Govt Accounting

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Govt Accounting
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  1. Which of the following is true regarding the use of Special Revenue Funds?
    a. Special Revenue Funds may be used whenever a government wishes to segregate income for specific purposes.
    b. Assigned resources may be accounted for in a Special Revenue Fund.
    c. Special Revenue Funds may only be used when a substantial portion of the resources are provided by restricted or committed revenue sources.
    d. Once a Special Revenue Fund is established, it will continue to be a Special Revenue Fund until all resources are exhausted.
    c. Special Revenue Funds may only be used when a substantial portion of
  2. Which of the following statements is not true regarding modified accrual accounting?
    A. Expenditures and fund liabilities are
    recorded when goods and services are received.
    B. Debt service expenditures for principal and interest are accrued.
    C. Expenditures for claims and judgments
    and landfill postclosure care costs of governmental funds should be recognized to the extent that the liabilities are going to be paid with available resources.
    D. Compensated absences and special
    termination benefits of governmental funds that will not be paid with available resources should be reported as liabilities in the government-wide statements.
    B. Debt service expenditures for principal and interest areaccrued.
  3. Regarding interfund transactions, which of the following is not correct?
    A. Transaction between funds are not
    assumed to be arm's length in nature.
    B. Failure to properly report interfund transactions will result in two funds being misstated.
    C. Interfund transaction must be repaid.
    D. Interfund reimbursement is a payment
    by one fund to second fund to repay it for a purchase which belongs in the first fund.
    C. Interfund transaction must be repaid.
  4. Which of the
    following is an interfund transaction?
    A. Interfund services provided and used
    B. Interfund reimbursement
    C. Interfund transfers
    D. All of the above are interfund transactions
    A. Interfund services provided and used
    (this multiple choice question has been scrambled)
  5. Which of the following statements is not correct?
    A. Transactions between funds of the same government may not be assumed to be arms' length in nature.
    B. Most interfund transactions are
    eliminated in the government-wide statements.
    C. Interfund reimbursements are classified as other financing sources or uses.
    D. Interfund transfers are classified as other financing sources or uses.
    C. Interfund reimbursements are classified as otherfinancing sources or uses.
  6. The journal entry to record the budget would include:
    A. A debit to appropriations Control
    B. A debit to Estimated Revenues Control
    C. A and B would both be included in the
    D. A credit to Estimated Revenues Control
    journal entry
    B. A debit to Estimated Revenues Control
    (this multiple choice question has been scrambled)
  7. The journal entry to record the re-establishment of encumbrances that were outstanding at the close of the prior period would include:
    A. A and B would both be included in the journal entry
    B. A credit to Encumbrance Control
    C. A debit to Encumbrance Control
    D. A credit to Fund Balance
    A. A and B would both be included in the journal entry
    (this multiple choice question has been scrambled)
  8. The journal entry to record the prior year's deferred property taxes (those expected to be collected more than 30 days beyond year end) as revenue in the current year would include:
    A. A debit to Revenues Control
    B. B and C would both be included in the journal entry
    C. A debit to Deferred Revenues
    D. A credit to Revenues Control
    B. B and C would both be included in the journal entry
    (this multiple choice question has been scrambled)
  9. The journal entry to record an encumbrance would
    include:
    A. A debit to Encumbrance Control
    B. A debit to Budgetary Fund Balance - Reserve for Encumbrances
    C. A credit to Budgetary Fund Balance - Reserve for Encumbrances
    D. A and C would both be included in the journal entry
    D. A and C would both be included in the journal entry
    (this multiple choice question has been scrambled)
  10. The journal entry to record the property tax levy for a municipality would include:
    A. A debit to Estimated Uncollectible Current Taxes
    B. A credit to Taxes Receivable - Current
    C. A credit to Revenues Control
    D. None of the above
    C. A credit to Revenues Control
    (this multiple choice question has been scrambled)
  11. Reciprocal interfund activity:
    A. Does not include interfund loans
    B. Includes interfund transfers
    C. Is the internal counterpart to exchange transactions
    D. None of the above
    C. Is the internal counterpart to exchange transactions
    (this multiple choice question has been scrambled)
  12. Nonreciprocal interfund activity:
    A. Includes interfund transfers and reimbursements
    B. Includes interfund services provided and used
    C. Includes exchange-like transactions
    D. Includes interfund loan
    A. Includes interfund transfers and reimbursements
    (this multiple choice question has been scrambled)
  13. Which of the following is true with respect to Special revenue funds?
    A. Special revenue funds are used when it is desirable to provide separate reporting of resources that are designated
    for specific purposes.
    B. Special revenue funds are used when it is desirable to provide separate reporting for capital projects.
    C. Special revenue funds are used when
    it is desirable to provide funding for debt service.
    D. Special revenue funds are used when it is desirable toprovide separate reporting of resources that are restricted or committed as toexpenditure for purposes other than debt service or capital projects.
    D. Special revenue funds are used when it is desirable toprovide separate reporting of resources that are restricted or committed as toexpenditure for purposes other than debt service or capital projects.
  14. Which of the following is not true with respect to
    Special revenue funds?
    A. Special revenue funds may be used for any designated purpose to segregate revenues and ensure compliance with restrictions.
    B. A special revenue funds would be used to account for taxes which are required by state law to be used by the government to support specific activities.
    C. Resources appropriately reported within proprietary or fiduciary funds are excluded from special revenue funds.
    D. Special revenue funds may not be used for debt service or capital projects.
    A. Special revenue funds may be used for any designatedpurpose to segregate revenues and ensure compliance with restrictions.
    (this multiple choice question has been scrambled)
  15. Which of the following is not correct with respect to accounting for supplies inventories in a governmental fund?
    A. Typically, supplies inventory is a significant portion of governmental fund balances.
    B. Supplies inventories may be recorded
    using either the purchase method or the consumption method.
    C. An amount equal to the ending balance
    of supplies is reported as Nonspendable Fund Balance.
    D. The consumption method is preferable over the purchase method since it requires no adjustment to supplies expense when preparing the government-wide statements.
    A. Typically, supplies inventory is a significant portion ofgovernmental fund balances.
  16. Under the modified accrual basis of accounting, GASB standards for property tax revenue recognition provide that revenue should not be recognized for property taxes collected:
    A. After fiscal year end.
    B. More than 30 days after fiscal year
    end.
    C. More than 60 days after fiscal year end.
    D. More than 90 days after fiscal year
    end.
    C. More than 60 days after fiscal year end.
  17. Which of the following is true regarding modified accrual accounting?
    A. Modified accrual accounting requires
    that all expenditures be recognized on the cash basis.
    B. Revenues are recognized in the period in which they
    become available and measurable, and expenditures are recognized at the time a liability is incurred, except for principal and interest on long-term debt.
    C. Modified accrual accounting is
    required for all fund financial statements.
    D. All of the above.
    B. Revenues are recognized in the period in which theybecome available and measurable, and expenditures are recognized at the time aliability is incurred, except for principal and interest on long-term debt.
  18. When payrolls and other liabilities are incurred and must be paid before substantial amounts of cash
    will be collected, what type of short-term note is desirable and secured by a government's power to tax?
    A. Tax Budget Note Payable.
    B. Tax Relief Note Payable.
    C. Tax Encumbrances Note Payable.
    D. Tax Anticipation Note Payable.
    D. Tax Anticipation Note Payable.
    (this multiple choice question has been scrambled)
  19. What is a Special Revenue Fund?
    A. Fund created to account for all
    resources and revenues to be used for the construction or acquisition of capital assets.
    B. Fund used to account for all revenue
    transactions of a governmental unit that are not accounted for in another fund.
    C. Fund used to account for revenues from general taxes or other revenue sources that finance general activities of the government.
    D. Fund used to account for revenues from specific taxes or other revenue sources that are restricted or committed to particular activities of the government other than capital projects.
    D. Fund used to account for revenues from specific taxes or other revenue sources that are restricted or committed to particular activities of the government other than capital projects.
  20. Expenditures are generally recorded and fund liabilities are recognized
    A. When goods and services are received, but only if resources are available in the fund.
    B. When purchase orders are issued, regardless of whether or not resources are available in the fund.
    C. When goods and services are received, regardless of whether or not resources are available in the fund.
    D. When invoices are paid.
    C. When goods and services are received, regardless ofwhether or not resources are available in the fund.
    (this multiple choice question has been scrambled)
  21. When would a special revenue fund be deemed to have satisfied the eligibility requirement of a reimbursement-type federal grant, under GASB Statement 33?
    A. When work has started for the project.
    B. When a plan for use of the funds has been developed and approved.
    C. Only as work is completed for a project.
    D. Only after work is completely finished for the project.
    C. Only as work is completed for a project.
    (this multiple choice question has been scrambled)
  22. The entry to re-establish encumbrances related to purchase orders from the prior year would include:
    A. A debit to Encumbrances Control.
    B. A debit to Fund Balance.
    C. A credit to Budgetary Fund Balance -
    Reserved for Encumbrances.
    D. None of the above.
    A. A debit to Encumbrances Control.
    (this multiple choice question has been scrambled)
  23. Which of the following is not likely to be recorded in a special revenue fund?
    A. Phone fees restricted to supporting the
    emergency 911 access system.
    B. Hotel taxes restricted to promoting tourism.
    C. Sales taxes restricted to courthouse additions.
    D. State motor fuel tax restricted to road maintenance
    C. Sales taxes restricted to courthouse additions.
  24. Indicate which of the following use Modified Accrual Accounting?

    A. Option D - yes-yes-no-no
    B. Option C - yes-no-yes-yes
    C. Option B - no-yes-no-yes
    D. Option A - yes-no-yes-no
    D. Option A - yes-no-yes-no
    (this multiple choice question has been scrambled)
  25. Short-term loans which are backed by the taxing power of the governmental unit and used to meet working capital requirements are called:
    A. Tax anticipation notes.
    B. Other financing sources.
    C. Appropriation loan.
    D. Inter-fund loans.
    A. Tax anticipation notes.
    (this multiple choice question has been scrambled)
  26. A local government was awarded a federal grant in the amount of $1,200,000 to provide for a summer employment program for young people. The grant was a reimbursement grant and was awarded on April 30, 2012. The local government expended the resources as follows: June, 2012, $440,000; July 2012, $400,000; August, 2012, $360,000. The federal government provided the funds the following months. The local government would recognize revenues for the fiscal year ended June 30, 2012 in which amount?
    A. $440,000
    B. $840,000
    C. $1,200,000
    D. $-0-
    A. $440,000
    (this multiple choice question has been scrambled)
  27. A donor pledged $200,000 to the fund raising drive of a local government to assist its police officers in obtaining the latest technology. The pledge was made on July 16, 2011 but was conditioned on the government raising an additional $200,000 from other donors. By the fiscal year-end of June 30, 2012, the local government had raised only $5,000 from other donors. What entry would be made for the initial pledge by the local government during the year ended June 30, 2012?
    A. Debit a receivable and credit a revenue.
    B. No entry is required.
    C. Debit a receivable and credit deferred revenues, a liability.
    D. Debit a receivable and credit Fund Balance.
    B. No entry is required.
    (this multiple choice question has been scrambled)
  28. Which of the following is true regarding modified accrual accounting?
    A. Expenditures for claims and judgments, compensated absences, and special termination benefits should be recognized whether or not the liabilities are to be paid with available resources.
    B. Expenditures for services used by General Fund departments should be recognized when those services are received, regardless of whether or not resources are available in the fund.
    C. Both of the above are true.
    D. Neither of the above is true.
    B. Expenditures for services used by General Fund departments should be recognized when those services are received, regardless of whether or not resources are available in the fund.
  29. The General Fund of the City of Lexington approved a tax levy for the calendar year 2012 in the amount of $2,000,000. Of that amount, $30,000 is expected to be uncollectible. During 2012, $1,750,000 was collected. During 2013, $100,000 was collected during the first 30 days, $70,000 was collected during the next 30 days, and $50,000 was collected during the next 30 days. During the postaudit, you discovered that the City showed $2,000,000 in revenues. What adjusting entry would you need to make, assuming you decided to allow the maximum amount of revenues for 2012, using modified accrual accounting?
    A. Debit Revenues and Credit Deferred Revenues in the amount of $120,000.
    B. Debit Revenues and Credit Deferred Revenues in the amount of $50,000.
    C. No entry is required.
    D. Debit Revenues and Credit Deferred Revenues in the amount of $350,000.
    B. Debit Revenues and Credit Deferred Revenues in the amountof $50,000.
    (this multiple choice question has been scrambled)
  30. TheCity of Brownsville had a balance in the Budgetary Fund Balance -- Reserve forEncumbrances account at the end of 2011 in the amount of $30,000. During 2012,all purchase orders related to the $90,000 were filled, and the invoice amountwas $91,200. Which of the following would be true regarding the Statement of
    Revenues, Expenditures, and Changes in Fund Balances for 2012? (assumeencumbrances do not lapse)
    A. The amount shown for Expenditures would include only the $1,200.
    B. The amount shown for Expenditures would include the $91,200.
    C. The amount shown for Expenditures would include only the $90,000.
    D. The amount shown for Expenditures would not include items related to orders placed in 2011.
    B. The amount shown for Expenditures would include the $91,200.
    (this multiple choice question has been scrambled)
  31. Under modified accrual accounting, revenues are recognized when measurable and:
    A. Expenditures have been made.
    B. Earned.
    C. Collected.
    D. Available.
    D. Available.
    (this multiple choice question has been scrambled)
  32. When accounting for the General Fund, the Encumbrances Control account is credited when:
    A. A purchase order is filled or canceled.
    B. The budget is approved.
    C. An invoice is paid.
    D. A purchase order is approved.
    A. A purchase order is filled or canceled.
    (this multiple choice question has been scrambled)
  33. The City of Pine Cove levied property taxes for the fiscal year ended June 30, 2012 in the amount of $9,000,000. It is estimated that 2% will not be collected. During the year ended June 30, 2012, $8,100,000 in property taxes was collected. It is estimated that $500,000 will be collected during the next 60 days, $265,000 will be collected after 60 days, and $160,000 will not be collected. What is the maximum amount Lonesome Pines can recognize as property tax revenue for the fiscal year ended June 30, 2012 in its Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances, assuming there were no unpaid property taxes at the end of the previous year?
    A. $8,600,000.
    B. $8,100,000.
    C. $9,000,000.
    D. $8,865,000.
    A. $8,600,000.
    (this multiple choice question has been scrambled)
  34. What is the effect on the General Fund's fund balance when capital assets are purchased during a year from General Fund revenues?
    A. Fund balance is decreased.
    B. There is no effect, since one asset (cash) is replaced by another (capital asset).
    C. Fund balance is increased.
    D. None of the above, capital assets must be purchased through a capital projects fund.
    A. Fund balance is decreased.
    (this multiple choice question has been scrambled)
  35. The initial transfer of cash from the General Fund to establish a motor pool internal service fund would require the General Fund to credit cash and debit:
    A. Other Financing Uses-Transfers Out Control.
    B. Investment in Internal Service Fund.
    C. Accounts Receivable-Internal Service Fund.
    D. Expenditures - Vehicle maintenance.
    A. Other Financing Uses-Transfers Out Control.
    (this multiple choice question has been scrambled)
  36. When supplies ordered by a governmental unit are received at an actual price which is more than the estimated price on the purchase order, the Encumbrance Control account is:
    A. Credited for the original estimated price for the supplies received.
    B. Credited for the actual price on the purchase order.
    C. Debited for the estimated price on the purchase order.
    D. Debited for the actual price for the supplies received.
    A. Credited for the original estimated price for thesupplies received.
  37. Which of the following accounts of a governmental unit is debited when supplies
    previously ordered are received?
    A. Encumbrances Control.
    B. Reserve for Supplies.
    C. Budgetary Fund Balance -- Reserve for Encumbrances.
    D. Appropriations.
    C. Budgetary Fund Balance -- Reserve for Encumbrances.
  38. Which of the following accounts of a governmental unit is credited to close it at the end of the fiscal year?
    A. Appropriations Control.
    B. Budgetary Fund Balance -- Reserve for Encumbrances.
    C. Other Financing Sources-Transfers In.
    D. Encumbrances Control.
    D. Encumbrances Control.
    (this multiple choice question has been scrambled)
  39. The Expenditures control account in the General Fund is debited when:
    A. The budget is recorded.
    B. Supplies are ordered.
    C. Equipment previously ordered is received.
    D. The books are closed at the end of the year.
    C. Equipment previously ordered is received.
    (this multiple choice question has been scrambled)
  40. Which of the following accounts in the General Fund is credited when a purchase order is approved?
    A. Appropriations Control.
    B. Encumbrances Control.
    C. Budgetary Fund Balance -- Reserve for Encumbrances.
    D. Vouchers Payable.
    C. Budgetary Fund Balance -- Reserve for Encumbrances.
    (this multiple choice question has been scrambled)
  41. A transfer should be reported in the operating statement of the General Fund as a(an):
    A. Due from or Due to Other Funds.
    B. Revenue or Expenditure.
    C. Other Financing Source or Use.
    D. None
    of the above, it is a direct increase or decrease to fund balance.
    C. Other Financing Source or Use.
    (this multiple choice question has been scrambled)
  42. The Revenues Control account of the General Fund is debited when:
    A. The budget is recorded at the beginning of the year.
    B. Uncollectible taxes receivable accounts are written off.
    C. Property taxes are collected.
    D. None of the above.
    D. None of the above.
  43. The asset, equipment, used by a department accounted for by the General Fund of a governmental unit should be reported in the:
    A. Government-Wide Statements.
    B. Both (a) and (b).
    C. General Fund.
    D. None of the above.
    A. Government-Wide Statements.
    (this multiple choice question has been scrambled)
  44. Liabilities incurred, such as for accrued payroll, but still unpaid at year-end, should be recorded in the General Fund by a debit to which one of the following
    accounts?
    A. Appropriations Control.
    B. Expenditures Control.
    C. Encumbrances Control.
    D. Salary Expense.
    B. Expenditures Control.
    (this multiple choice question has been scrambled)
  45. The following items were included in the City of Wilson's General Fund expenditures for the year ended June 30, 2012:

    Personal Computer for city clerk - 9000
    Furniture for Controllers Office - 15000

    How much should be classified as capital assets in Wilson's General Fund balance sheet at June 30, 2012?
    A. $-0-.
    B. $9,000.
    C. $24,000.
    D. $15,000.
    A. $-0-.
    (this multiple choice question has been scrambled)
  46. What would be the effect on the General Fund Fund Balance at the end of the current fiscal year of recording the purchase of a $15,000 new computer?
    A. Reduce the General Fund's Fund Balance $15,000.
    B. Reduce the General Fund's Fund Balance $14,600.
    C. Have no effect on the General Fund's Fund Balance.
    D. Reduce the General Fund's Fund Balance $400.
    A. Reduce the General Fund's Fund Balance $15,000.
    (this multiple choice question has been scrambled)
  47. A local government was awarded a federal grant in the amount of $800,000 to provide for a summer youth employment program for young people. The grant was a reimbursement grant, and a notification of the grant award was received on Apri1 30, 2012. The local government expended the resources as follows:

    The federal government sent the funds in the month following the expenditure. The local government would recognize revenues for the fiscal year ended June 30, 2012 in which amount?
    A. $650,000.
    B. $350,000.
    C. $900,000.
    D. $-0-.
    B. $350,000.
    (this multiple choice question has been scrambled)
  48. The General Fund of the City of Bangor purchased water from its Water Utility Fund in the amount of $20,000. The General Fund would debit:
    A. Water Expense.
    B. Expenditures Control.
    C. Other Financing Uses-Transfers Out.
    D. None of the above; no entries would be made.
    B. Expenditures Control.
    (this multiple choice question has been scrambled)
  49. General Fund resources were expended in the amount of $180,000 to purchase a new fire truck. The General Fund would debit:
    A. Expenditures Control.
    B. Capital assets -Motor Vehicles.
    C. Both (a) and (b) above.
    D. None of the above; no entry is made in the General Fund when a motor vehicle is purchased.
    A. Expenditures Control.
  50. Which of the following is true regarding modified accrual accounting?
    A. Revenues are generally recognized when measurable and available to finance expenditures of the current period.
    B. Expenditures are recognized as the related goods or services are received.
    C. Both (a) and (b) above.
    D. None of the above.
    C. Both (a) and (b) above.
  51. The City of Corning General Fund reported the following at year-end, prior to closing entries: Revenues, $11,000,000; Expenditures, $9,900,000; Other Financing Uses, $500,000; Other Financing Sources, $300,000; Encumbrances, $600,000. Assume the beginning unassigned fund balance was $1,000,000, what is the amount that would be reported as ending unassigned fund balance?
    A. $1,900,000.
    B. $1,300,000.
    C. $1,400,000.
    D. Cannot be determined without information concerning constraints placed on the fund's resources.
    D. Cannot be determined without information concerning constraints placed on the fund's resources.
    (this multiple choice question has been scrambled)
  52. When recording property taxes, the estimated uncollectible amount of property taxes is:
    A. Recognized as an expenditure.
    B. Not recognized.
    C. Recognized as a reduction of revenue.
    D. None of the above.
    C. Recognized as a reduction of revenue.
    (this multiple choice question has been scrambled)
  53. Interfund services provided and used are recognized as:
    A. Increases and Decreases in Fund Balance.
    B. Transfers In and Transfers Out.
    C. Revenues or expenditures.
    D. None
    of the above.
    C. Revenues or expenditures.
    (this multiple choice question has been scrambled)
  54. A December 2012 year-end government should record which of the following as expenditures:
    A. Salaries Payable due January 20, 2013.
    B. Bond Payable that matures January 30, 2013.
    C. Both A
    D. Bond Payable that matures February 14, 2013.
    & B.
    A. Salaries Payable due January 20, 2013
    (this multiple choice question has been scrambled)
  55. When delinquent taxes are written off:
    A. Expenditures will increase.
    B. Fund balance will be unaffected.
    C. Both a and c.
    D. Fund balance will decrease.
    B. Fund balance will be unaffected.
    (this multiple choice question has been scrambled)
  56. In February, X City ordered $500,000 of supplies. On March 17th it received all of the ordered supplies and an invoice of $492,000. Which of the following would be recorded upon receipt of the supplies and invoice?
    A. Debit Encumbrances Control for $492,000.
    B. Credit Expenditures Control for $492,000.
    C. Debit Budgetary Fund Balance -- Reserve for Encumbrances for $500,000.
    D. Debit Encumbrances Control for $500,000.
    C. Debit Budgetary Fund Balance -- Reserve for Encumbrances for $500,000.
    (this multiple choice question has been scrambled)
  57. Which of the following is true regarding accounting for inventories?
    A. GAAP permits use of either the consumption method or the purchases method.
    B. If inventories are significant, GAAP requires that an asset account be credited in
    order to record a fund balance reserve.
    C. Under the consumption method, Expenditures equal the amount of inventory received during the period.
    D. All of the above are true.
    A. GAAP permits use of either the consumption method or the purchases method.
  58. The year end closing entries involve:
    A. Reversing the entry to record the budget.
    B. Transferring the balances of the activity accounts and of the budgetary accounts to Fund Balance.
    C. Reversing any entries that were made to amend the budget.
    D. All of the above.
    D. All of the above.
  59. Debt service expenditures for principal and interest are:
    A. Accrued.
    B. Recorded when due but may be accrued at year end if debt service due date is less than 30 days after year end.
    C. Recorded when due but may be accrued at
    year end if debt service due date is less than 60 days after year.
    D. Reported in the government-wide statements
    only.
    B. Recorded when due but may be accrued at year end if debt service due date is less than 30 days after year end.
    (this multiple choice question has been scrambled)
  60. When closing out the General Fund and Special Revenue Funds of a state or local governmental unit, the balance of the operating statement accounts and the balances of the budgetary accounts are closed to:
    A. Fund Balance.
    B. Appropriations Control.
    C. Other Financing Sources - Transfer Out.
    D. Budgetary Fund Balance - Reserved for Encumbrances.
    A. Fund Balance.
    (this multiple choice question has been scrambled)

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