Term
Which of the following is not a common type of governmental fund expenditure?
A. Capital outlay
B. Debt service
C. Salaries & wages
D. Depreciation
E. All of the above |
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Definition
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Term
An expenditures account in a General Fund should be charged for materials and supplies:
A.Only as the materials and supplies are being consumed
B.Only as the materials and supplies are purchased
C.Either as the materials and supplies are consumed or as they are purchased
D.Either as the materials and supplies are consumed or purchased but dependent upon the materiality of the material and supplies inv. |
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Definition
| C. Either as the materials and supplies are consumed or as they are purchased |
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Term
A city has formalized tax liens of $50,000 against a property on which there are delinquent taxes receivable. The estimated salable value of the property is $39,000. The remaining total balances in Property Taxes Receivable – Delinquent and the related allowance are $113,000 and $28,000, respectively. What amount should be reclassified from allowance for uncollectible delinquent taxes to allowance for uncollectible tax liens?
A. $11,000
B. $0
C. $8,589
D. $28,000 |
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Definition
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Term
Which of the following events could require a restatement of the beginning fund balance of a governmental fund?
A. Management changes the method of accounting for inventory to FIFO
B. A claim that was previously not reported due to uncertainties about its validity is now considered probable and reasonably estimable
C. The GASB issues new accounting and financial reporting guidance that must be implemented retroactively
D. Items A and C only |
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Definition
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Term
A city has formalized tax liens of $50,000 against a property on which there are delinquent taxes receivable. The estimated salable value of the property is $39,000. The remaining total balances in Property Taxes Receivable – Delinquent and the related allowance are $113,000 and $28,000, respectively. If the city decides to keep the property for its own use, what amount of expenditures should be recognized?
A. $0
B. $39,000
C. $50,000
D. None of the above |
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Definition
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Term
A state pays salaries and wages of $118 million to General Fund employees during a year. Unpaid, accrued salaries were $3 million at the beginning of the year and $6 million at year end. General Fund salary expenditures should be reported for the year in the amount of:
A. $121 million
B. $118 million
C. $124 million
D. $115 million |
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Definition
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Term
A Special Revenue Fund expenditure of $40,000 was initially paid from and recorded in the General Fund. The General Fund is now being reimbursed. The General Fund should report:
A. Transfers in of $40,000
B. A $40,000 reduction in expenditures
C. Revenues of $40,000
D. Other financing sources of $40,000 |
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Definition
| B. A $40,000 reduction in expenditures |
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Term
On June 1, 20X4, a school district levies the property taxes for its fiscal year that will end on June 30, 20X5. The total amount of the levy $1,000,000 and it is expected that 1% will be uncollectible. Of the levy, $250,000 is collected in June 20X4 and another $500,000 is collected in July and August 20X4. What amount of property tax revenue associated with the June 1, 20X4, levy should be reported as a revenue in the fiscal year ending June 30, 20X4?
A. $0
B. $760,000
C. $990,000
D. $750,000 |
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Definition
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Term
Both the periodic and perpetual inventory systems may be used with:
A. The purchases method only
B. Either the consumption or purchases methods
C. The purchases method if local laws require this method of accounting
D. The consumption method if inventory values are deemed to be of material value
E. The consumption method only |
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Definition
| E. The consumption method only |
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Term
A state received a gift of $80,000 of stocks and bonds from a private donor. The General Fund statement of revenues, expenditures, and changes in fund balance should report:
A. Other financing sources of $80,000
B. Special items for all such gifts
C. Revenues of $80,000
D. Extraordinary items for all such gifts |
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Definition
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Term
The minimum expenditure classifications required in the basic financial statements for governmental funds are:
A. Fund, character, department and line item
B. Fund, character, and function or program
C. Fund, character, and department
D. Fund and function or program |
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Definition
| D. Fund and function or program |
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Term
Which of the following may be reported as governmental fund revenue?
A. Taxes
B. Fines and forfeitures
C. Special assessments
D. Payments in lieu of taxes
E. All of the above |
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Definition
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Term
A county received $3,000,000 from the state. Of that amount, $1,500,000 was received under an entitlement program and was not restricted as to use. The other $1,500,000 was received under a grant agreement that requires the funds to be used for specific health and welfare programs. The county accounts for the resources from both of these programs in a Special Revenue Fund. Expenditures of that fund that qualified under the grant agreement totaled $900,000 in the year that the grant and entitlement were received. What amount of revenues should the county recognize in that year with respect to the entitlement and the grant?
A. $0
B. $900,000
C. $1,500,000
D. $1,800,000
E. $2,400,000 |
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Definition
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Term
Generally, sales tax revenues should be recognized by a local government in the period
A. In which the local government receives the cash
B. That the underlying sale occurs, whether or not the local government receives the cash in that period
C. In which the state-which collects all sales taxes in the state-receives the cash from the collecting merchants
D. In which the state-which collects all sales taxes in the state-receives the cash from the collecting merchants if the local government collects the taxes from the state in that period or soon enough in the next period to be used as a resource for payment of liabilities incurred in the first period |
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Definition
| D. In which the state-which collects all sales taxes in the state-receives the cash from the collecting merchants if the local government collects the taxes from the state in that period or soon enough in the next period to be used as a resource for payment of liabilities incurred in the first period |
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Term
A city levied $2,000,000 of property taxes for its current fiscal year. The city collected $1,700,000 cash on its taxes receivable during the year and granted $72,000 in discounts to taxpayers who paid within the legally established discount period. It is expected that the city will collect another $88,000 on these taxes receivable during the first two months of the next fiscal year. One percent of the tax levy is expected to be uncollectible. What amount of property tax revenues should the city report for the current fiscal year/
A. $1,788,000
B. $1,860,000
C. $1,980,000
D. $2,000,000 |
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Definition
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Term
In governmental funds, expenditures should be recognized in the period in which a fund liability is incurred, though there are some exceptions to the general rule. Which of the following is not an exception to the expenditure accrual rule?
a. Expenditures for Inventory
b. Salaries and wage expenditures
c. Debt Service expenditures
d. Prepayments for insurance premiums
e. Items a and d only. |
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Definition
| b. Salaries and wage expenditures |
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Term
Assume a governmental entity enter into a capital lease for the purchase of seven new public safety vehicles. The present value of the future lease payments is $224,750 and there is a down payment at the inception of the lease of $25,000. The net effect on fund balance of the General Fund in the year of inception is
a. An increase of $224,750
b. A decrease of $224,750
c. $0
d. a decrease of $199,750
e. a decrease of $25,000 |
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Definition
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Term
A city levied $2,000,000 of property taxes for its current fiscal year. The city collected $1,700,000 cash on its taxes receivable during the year and granted $72,000 in discounts to taxpayers who paid within the legally established discount period. It is expected that the city will collect another $88,000 on these taxes ceivable during the first two months of the next fiscal year. One percent of the tax levy is expected to be uncollectible. What amount of property tax revenues should the city report for the current fiscal year, if the city also collected $100,000 of the prior year’s taxes during the first two months of the current fiscal year and another $53,000 of the prior year’s taxes during the remainder of the current year?
a. $1,788,000
b. $1,860,000
c. $1,941,000
d. $1,980,000
e. None of the above. |
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Definition
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Term
A state received a gift of $80,000 of stocks and bonds from a private donor. The General Fund statement of revenues, expenditures, and changes in fund balance should report
A. special items for all such gifts.
b. extraordinart items for all such gifts.
c. revenues of $80,000
d. other financing sources of $80,000 |
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Definition
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Term
Which of the following statements is true concerning the accounting and financial reporting for capital leases in governmental funds?
a. government entities apply essentially the same criteria as busineses to determine whether or not a lease is a capital lease
b. when a government fund enters into a capital lease, the transaction should result in a capital outlay expenditure and an other financing source
c. capital lease in government funds do not result in fund liabilty
d. all of the which are true
e. items b and c are only true statements |
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Definition
| d. all of the which are true |
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Term
Which of the following statements regarding the required GAAP reporting for a Capital Projects Fund is false?
A. A GAAP-basis operating statement is not required for a Capital Projects Fund if a multi-year budget has been adopted
B. It is not uncommon for a Capital Projects Fund operating statement to report an excess of expenditures over revenues during a project.
C. The format of the Statement of Revenues, Expenditures, and Changes in Fund Balance for a Capital Projects Fund is the same as for a General Fund.
D. A GAAP-basis balance sheet and a Statement of Revenues, Expenditures, and Changes in Fund Balance are required for CPF. |
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Definition
| A. A GAAP-basis operating statement is not required for a Capital Projects Fund if a multi-year budget has been adopted |
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Term
Which of the following statements concerning debt refunding is true?
A. Advance refundings do not result in immediate, direct retirement of existing long-term debt.
B. Often, resources of a irrevocable trust are used to service old long-term debt, even though the liability has been removed from the financial statements of the original issuing government.
C. Both legal defeasance and in-substance defeasance may result in the removal of the old debt from the original issuer’s balance sheet.
D. All of the above are true statements |
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Definition
| D. All of the above are true statements |
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Term
Which of the following is never reported as a general long-term liability?
A. Capital leases
B. Compensated absences
C. Advances from other funds
D. Certificates of participation
E. Landfill closure and postclosure care |
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Definition
| C. Advances from other funds |
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Term
What are the characteristics of a term bond?
A. Term bonds may not exceed 15 years.
B. Principal and interest on the entire principal are paid throughout the life of the issue.
C. Interest is paid on the entire principal throughout the life of the issue
D. Principal is paid at the end of the bond issue term
E. Items A and B only
F. Items C and D only |
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Definition
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Term
Donated capital assets are valued by the recipient government at:
A. The value of any tax deduction to be claimed by the donor
B. Fair market value at the date of donation
C. The original cost of the donated asset per the donor’s records
D. The assessed valuation at the date of donation
E. The net book value of the asset at the date of donation |
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Definition
| B. Fair market value at the date of donation |
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Term
Bond anticipation notes may be reported as a general long-term liability in which of the following circumstances?
A. The government intends to refinance the bond anticipation notes within the next fiscal period
B. All legal steps have been taken to refinance the bond anticipation notes and the ability to refinance has been determined
C. Bond anticipation notes, like other anticipation notes, must always be reported as a fund liability.
D. The bond anticipation notes must always be reported as a long-term liability |
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Definition
| B. All legal steps have been taken to refinance the bond anticipation notes and the ability to refinance has been determined |
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Term
Arbitrage may best be defined as:
A. Interest earned in excess of interest paid on tax-exempt debt
B. Interest paid in excess of interest earned on tax-exempt debt
C. Interest paid on short-term financings.
D. Any interest earned on investments in a Capital Projects Fund |
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Definition
| A. Interest earned in excess of interest paid on tax-exempt debt |
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Term
Which of the following may be accounted for either as a fund liability or a general long-term liability?
A. Bond anticipation notes
B. Grant anticipation notes
C. Tax anticipation notes
D. Revenue anticipation notes
E. All of the above |
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Definition
| A. Bond anticipation notes |
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Term
When refunding bonds are issued, other financing sources would be credited for:
A. The face value of the bonds issued, net of any discounts
B. The face value of the bonds issued, net of any amounts to be immediately placed in an irrevocable trust to service the old debt
C. The face value of the bonds issued, as well as the amount of any premium at issuance
D. The face value of the bonds issued, net of any discounts and underwriter’s fees or issuance costs |
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Definition
| C. The face value of the bonds issued, as well as the amount of any premium at issuance |
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Term
If a government chooses to raise its capitalization threshold for general government capital assets,
A. The change is applied retroactively: all currently capitalized capital assets that no longer meet the threshold would be removed from the General Capital Accounts and cease to be reported as capital assets
B. The General Fund will report a prior period adjustment to reflect the change in policy retroactively.
C. The current valuation of capital assets remains, but the new threshold is applied prospectively for the capital asset acquisitions
D. The change may be applied either prospectively or retroactively as per management discretion |
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Definition
| A. The change is applied retroactively: all currently capitalized capital assets that no longer meet the threshold would be removed from the General Capital Accounts and cease to be reported as capital assets |
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Term
Which of the following statements about Special Assessment Debt Service Funds is false?
A. It is common for deferred revenues to be reported in a Special Assessment Debt Service Fund
B. Debt Service Funds must be used anytime a government entity has special assessment debt
C. Revenue accounting for special assessments follows the same principles as that for property taxes
D. Most of the receivables in a Special Assessment Debt Service Fund are non-current |
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Definition
| B. Debt Service Funds must be used anytime a government entity has special assessment debt |
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Term
| 12) Wakefield Heights sold $6,000,000 of general obligation serial bonds at 1.5% discount to finance the construction of a new recreation center. Bond issuance costs were 2% of the face amount of the bonds. The entry to record the sale of the bonds in a Capital Projects Fund would be: |
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Definition
Cash 5,790,000
Expenditures – Bond Issue Costs 120,000
OFU – Bond Discount 90,000
OFS – Bonds 6,000,000 |
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Term
Assume that a building used by Carter County’s police department is totally destroyed by a fire. It is then discovered that the building was not properly insured and that its current net book value was $170,000. It is estimated that it will cost $350,000 to replace the building. The loss that would be reported in the General Fund for the reporting period in which the fire occurred would be:
A. $170,000 (current net book value)
B. $350,000 (estimated replacement cost)
C. $180,000 (the difference between the net book value and the estimated replacement cost)
D. $0
E. None of the above |
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Definition
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Term
Which of the following is a common example of a short-term financing arrangement?
A. Bond anticipation notes
B. Grant anticipation notes
C. Tax anticipation notes
D. Revenue anticipation notes
E. All of the above |
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Definition
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Term
Budgets for Capital Projects Funds:
A. Are common for projects financed by proprietary funds
B. Are indirectly budgeted through an entity’s General Fund
C. Are often project-length, or multiyear, budgets
D. Are always required by GAAP |
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Definition
| C. Are often project-length, or multiyear, budgets |
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Term
Which of the following general government capital asset acquisitions would be least likely to be accounted for in a Capital Projects Fund?
A. Expansion of a town’s main thoroughfare from 3 to 5 lanes financed by a federal highway grant
B. Acquisition of new police vehicles through a capital lease agreement
C. Construction of a new fire station being financed by a special tax levy (the tax levy is being accounted for in a Special Revenue Fund)
D. Construction of curb and guttering in a large neighborhood financed by capital improvement special assessment debt
E. Construction of a new government center being financed by the issuance of general obligation serial bonds |
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Definition
| B. Acquisition of new police vehicles through a capital lease agreement |
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Term
In which of the following scenarios would a general long-term liability be reported as a governmental fund liability?
A. The current portion of long term debt should always be reported as a governmental fund liability
B. Debt that has been defeased in substance
C. Debt that is in default
D. The current portion of refunding bonds
E. All of the above |
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Definition
| C. Debt that is in default |
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Term
Which of the following statements concerning the accounting and financial reporting of capital assets is false?
A. Proprietary fund capital assets are reported as assets in both the fund financial statements and the government-wide financial stmts.
B. Capitalization thresholds differ among governments and often within governments among classes of assets
C. Governments may choose the method of depreciation used for its capital assets
D. All capital assets are reported as assets of the purchasing fund
E. The modified approach may be used in lieu of reporting depreciation for infrastructure |
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Definition
| D. All capital assets are reported as assets of the purchasing fund |
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Term
| 19) Nondefeasance, in a refunding transactions, would result in: |
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Definition
| - Both the old debt and the new debt being recorded as liabilities by the issuing government, even if resources to service the old debt have been placed in an irrevocable trust |
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Term
Which of the following is not a characteristic of a Permanent Fund?
A. The principal is nonexpendable, but interest earnings may be expendable
B. A government activity is the beneficiary of Permanent Fund resources
C. Principal and interest are both nonexpendable
D. Permanent Funds are reported in both a balance sheet and an operating statement |
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Definition
| C. Principal and interest are both nonexpendable |
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Term
Which of the following financial statements are required for a Debt Service Fund?
A. Balance Sheet only.
B. Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balance
C. Statement of Revenues, Expenditures, and Changes in Fund Balance-Budget and Actual
D. Statement of Revenues, Expenditures, and Changes in Fund Balance only
E. Balance Sheet, Statement of Revenues, Expenditures, and Changes in Fund Balance, and Statement of Cash Flows |
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Definition
| B. Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balance |
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Term
When a Proprietary Fund capital asset is transferred to a governmental fund, the effect of the transaction is reported as:
A. A nonoperating expense in the proprietary fund (nothing is reported in the governmental fund)
B. A transfer in both the proprietary and the governmental fund
C. A transfer out in the proprietary fund (nothing is reported in the governmental fund)
D. A nonoperating item in both the proprietary fund and the governmental fund |
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Definition
| A. A nonoperating expense in the proprietary fund (nothing is reported in the governmental fund) |
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Term
Common expenditures in a Capital Projects Fund include:
A. Bond issuance costs
B. Payments to contractors
C. Bond discounts
D. All of the above are common expenditures in a Capital Projects Fund
E. Items a and b only
F. Items a and c only |
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Definition
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Term
In the year that any advance refunding occurs, which of the following disclosures is not required by GAAP?
A. Difference in debt service requirements of the old defeased issue and new issue, adjusted for any additional cash paid or received
B. Difference between the present value of the new issues debt service requirements and the old defeased issue’s debt service requirements
C. Any clarification necessary concerning whether the defeasance was a legal defeasance or an in-substance defeasance
D. Identity of the escrow agent managing the irrevocable trust established to service the old defeased issue’s debt service requirements
E. All of the above disclosures are required by GAAP |
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Definition
| D. Identity of the escrow agent managing the irrevocable trust established to service the old defeased issue’s debt service requirements |
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Term
In practice, how is any remaining fund balance of a completed Capital Projects Fund used?
A. Frequently, a governing body will specify what shall be done with any remaining fund balance before the projects even starts, subject to other legal or contractual requirements
B. It is not uncommon for the remaining fund balance to be transferred to a Debt Service Fund
C. Grantors may specify that remaining amounts will revert back to them based upon their percentage of initial funding
D. All of the above
E. Items a and c only |
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Definition
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Term
As a general rule, debt service expenditures in a Debt Service Fund are recognized:
A. When the debt service payment is due
B. When due for principal repayments but on an accrual basis for interest
C. In accordance with the requirements of the original bond order which specifies the basis of expenditure recognition
D. Resources to be used for the repayment are made available to a Debt Service Fund |
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Definition
| A. When the debt service payment is due |
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Term
Which of the following statements about "deep discount debt" is false?
a. The issuance of deep discount debt requires approval by referendum
b. in comparison to serial bond issues, deep discount debt is usually issued in relatively small amounts
c. deep discount debt require little or no interest payments during its outstanding term
d. deep discount debt is evidenced by interest rates that are abnormally low or even at zeros |
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Definition
| a. The issuance of deep discount debt requires approval by referendum |
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Term
28) Which of the following statement concerning the reporting of GLTL is true?
a. GLTL are reported in both the governmental fund and the government-wide financial statements
b. GLTL are only reported in the government-wide financial statements
c. GLTL are only reported in governmental funds.
d. Advances from other funds that are being repaid over a ten year period would be reported as GLTL
e. items b and d are true statements. |
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Definition
| b. GLTL are only reported in the government-wide financial statements |
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