expenditure
    C. should be recorded in the governmental activities accounts
    D. should be recorded in the enterprise fund by a debit to an expense account
    D. 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 increase the total amount of taxes levied
    D. to help eliminate a General Fund deficit
    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. taxes receivable for other funds and units
    B. cash
    C. due to other funds and units
    D. revenues
    D. revenues
    (this multiple choice question has been scrambled)
  40. A difference between the accounting for agency funds and governmental funds is:
    A. agency funds are not included on any fund financial statements
    B. agency funds do not report fund balances; only assets and liabilities
    C. agency funds use a different basis of accounting
    D. b. and c. are correct
    D. 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. current financial resources
    B. cash and cash equivalents
    C. economic resources
    d. none of the above
    C. 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. independent auditor's report
    C. required supplementary information (RSI)
    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. financial section of the comprehensive annual finical report (CAFR)
    D. government-wide financial statements plus fund financial statements plus fund financial statements plus notes plus required supplementary information (RSI)
    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. financial position
    B. interperiod equity
    C. financial condition
    D. none of these terms
    B. interperiod equity
    (this multiple choice question has been scrambled)
  45. The term that is closely related to the concept of liquidity is:
    A. none of these terms
    B. financial condition
    C. interperiod equity
    D. financial position
    D. 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 position
    B. liquidity
    C. financial condition
    D. financial leverage
    C. 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 position
    B. fiscal capacity
    C. economic condition
    D. financial condition
    B. fiscal capacity
    (this multiple choice question has been scrambled)
  48. When bonds are sold, there will be a: 
    A. a debit to cash in the General Fund account 
    B. a credit to other financing uses
    C. both a. and c. are correct
    D. debit to cash in the debt service fund accounts
    E. both b. and c. are correct
    A. 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. #1 reestablish the unexpended encumbrances with a credit entry
    B. #2 reestablish the unexpended encumbrances with a debit entry
    C. both #2 and #3 are correct
    D. #3 close out the reserve for encumbrances
    E. both #1 and #3 are correct
    B. #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. the government-wide financial statements
    B. both the fund financial statements and the government-wide financial statements
    C. the fund financial statements
    A. 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. the fund financial statements
    C. both the fund financial statements and the
    government-wide financial statements
    B. the fund financial statements
    (this multiple choice question has been scrambled)
  53. The accounting term “original cost” refers to:
    A. a. and b. and c. are all correct
    B. the modified approach
    C. accounting for utilities
    D. toll road and toll bridges
    C. 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 from general fund revenues
    B. a computer purchased from grant revenues of a special revenue fund and used by the police department
    C. a vehicle purchased and maintained by an enterprise fund
    D. lighting on sidewalks constructed form special assessments
    C. 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. servicing long-term debt
    B. providing water and sewer services
    C. maintaining roads and bridges
    D. building a park or addition to the city council building
    D. 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. estimated revenues
    B. estimated other financing sources
    C. encumbrances
    D. appropriations
    C. 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. and agency find
    B. an agency fund and disclosed in the notes to the financial statements
    C. the governmental activities accounts
    D. a debt service fund
    C. 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. 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
    C. both the enterprise fund and the governmental activities accounts
    D. 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
    (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. encumbrances
    c. both a. and b.
    d. none of the above
  78. Capital Asset
    • Assets of a long-term character that are intended to continue to be held or used, such as land, buildings, machinery, furniture, and other equipment.
    • Note: the term does not indicate the immobility of an asset, which is the distinctive character of "fixture" Also fixed assets.
  79. General Capital Asset (GCA)
    Those capital assets of a government that are NOT RECOGNIZED by a proprietary or fiduciary fund.
  80. Accountability
    • Being obliged to explain one's actions, to justify what one does; the requirement for government to answer to its citizenry- 
    • - to justify the raising of public resources and expenditure of those resources.
    • Also, in the GASB's view,
    • 1. the obligation to report whether the government operated within appropriate legal constraints;
    • 2. whether resources were used efficiently, economically, and effectively;
    • 3. whether current year revenues were sufficient to pay for the services provided in the current year;
    • 4. and whether the burden for services previously provided will be shifted to future taxpayers.
  81. Agency Funds
    • Funds consisting of resources received and held by the government as an agent for others;
    • example taxes collected and held by a municipality for a school district.
    • Note: Sometimes resources held by a government for other organizations are handled through an agency fund known as a pass-through agency fund.
  82. Arbitrage
    Earning a higher interest rate from investing borrowed funds than is applicable to the entity's tax-exempt debt. Federal tax regulations require governments to rebate the investment earnings in excess of that permitted.
  83. Additions and deductions
    In trust funds the revenue and expense are called additions and deductions
  84. Basic financial statements
    Term used in GASB standards to describe required government-wide and fund financial statement.
  85. Benchmarking
    • The method of identifying a number that represents a target to which actual results are compared, or a basis for comparison
    • Example: industry averages.
  86. Blending
    Wanting as few discrete presentations as possible by blending component units such as the department of mosquito and vector control and the park district.
  87. Certificates of participation (COP)
    A long-term debt instrument authorized for construction of municipal facilities, typically issued by a quasi-independent authority but secured by a long-term lease with a general-purpose local government.
  88. Compensated absences
    The value of unused vacation, sick and other leave time for which employees will be paid when they retire or otherwise cease to work for a government.
  89. Component units
    Separate governments, agencies, or not-for-profit corporations that, pursuant to the criteria in the GASB codification, Section 2100, are combined with other component units to constitute the reporting entity.
  90. Construction in progress
    An accountancy term, construction in progress asset or capital work in progress entry records the cost of construction work, which is not yet completed. A CIP item is not depreciated until the asset is placed in service
  91. Debt capacity
    (General definition; not from book) Ability to borrow. The amount a firm can borrow up to the point where the firm value no longer increases.
  92. Debt service fund (DSF)
    Funds used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. Debt service funds should be used to report resources if legally mandated. Financial resources that are being accumulated for principal and interest maturing in future years also should be reported in debt service funds.
  93. Discrete presentation
    The method of reporting financial data of component units in a column(s) separate from the financial data of the primary government.
  94. Dual-track method
  95. Economic condition
    A composite of a government's financial health and its ability and willingness to meet its financial obligations and its commitments to provide services.
  96. Enterprise fund (EF)
    • A fund established to finance and account for the acquisition, operation, and maintenance of governmental facilities and services that are entirely or predominantly self-supporting by user charges; or for when the governing body of the government has decided periodic determination of revenues earned, expenses incurred, and/or net income is appropriate.
    • Example: Governmentally owned utilities and hospitals are ordinarily accounted for by enterprise funds.
  97. Fiduciary funds
    • Any fund held by a government in a fiduciary capacity for an external party, ordinarily as agent or trustee.
    • Example: Also called trust and agency funds.
  98. Financial condition
    The probability that a government will meet its financial obligations as they become due and its service obligations to constituencies, both currently and in the future.
  99. Financial position
    The adequacy of cash and short-term claims to cash to meet current obligations and those expected in the near future.
  100. Fiscal capacity
    A governments ongoing ability and willingness to raise revenues, incur debt, and meet its financial obligations as they become due.
  101. Forward-looking statements
    Some of the information on our Site may contain projections or other forward-looking statements regarding future events or our future financial performance, which are subject to risks and uncertainties.  Actual results may vary from those projected or implied by such forward-looking statements. ...
  102. General capital asset (GCA)
    Those capital assets of a government that are not recognized by a proprietary or fiduciary fund.
  103. General purpose financial statements
  104. Infrastructure assets
    Roads, bridges, curbs and gutters, streets, sidewalks, drainage systems, and lighting systems installed for the common good.
  105. In-substance defeasance
    A transaction in which low-risk U.S. government securities are placed into an irrevocable trust for the benefit of debtholders, and the liability for the debt is removed from the accounts of the entity even though the debt has not been repaid.
  106. Interfund transfers
    Amount transferred from one fund to another
  107. Internal service funds (ISF)
    • Funds established to finance and account for services and commodities furnished by a designated department or to other governments. Amounts expended by the fund are restored thereto either from other funds, so that the original fund capital is kept intact.
    • Formally called working capital fund or intragovernmental service fund.
  108. Investment trust funds
    Funds used to account for the assets, liabilities, net position, and changes in net position corresponding to the equity of the external participants.
  109. Legal defeasance
    A transaction in which debt is legally satisfied based on certain provisions in the debt instrument (e.g. third-party guarantor assumes the debt) even though the debt has not been repaid.
  110. Modified approach
    An approach that allows the government to elect not to depreciate certain eligible infrastructure assets provided certain requirements are met.
  111. Other financing sources
    • An operating statement classification in which financial inflows other than revenues are reported
    • Example: proceeds of long-term debt and transfers in.
  112. Other financing uses
    • An operating statement classification in which financial outflows other than expenditures are reported
    • Example: transfers out
  113. Pension trust funds (PTA) or Public Employee Retirement Systems (PERS)
    The organizations that collect retirement and other employee benefit contributions from government employers and employees, manage assets, and make payments to qualified retirants, beneficiaries, and disabled employees.
  114. Performance measurements
    • Spendable (Governmental)
    •  *this is all I have in my notes.
  115. Permanent fund (PF)
    Funds used to account for and report resources that are restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government's programs- that is, for the benefit of the government or its citizenry. Permanent funds do not include private-purpose trust funds, which should be used t report situations in which the government is required to use the principal or earning for the benefit of individuals, private organizations, or other governments.
  116. Popular reports
    Highly condensed financial information, including budgets, summaries, and narrative descriptions.
  117. Pricing policy for internal service funds
  118. Private-purpose trust fund
    Funds that account for contributions received under a trust agreement in which the investment income of an endowment is intended to benefit an external individual, organization, or government.
  119. Proprietary funds
    • Sometimes referred to as income determination, business-like, or commercial-type funds of a state or local government.
    • Examples: enterprise funds and internal service funds
  120. RAP - regulatory accounting principles
    • The accounting principles prescribed by deferral or state regulatory commissions for investor-owned and some governmentally owned utilities.
    • AKA: Statutory accounting principles (SAP)
  121. Reconciliation method
    An accounting process used to compare two sets of records to ensure the figures are in agreement and are accurate. Reconciliation is the key process used to determine whether the money leaving an account matches the amount spent, ensuring that the two values are balanced at the end of the recording period
  122. Required supplementary information (RSI)
    Information that is required by generally accepted principles to be included with the audited annual financial statement, usually directly following the notes to the general purpose external financial statements.
  123. Restricted assets
    Assets (usually of an enterprise fund) that may not be used for normal operating purposes because of the requirements of regulatory authorities, provisions in bond indentures, or other legal agreements, but that need not be accounted for in a separate fund.
  124. Restricted net assets
    A term used in accounting for not-for-profit organizations indicating the portion of the residual of assets and liabilities (i.e. net assets) that has been restricted in purpose or time by parties external to the organization.
  125. Revenue capacity
    (*definition from internet) In economics, the ability of groups, institutions, etc. to generate revenue. The fiscal capacity of governments depends on a variety of factors including industrial capacity, natural resource wealth and personal incomes
  126. Serial bonds
    Bonds the principal of which is repaid in periodic installments over the life of the issue.

    A GO Bond (General Obligation bond)
  127. Service capacity
    A government's ongoing ability and willingness to supply the capital and human resources needed to meet its commitments to provide services.
  128. Solvency
    the ability to meet maturing obligations as they come due
  129. Special assessment districts
    The official list showing the amount of special assessments levied against each property presumed to be benefited by an improvement or service.
  130. Tax agency fund
    Agency fund, usually maintained by a county official, to handle the collection of all property taxes within the county or other jurisdiction and the distribution of proceeds to all governments within the borders of that county or other jurisdiction.
  131. Term bonds
    • Bonds the entire principal of which matures on one date.
    • A GO Bond (General Obligation bond)
  132. Trust funds
    • Funds consisting of resources received and held by the government as trustee, to be expended or invested in accordance with the conditions of the trust.
    • Example: Endowment, Pension trust funds, private purpose trust funds, public purpose trust funds.
  133. Mello-Roos
    • 1. CFD (community Facilities District)
    • 2. Residents vote
    • 3. Approved then sell bonds
    • 4. Receive cash
    • 5. Contract to build (ex: sewer)a. appropriations
  134. In the ________  __________   basis of accounting, expenses are recognized as soon as they result in liabilities for benefits received for the particular accounting period.
    full accrual 
  135. The _____________ accounts include estimated revenues, appropriations, and encumbrances.
    budgetary
  136.  ________________  ___________ is a GASB term indicating the extent to which current-period revenues are adequate to pay for current-period services
    Interperiod equity
  137. A fund is a ____________ and ___________________ entity.
    fiscal and accounting
  138. An ____________________ is an authorization, granted by a legislative body, to expend fund resources in compliance with an approved budget.
    appropriation
  139. The term ________________ accountability relates to information useful in assessing operating results and short- and long-term financial position of a primary governmental entity on a entity-wide basis.
    operational
  140. The term ________________accountability relates to budgetary compliance and the ability of the governmental entity to meet its short-term or current financial needs.
    fiscal
  141. An example of “other financing sources” would be  ____________________________
    proceeds from the sale of bonds
  142. The _____________fund is used to account for all governmental transactions not accounted for in another fund.
    general
  143. ____________revenue is usually is from an exchange-type transaction and can be associated with a specific function or program of the governmental entity.
    Program
  144. Examples of ______________revenues would be income taxes and sales taxes
    general
  145. ________________________   accounting is used with the governmental funds but not the proprietary or fiduciary funds.
    • Modified accrual   
    • Budgetary accounting works here too.
  146. The proprietary funds use the _______________ ________________ measurement focus while the governmental funds use the ________________  _______________ resources focus.
    • economic resources
    • current financial
  147. _____________   ______________ accounting is used with the governmental funds but not with the proprietary funds or the fiduciary funds.
    • Modified accrual
    • Budgetary accounting works here too.
  148. The term _________________ is used to distinguish expenditures for the period they are presumed to benefit.
    character
  149. For governmental financial reporting we include both the _____________ government and the ________________  units.
    • primary
    • component
  150. The ________________section of the______________ is a narrative provided by the management of the primary government that provides an easily readable analysis of the financial results for the year.
    • MD&A– Management Discussion and Analysis
    • CAFR– Comprehensive Annual Financial Report
  151. The __________________ fund is used to account for gifts given to a city to support city functions.
    permanent
  152. A _______________  ____________ is a document that authorizes the acquisition of goods and services and can result in a accounting entry to the encumbrance account.
    purchase order
  153. The ___________ ____________ fund is used to account for tax revenue or other sources of funds that are legally restricted as to their specific use.
    special revenue
  154. What are the three broad classification of funds:  ________________________  ___________________  and _______________________ .
    governmental, proprietary, and trust-agency
  155. Which broad classification of funds uses the modified accrual accounting method: _______________
    governmental
  156. Accountability focus:  What are the two types:  ______________________  and _________________
    operational and fiscal
  157. Measurement focus:  What are the two types:  ______________________  and  __________________
    economic resources and current financial resources
  158. What is meant by interperiod equity:?
    This is the concept that a governmental entity is able to fund its current activities from current resources:  See page 722 in the text.  It is essentially a nice way to say that governments should be cautious about operating with a deficit.
  159. Which fund types used budgetary accounting:  _________________________.
    governmental funds only.
  160. Which fund types use fund assets and fund liabilities: _____________________________________
    governmental funds only
  161. What are the names of the financial statements used in government-wide reporting:  __________________________  and __________________________.
    Statement of Net Assets and Statement of Activities.
  162. Internal service funds of a governmental unit are not intended to provide goods or services, on a cost-reimbursement basis, to members of the general public.
    True or False
    True. A fund that sells goods to the general public is an enterprise fund, not an internal service fund.
  163. Internal service funds should account for operating expenditures on the full accrual basis.  True or False
    False. Internal service funds account for expenses, not expenditures, and use the full accrual basis.
  164. Internal service funds should not account for depreciation of capital assets used in their operations, since this would, in effect, charge the government twice for the same assets. True or False
    False. As for a business enterprise, including a depreciation charge is necessary to determine the full cost of services.
  165. Internal service funds are intended to operate on taxes or other financing sources authorized by the legally enacted revenue budget for each year; therefore, they are classified as "governmental funds."
    True or False
    False. Internal service funds and enterprise funds are intended to cover operating costs on a continuing basis and ordinarily obtain their revenues from user charges, not taxes or other financing sources provided for by an annual budget; therefore, these are both proprietary, not governmental, funds.  However, under GASBS 34, internal service funds are reported as governmental activities, not business-like activities, on the government-wide statements as long as their “customers” are primarily other departments or functions of the government.
  166. Proprietary funds are accounted for in a manner similar to investor-owned businesses:  among other features, the full accrual basis is used and all of the capital assets used in fund operations is accounted for by the using fund.
    True or False
    TRue. The features described are characteristic of GAAP applicable to proprietary funds.
  167. The Encumbrances account should be used by an internal service fund in the same manner as by the General Fund
    True or false
    False. Internal service funds do not use budgetary accounts
  168. A statement of revenues, expenses, and changes in net assets for an internal service fund is similar in many respects to an income statement prepared for an investor-owned business.
     True or False
    True. The terminology differs somewhat, but otherwise, the statement is similar in format and display to income statements prepared for business organizations.
  169.  Enterprise funds are used by state and local governmental units to account for services that are provided to the general public on a user-charge basis, or to account for any services that the governing body of the governmental unit has decided should be accounted for on a "business basis."
    True or False
    True. Even if user charges are not the primary source of revenues, the enterprise fund approach may be used for any activities for which the governing body desires periodic determination of revenues earned, expenses incurred, and/or net income.
  170. Enterprise funds and internal service funds are classified as "fiduciary funds." True or False
    False. These are two types of funds GABS standards identify as proprietary funds not fiduciary funds.
  171. Budgets for enterprise funds should be recorded in the accounts in the same manner as budgets for a General Fund or a special revenue fund.
    True or False
    False. Budgets for enterprise funds are prepared to assist management in the efficient use of resources and normally are not legally binding documents.  Consequently, GAAP do not require that budgets be recorded in the accounts of an enterprise fund.  (In jurisdictions in which enterprise funds are required by law to prepare budgets it may be desirable to integrate budgetary accounts with proprietary accounts.  Only the proprietary account balances should be reported in general purpose financial statements, however.
  172. Which of the following may properly be reported as a component of equity in the proprietary fund statement of net assets? 
    A)  Retained earnings.
    B)  Restricted net assets.
    C)  Designated equity.
    D)  Contributed capital.
    B)  Restricted net assets.
    (this multiple choice question has been scrambled)
  173. 41.  What type of fund is recommended for municipal solid waste landfills? 
    A)  Special revenue fund.
    B)  General Fund.
    C)  Internal service fund.
    D)  Enterprise fund.
    D)  Enterprise fund.
    (this multiple choice question has been scrambled)
  174. 44.  Revenue bonds sold by a water utility fund, upon sale, would be recorded 
    A)   In an enterprise fund as “Proceeds of Bonds.”
    B)   In an enterprise fund as a revenue.
    C)   In an enterprise fund as a liability.
    D)   In the governmental activities accounts as a liability.
    C)   In an enterprise fund as a liability.
    (this multiple choice question has been scrambled)
  175. Which of the following funds of a governmental unit uses the same basis of accounting as an enterprise fund?  
    A)  Special revenue.
    B)  Capital projects.
    C)  Permanent trust.
    D)  Investment trust fund.
    D)  Investment trust fund.
    (this multiple choice question has been scrambled)
  176. How is an enterprise fund different than an internal service fund?  
    A)  An enterprise fund provides services for outside users, while an internal service fund generally does not.
    B)  An enterprise fund is operated for profit.
    C)  An internal service fund provides services for outside users, while an enterprise fund does not.
    D)  An internal service fund is not operated like a for-profit business.
    A)  An enterprise fund provides services for outside users, while an internal service fund generally does not.
    (this multiple choice question has been scrambled)
  177. In which of the following funds is it appropriate to record depreciation of capital assets? 
    A)  General fund.
    B)  Capital projects fund.
    C)  Enterprise fund.
    D)  Permanent fund.
    C)  Enterprise fund.
    (this multiple choice question has been scrambled)
  178. Which of the following is a difference between enterprise funds and internal service funds? 
    A)  The identity of those who benefit from the fund’s service.
    B)  The use of cost accounting by enterprise funds but not internal service funds.
    C)  The number of basic financial statements required.
    D)  The measurement focus on economic resources for enterprise funds and current financial resources for internal service funds.
    A)  The identity of those who benefit from the fund’s service.
    (this multiple choice question has been scrambled)

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