1. Each of the following would be defined as a governmental entity based on the definition of a government that was jointly developed by the GASB and FASB except
2. Business-type activities differ from governmental-type activities in that
3. Which of the following is a characteristic that distinguishes government and not-for-profit (G&NP) organizations from business enterprises?
a. Borrowing is not a significant source of financing.
b. The resource providers of G&NP organizations often do not receive services commensurate with the amount of resources they provide.
c. Net income is an appropriate performance evaluation measurement for most of these organizations.
d. Accumulating wealth on behalf of its constituents is a key goal of G&NP organizations and business enterprises.
4. Which of the following is a government?
a. An entity that has 4 of its 7 governing board members appointed by government entities.
b. An entity that has the power to enact and enforce a property tax levy.
c. An entity that can be dissolved at the pleasure of a government and the assets of which revert to a government upon dissolution.
d. All of the above would be considered government entities for the purpose of determining whether government GAAP must be followed for financial reporting purposes.
e. An entity that has 4 of its 7 governing board members appointed by government entities.
f. An entity that has the power to enact and enforce a property tax levy.
g. An entity that can be dissolved at the pleasure of a government and the assets of which revert to a government upon dissolution.
h. All of the above would be considered government entities for the purpose of determining whether government GAAP must be followed for financial reporting purposes.
a. GAAP take precedence over the legal requirements.
b. Legal requirements take precedence over GAAP.
c. Both GAAP requirements and legal requirements must be met.
d. Information should be presented that meets as many legal requirements as possible without violating GAAP in a material manner.
7. Assume that the city of Wakefield purchased a tract of land to be used as a public park. The purchase was financed with proceeds from a five-year note issued by a local lending institution. The park itself will not be ready for public use, however, for at least two years. At the date of purchase, the city would most likely account for the transaction in
8. Ashley Woods Village issued $4,000,000 in general obligation bonds to finance the widening of a local thoroughfare. This transaction will most likely
9. Government-wide financial statements include
10. A computer was purchased from unrestricted resources for a general government department. The government paid cash for the computer at the purchase date. Which of the following is not an effect of this transaction in the General Fund?
a. Current assets decrease.
b. Capital assets increase.
c. Current liabilities do not change.
d. Fund balance decreases.
11. In which of the following financial statements should a government not report depreciation expense?
a. Fiduciary fund financial statements
b. Governmental fund financial statements
c. Proprietary fund financial statements
d. Government-wide financial statements
12. The city of Brittainville’s Special Revenue Fund levied $350,000 in taxes, of which 1% was expected to be uncollectible during the current year. Also during the year, the fund collected $ 7,500 of interest revenue and $ 50,000 was transferred from the General Fund. As a result of these transactions fund balance will increase by
13. A local school district issued a short-term note payable to purchase $500,000 of recreation equipment. The note will be repaid with General Fund resources. The General Fund would report
14. The Special Revenue Fund of the city of Wakefield ended its fiscal year with revenues of $750,000, other financing sources of $ 50,000, and expenditures of $725,000. The closing entry in the Special Revenue Fund would be
dr cr
Net profit 75,000
Revenues $ 750,000
Other Financing Sources 50,000
Other Financing Uses 75,000
Revenues $ 750,000
Other Financing Sources 50,000
Unreserved Fund Balance 75,000
Revenues $ 750,000
Other Financing Sources 50,000
Other Financing Sources 50,000
Expenditures $ 725,000
Other Financing Uses 75,000
Other Financing Sources 50,000
Expenditures $ 725,000
Unreserved Fund Balance 75,000
15. The following information pertains to the Richardson County General Fund:
Expenditures 12,800,000
Revenues 9,200,000
Long-term note issue proceeds 1,000,000
Short-term note principal retirements 250,000
Operating transfers to other funds 75,000
The change in RichardsonCounty’s General Fund fund balance for the year is
a. a $2,600,000 decrease.
b. a $2,675,000 decrease.
c. a $2,925,000 decrease.
d. a $3,600,000 decrease.
e. a $3,675,000 decrease.
16. The purpose of encumbrance accounting is to
a. manage a government’s cash flows.
b. avoid expenditures exceeding appropriations.
c. replace expense accounting in governments.
d. prevent government waste.
17. Which of the following budgetary entries would the township of Brussels make upon adoption of its General Fund budget for the year? Assume the following:
Estimated Revenues $10,365,000
Appropriations 10,500,000
Estimated Other Financing Sources (OFS) 200,000
Estimated Other Financing Uses (OFU) 15,000
dr cr
a. Appropriations $10,500,000
Estimated OFU 15,000
Unreserved Fund Balance 50,000
Estimated Revenues $10,365,000
Estimated OFS 200,000
b. Appropriations $10,500,000
Unreserved Fund Balance 50,000
Estimated Revenues $10,365,000
Estimated OFS/OFU, net 185,000
c. Estimated Revenues $10,365,000
Estimated OFS 200,000
Appropriations $10,500,000
Estimated OFU 15,000
Unreserved Fund Balance 50,000
d. Estimated Revenues $10,365,000
Estimated OFS/OFU, net 185,000
Appropriations $10,500,000
Excess 50,000
18. A city ordered uniforms with an expected cost of $6,000 for policemen. This amount is encumbered. The uniforms are received with an invoice of $5,900. The entries to record the receipt of the uniforms should include a debit to
a. encumbrances of $6,000.
b. reserve for encumbrances of $5,900.
c. reserve for encumbrances of $6,000.
d. appropriations of $100.
19. Which of the following is not a common revenue source in a governmental fund budget?
a. Property taxes.
b. Other financing sources.
c. Charges for services.
d. Investment income or interest.
e. Licenses and permits.
20. A general budget is often a term used to describe a budget for all of the following except
a. a General Fund.
b. a Special Revenue Fund.
c. an Internal Service Fund.
d. an Enterprise Fund.
e. Both items c and d.