acct 266 exam 2a

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acct 266 exam 2a
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acct 266 exam 2a
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  1. 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
    • the resources are provided by restricted or committed revenue sources.
  2. Which of the following is an interfund transaction?
    a. Interfund services provided and used
    b. Interfund transfers
    c. Interfund reimbursement
    d. All of the above are interfund transactions
    d All of the above are interfund transactions
  3. 3. When recording property taxes, the estimated uncollectible amount of property taxes is:
    a. Recognized as an expenditure.
    b. Recognized as a reduction of revenue.
    c. Not recognized.
    d. None of the above.
    b Recognized as a reduction of revenue.
  4. When accounting for the General Fund, the Encumbrances Control account is credited when:
    a. A purchase order is approved.
    b. A purchase order is filled or canceled.
    c. An invoice is paid.
    d. The budget is approved.
    b A purchase order is filled or canceled.
  5. 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. Salary Expense.
    b. Appropriations Control.
    c. Encumbrances Control.
    d. Expenditures Control.
    d Expenditures Control.
  6. 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.
  7. 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. Expenditures Control.
    b. Other Financing Uses-Transfers Out.
    c. Water Expense.
    d. None of the above; no entries would be made.
    a Expenditures Control.
  8. 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. Inter-fund loans.
    c. Other financing sources.
    d. Appropriation loan.
    a Tax anticipation notes.
  9. $60,000 of property tax owed to the city of Akron will not be collected within 60 days after year end. The year end journal entry to record this information would include a:
    a. A credit to Revenues Control.
    b. A debit to Deferred Revenue - Property Taxes.
    c. A credit to Income Taxes Receivable.
    d. A debit to Revenues Control.
    d A debit to Revenues Control.
  10. The term special item is defined as:
    a. Frequent and unusual but within management's control.
    b. Unusual or infrequent but within management's control.
    c. Frequent and unusual and not within management's control.
    d. Unusual or infrequent and not within management's control.
    b Unusual or infrequent but within management's control.
  11. Which of the following is true with respect to special assessment levies?
    a. Taxpayers may opt out of a service-type special assessment if they agree to not use the service funded by the assessment.
    b. Service-type special assessments may not be accounted for in the General or special revenue fund.
    c. Construction-type special assessments are accumulated until there is enough money to finance the construction project.
    d. If the government is not liable for the special assessment debt directly or through guarantee, the special assessment is accounted for in an agency fund.
    • d If the government is not liable for the special assessment debt
    • directly or through guarantee, the special assessment is accounted for
    • in an agency fund.
  12. With respect to Debt Service Funds, which of the following is true?
    a. Each separate long-term obligation must be accounted for in a separate debt service fund
    b. Debt service funds may be required to service capital lease obligation
    c. Debt service funds use accrual accounting
    d. All of the above are true.
    b Debt service funds may be required to service capital lease obligation
  13. If taxes are levied specifically for payment of interest and principal on long-term debt, those taxes are:
    a. Included as a liability of the General Fund.
    b. Recorded as operating transfers to the debt service fund.
    c. Included as revenues of the debt service fund.
    d. Both A and B are correct.
    c Included as revenues of the debt service fund.
  14. Governmental funds, other than the General Fund, are considered major if:
    I. Total Assets, Liabilities, Revenues, or Expenditures of that individual governmental fund are at least 10% of the corresponding total (assets, liabilities, and so forth) for all governmental funds.
    II. Total Assets, Liabilities, Revenues, or Expenditures of the individual governmental fund are at least 5% of the corresponding total for all governmental and enterprise funds combined.
    a. I only.
    b. II only.
    c. Either I or II, but need not be both.
    d. Both I and II.
    d Both I and II.
  15. On October 1, 2011, the City of Mizner issued $3,500,000 in 5%, general obligation bonds at 102 for the purpose of constructing an addition to City Hall. The premium was transferred to a debt service fund. A total of $3,450,000 was used to construct the addition, which was completed prior to June 30, 2012. The remaining funds were transferred to the debt service fund. The bonds were dated October 1, 2011, and paid interest on April 1 and October 1. The first of 20 annual principal payments of $175,000 is due October 1, 2012. The fiscal year for Mizner is July 1- June 30.
    What would be the amount of debt service expenditures reported in the fiscal year ended June 30, 2013?
    a. $350,000.
    b. $170,625.
    c. $341,250.
    d. $345,625.
    d $345,625.
  16. Which of the following would be accounted for as a permanent fund?
    a. A gift of $500,000 to a city, to be invested permanently, with the proceeds to be used to maintain the city cemetery.
    b. A gift of $500,000 to a city, to be invested permanently, with the proceeds to be distributed as scholarships.
    c. An intergovernmental grant of $500,000 to a city to be used for low income housing.
    d. A gift of $500,000 to a city to be used for a new caretaker's residence at the local cemetery.
    a A gift of $500,000 to a city, to be invested permanently, with the proceeds to be used to maintain the city cemetery.
  17. Siler City receives a trust donation for the purpose of maintaining flower beds in city parks, but the donor does not specify that the principal must be maintained. This type of trust would be most appropriately accounted for in a:
    a. Permanent Fund.
    b. Special Revenue Fund.
    c. Private Purpose Trust Fund.
    d. General Fund.
    b Special Revenue Fund.
  18. Use the following to answer the next six questions: During the fiscal year ended December 31, 2012, the City of Johnstown issued 6% general obligation serial bonds in the amount of $3,000,000 at 101 ($3,030,000) and used $2,970,000 of the proceeds to construct a fire station. The $30,000 premium was transferred to a debt service fund. The $30,000 left in the capital projects fund at the end of the project was transferred to the debt service fund. The bonds were dated April 1, 2012 and paid interest on October 1 and April 1. The first of 10 equal annual principal payments was due on April 1, 2013. How would the $3,000,000 bond sale be recorded?
    a. As a liability in the debt service fund.
    b. As a liability in the capital projects fund.
    c. As an other financing source in the capital projects fund.
    d. As an other financing use in the debt service fund.
    c As an other financing source in the capital projects fund.
  19. Grant proceeds received from the state for a capital project would be recorded in a capital projects fund of a city government as a (an):
    a. Revenue.
    b. Other Financing Source.
    c. Direct addition to Fund Balance.
    d. Other Financing Use.
    a Revenue.
  20. Which of the following is true regarding the governmental fund financial statements?
    a. The General Fund is always a major fund and other governmental funds are considered major if total assets, liabilities, revenues, or expenditures are at least 10 percent of the corresponding totals of governmental funds and 5 percent of the corresponding totals for governmental and enterprise funds combined.
    b. Nonmajor funds are reported in aggregate in a discrete column.
    c. Both of the above are true.
    d. Neither of the above is true.
    c Both of the above are true.
  21. Which financial statements are required for a proprietary fund?
    a. Income statement, Statement of Net Assets and Statement of Cash Flows
    b. Statement of Revenues, Expenses and Changes in Fund Balance, Statement of Net Assets and Statement of Cash Flows
    c. Income statement and Balance sheet
    d. Statement of Revenues, Expenses and Changes in Fund Balance and Statement of Net Assets
    b Statement of Revenues, Expenses and Changes in Fund Balance, Statement of Net Assets and Statement of Cash Flows
  22. Which of the following is correct with respect to Internal Service Funds?
    a. Internal service funds use accrual accounting and the economic resource focus.
    b. Net Assets (fund equity) are to be reported in two categories: assigned and unassigned.
    c. Internal service funds account for long-term debt but not long-term fixed assets.
    d. All of the above are false statements.
    a Internal service funds use accrual accounting and the economic resource focus.
  23. GASB Statement 34 requires enterprise funds to be used under which of the following circumstances?
    a. When debt is backed by the full faith and credit of the government issuing it.
    b. When the legal requirement exists that the cost of providing services for an activity, including capital costs, be recovered through fees or charges.
    c. When a government is restricted by grant covenants to cover the cost of providing services for an activity.
    d. None of the above circumstances would require the use of an enterprise fund.
    • b When the legal requirement exists that the cost of providing services
    • for an activity, including capital costs, be recovered through fees or
    • charges.
  24. Which of the following are best described as proprietary funds? I. Internal Service funds II. Pension funds III. Enterprise funds
    a. I only.
    b. I and II.
    c. I and III.
    d. I, II, and III.
    c I and III.
  25. Capital assets of an enterprise fund should be reported in the:
    a. Government-Wide Statement of Net Assets only.
    b. Proprietary Fund Statement of Net Assets only.
    c. General Fixed Asset Account Group only.
    d. Government-Wide Statement of Net Assets and Proprietary Funds Statement of Net Assets.
    d Government-Wide Statement of Net Assets and Proprietary Funds Statement of Net Assets.
  26. Capital assets for internal service funds should be reported:
    a. In the internal service funds only.
    b. In the government-wide statements only.
    c. In both the internal service funds and the government-wide statements.
    d. None of the above, they are not reported
    c In both the internal service funds and the government-wide statements.
  27. Centralized purchasing, computer services, and janitorial services are examples of activities that are commonly reported in:
    a. Enterprise funds.
    b. Capital project funds.
    c. Internal service funds.
    d. Debt service funds.
    c Internal service funds.
  28. Revenue bonds
    a. Carry less risk than general obligation bonds.
    b. Are no longer in existence.
    c. Are intended to be payable from the revenues of an enterprise.
    d. Are backed by the full faith and credit of the government in addition to enterprise revenues.
    c Are intended to be payable from the revenues of an enterprise.
  29. The Water Utility (an enterprise fund) has just sent out a purchase order to a vendor for some new equipment. Which of the following would be included in the journal entry to record this event?
    a. A credit to Accounts Payable.
    b. A debit to Encumbrances.
    c. A debit to Expenditures.
    d. None of the above.
    d None of the above.
  30. Which of the following funds use business-like accounting?
    a. Internal Service Fund.
    b. Enterprise Fund.
    c. General Fund.
    d. Both A & B.
    d Both A & B.

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