Ch. 7 - 365

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Ch. 7 - 365
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  • 1. 
    Within the government-wide financial statements, the column for the Business-type Activities will generally include:
    • A. 

      Internal service funds only

    • B. 

      Enterprise funds only

    • C. 

      All internal service fund and enterprise fund transactions added together and accounted for on the accrual basis of accounting

    • D. 

      All enterprise fund transactions and only the internal service fund transactions undertaken with governmental funds on the accrual basis of accounting


  • 2. 
    Which of the following would most likely be accounted for in an internal service fund?
    • A. 

      City golf courses

    • B. 

      The city's investments, which are pooled with the county's school district's investments

    • C. 

      An asphalt plant used to supply the asphalt needed to resurface the city's streets

    • D. 

      Proceeds from an endowment that are used to maintain the city's cemeteries


  • 3. 
    The Computer Service Department operates as an internal service fund. It has billed the Parks and Recreation Department $3,000 for the services provided by its computer technicians. How would this be shown at the government-wide level?
    • A. 

      It would be an increase in governmental activities expenses of $3,000

    • B. 

      It would be an increase in governmental activities internal balances of $3,000

    • C. 

      It would be an increase in business-type activities revenues of $3,000

    • D. 

      There would be no increase in governmental activities


  • 4. 
    During 2014, the Ghetto City government recorded a $15,000 transfer from the General Fund to an internal service fund; a $25,000 transfer from the General Fund to an enterprise fund; a $10,000 transfer from an enterprise fund to an internal service fund, and a $5,000 transfer from an enterprise fund to the General Fund. In the Business-type Activities column of the government-wide financial statements, Ghetto City should report:
    • A. 

      Net transfers out of $5,000

    • B. 

      Net transfers in of $10,000

    • C. 

      Other Financing Uses--Transfers Out to governmental activities of $5,000

    • D. 

      Other Financing Sources--Transfers In of $25,000 and Other Financing Uses--Transfers Out of $15,000


  • 5. 
    Which of the following events would generally be classified as nonoperating on an enterprise fund's statements of revenues, expenses, and changes in net position?
    • A. 

      Billing other funds of the same government for services

    • B. 

      Loss on the sale of a piece of equipment

    • C. 

      Depreciation expense

    • D. 

      Administrative expense


  • 6. 
    During 2014 Walnut Creek reported the following operating receipts from self-sustaining activities paid by users of the services rendered: Operations of water supply plant.......................$4,000,000 Operations of transit system..............................      800,000 What amounts should be reported as operating revenues of Walnut Creek's enterprise funds?
    • A. 

      $4,800,000

    • B. 

      $4,000,000

    • C. 

      $800,000

    • D. 

      $0


  • 7. 
    Under GASB standards, which of the following events would be classified as an investing activity on a proprietary fund's statement of cash flows?
    • A. 

      Interest earned on certificates of deposit held by the proprietary fund

    • B. 

      Purchase of equipment for use by the proprietary fund

    • C. 

      Grant received to construct a building that will be used by the proprietary fund

    • D. 

      All of the above would be considered investing activities for reporting purposes


  • 8. 
    The proceeds of tax-supported bonds issued for the benefit of an enterprise fund and being serviced by a debt service fund:
    • A. 

      Should not be reported by the enterprise fund at all

    • B. 

      Should be reported in the notes to enterprise fund statements but not in the body of any of the statements

    • C. 

      Should be reported in the enterprise fund as long-term debt

    • D. 

      Should be reported in the enterprise fund as a contribution or interfund transfer in the statement of revenues, expenses, and changes in net position


  • 9. 
    During the year an enterprise fund purchased $230,000 worth of equipment. The equipment was acquired with a cash down payment of $23,000 and a $207,000 loan. What is the net effect of this transaction on the net position accounts of the enterprise fund?
    • A. 

      Net investment in capital assets is increased by $23,000

    • B. 

      Net investment in capital assets is increased by $230,000

    • C. 

      Net investment in capital assets is increased by $207,000

    • D. 

      Net investment in capital assets is decreased by $207,000


  • 10. 
    Antioch had the following long-term liabilities at year end: Revenue bonds to be repaid from tolls collected      by the superhighway enterprise fund                                        $250,000 General obligation bonds issued for the Antioch      water utility, which will service the debt                                       200,000 What amount should be recorded as long-term liabilities in the proprietary fund financial statements?
    • A. 

      $0

    • B. 

      $200,000

    • C. 

      $250,000

    • D. 

      $450,000


  • 11. 
    Which of the following would be reflected in the operating statement of a proprietary fund?
    • A. 

       Incurrence of interest expense.

    • B. 

       Repayment of the principal of debt.

    • C. 

      Issuance of debt.

    • D. 

      Purchase of a capital asset.


  • 12. 
    A cash flow statement prepared under GASB standards differs from one prepared under FASB standards in which of the following ways?
    • A. 

      The GASB statement of cash flows has four categories of cash flows rather than three.

    • B. 

      The GASB statement of cash flows reports Cash and Cash Equivalents, not just cash.

    • C. 

      The GASB statement of cash flows reports investments in the securities of other entities as cash flows from investing activities.

    • D. 

      All of the above.


  • 13. 
    Which of the following funds of a government uses the same basis of accounting as a proprietary fund?
    • A. 

      Permanent trust

    • B. 

      Investment trust fund

    • C. 

      Special revenue

    • D. 

      Capital projects


  • 14. 
    For proprietary funds, governments generally present a statement of net position in a format that displays assets, plus deferred outflows of resources, less liabilities, less deferred inflows of resources, equals net position.
    • A. 

      True

    • B. 

      False


  • 15. 
    Which of the following may be reported as a component of net position in the proprietary fund statement of net position?
    • A. 

      Retained earnings

    • B. 

      Designated equity

    • C. 

      Restricted net position

    • D. 

      Contributed capital


  • 16. 
    Which of the following properly portrays the components of net position for proprietary funds?
    • A. 

      Net investment in capital assets, Reserved, Unreserved.

    • B. 

      Designated, Undesignated, Restricted, Unrestricted.

    • C. 

      Net investment in capital assets, Restricted, Unrestricted.

    • D. 

      Contributed capital, Net investment in capital assets, Reserved, Unreserved.


  • 17. 
    Which of the following would not be considered a general long-term liability?
    • A. 

      Compensated absences for the city's Fire Department.

    • B. 

      Capitalized equipment leases of the water utility fund.

    • C. 

      Fiver-year notes payable used to acquire computer equipment for the city library.

    • D. 

      The estimated liability to clean up the hazardous waste storage sites of the city's Public Works Department.


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