General Government Financial Resources Quiz
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- 1.
Which of the following would not be considered a government or nonprofit organization?
- A.
A software company that sells software exclusively to state and local governments
- B.
A public elementary school
- C.
A church
- D.
A private trust organized for charitable contributions
Correct Answer
A. A software company that sells software exclusively to state and local governmentsExplanation
A software company that sells software exclusively to state and local governments would not be considered a government or nonprofit organization because it is a for-profit entity. While it may have a specific target market of government clients, its primary goal is to generate profit rather than provide public services or advance charitable causes.Rate this question:
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- 2.
The governmental GAAP hierarchy was established by
- A.
The Governmental Accounting Standards Board (GASB)
- B.
The Financial Accounting Standards Board (FASB)
- C.
The American Institute of Certified Public Accountants (AICPA)
- D.
The Financial Accounting Foundation
- E.
The Government Accounting Office (GAO)
Correct Answer
A. The Governmental Accounting Standards Board (GASB)Explanation
The correct answer is the Governmental Accounting Standards Board (GASB). The GASB is responsible for setting accounting and financial reporting standards for state and local governments in the United States. They establish the GAAP hierarchy specifically for governmental entities, ensuring that financial statements are prepared in a consistent and transparent manner. The other options listed are not directly involved in setting accounting standards for governmental entities.Rate this question:
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- 3.
The primary users of external financial reports, as identified by the GASB, include al of the following except
- A.
Investors and creditors
- B.
Citizens
- C.
Governing boards
- D.
All of the above are considered to be primary users of external financial reports
- E.
Both items A and B
Correct Answer
D. All of the above are considered to be primary users of external financial reportsExplanation
All of the options listed (Investors and creditors, Citizens, Governing boards) are considered to be primary users of external financial reports according to the GASB. This means that all these groups rely on these reports to make decisions, evaluate financial performance, and hold entities accountable.Rate this question:
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- 4.
Business-type activities differ from governmental-type activities in that
- A.
Most capital assets of business-type activities are considered to be revenue producing capital assets, while those in governmental-type activities generally are not
- B.
Business-type activities never have the power to levy a tax
- C.
Business-type activities do not adopt a budget
- D.
All of the above statements accurately reflect primary differences between business-type and governmental type activities
- E.
Items B and C only reflect primary differences between business-type and governmental-type activities
Correct Answer
A. Most capital assets of business-type activities are considered to be revenue producing capital assets, while those in governmental-type activities generally are not -
- 5.
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 serviced commensurate with the amount of resources they provide
- C.
Net income is an appropriate performance evaluations 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
Correct Answer
B. The resource providers of G&NP organizations often do not receive serviced commensurate with the amount of resources they provideExplanation
The answer is the resource providers of G&NP organizations often do not receive services commensurate with the amount of resources they provide. This characteristic distinguishes government and not-for-profit organizations from business enterprises because in G&NP organizations, the focus is on providing public goods and services rather than maximizing profits. Therefore, the resource providers may not receive direct benefits or services in proportion to their contributions.Rate this question:
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- 6.
What best describes the relationship of the FASB and GASB?
- A.
They are co-equal bodies with different areas of responsibility for standards setting
- B.
The FASB standards are authoritative for governments. However, the GASB asks the GASB to establish guidelines for many unique transactions of government that the FASB does not have time to consider
- C.
GASB standards are authoritative for governments unless they have been overruled by the FASB
- D.
Governments are not permitted to apply any FASB standard under any circumstances for any government operations
Correct Answer
A. They are co-equal bodies with different areas of responsibility for standards settingExplanation
The FASB and GASB are described as co-equal bodies with different areas of responsibility for standards setting. This means that both organizations have equal authority and importance, but they focus on different aspects of standards setting. The FASB standards are authoritative for non-governmental entities, while the GASB establishes guidelines for unique transactions of government entities that the FASB does not have time to consider. This arrangement allows for comprehensive and specialized standards to be set for both sectors.Rate this question:
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- 7.
General purpose external financial reports for state and local government entities must include
- A.
Government-wide financial statements
- B.
Management's discussion and analysis
- C.
Fund financial statements
- D.
Note disclosures
- E.
All of the above should be included in general purpose external financial reports
- F.
Items A and C only
Correct Answer
E. All of the above should be included in general purpose external financial reportsExplanation
General purpose external financial reports for state and local government entities must include government-wide financial statements, management's discussion and analysis, fund financial statements, and note disclosures. This is because these components provide a comprehensive overview of the entity's financial position, performance, and cash flows. Government-wide financial statements present the overall financial picture, while management's discussion and analysis provide additional context and analysis. Fund financial statements focus on individual funds and their balances. Note disclosures provide additional details and explanations regarding specific financial statement items. Therefore, all of these components should be included in general purpose external financial reports.Rate this question:
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- 8.
The operation of a municipality's recreation facilities and sites such as ball fields, gymnasiums, and tracks are most likely to be accounted for in a
- A.
General Fund
- B.
Enterprise Fund
- C.
Capital Projects Fund
- D.
Internal Service Fund
- E.
Permanent Fund
Correct Answer
A. General FundExplanation
The operation of a municipality's recreation facilities and sites such as ball fields, gymnasiums, and tracks are most likely to be accounted for in a General Fund. This is because the General Fund is used to account for the day-to-day operations and general activities of a government entity, including expenses related to providing recreational services to the public. The General Fund is typically funded through various revenue sources such as taxes and fees, which are used to cover the operating costs of the municipality's recreational facilities.Rate this question:
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- 9.
The General Capital Assets nonfund account would be used to account for
- A.
All capital assets acquired by a government entity regardless of the fund purchasing the assets
- B.
Capital assets acquired with governmental fund resources that will be used in governmental fund activities
- C.
Capital assets acquired with debt proceeds only
- D.
Capital assets that are used by a variety of governmental and proprietary funds
- E.
Capital assets that are solely revenue producing
Correct Answer
B. Capital assets acquired with governmental fund resources that will be used in governmental fund activitiesExplanation
The General Capital Assets nonfund account is used to account for capital assets acquired with governmental fund resources that will be used in governmental fund activities. This means that any capital assets purchased using funds from the government and intended to be used for government activities will be recorded in this account. It does not include assets acquired with debt proceeds only, assets used by a variety of governmental and proprietary funds, or assets that are solely revenue producing.Rate this question:
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- 10.
Capital outlay expenditures would be least likely in a
- A.
General Fund
- B.
Debt Service Fund
- C.
Permanent Fund
- D.
Capital Projects Fund
- E.
Special Revenue Fund
Correct Answer
B. Debt Service FundExplanation
Capital outlay expenditures refer to the funds spent on acquiring or improving long-term assets such as land, buildings, or equipment. The Debt Service Fund, on the other hand, is used to account for the repayment of debt and related interest costs. Since the Debt Service Fund is primarily focused on debt repayment rather than acquiring or improving assets, it would be least likely to have capital outlay expenditures. Therefore, the correct answer is Debt Service Fund.Rate this question:
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- 11.
Ashley Woods Village issued $4,000,000 in general obligation bonds to finance the widening of a local thoroughfare. This transactions will most likely
- A.
Increase fund balance in the General Fund by $4,000,000
- B.
Decrease fund balance in the General Fund by $4,000,000
- C.
Increase fund balance in the Capital Projects Fund by $4,000,000
- D.
Decrease fund balance in the Capital Projects Fund by $4,000,000
- E.
Have no effect on the balance of the Capital Projects Fund
Correct Answer
C. Increase fund balance in the Capital Projects Fund by $4,000,000Explanation
The issuance of general obligation bonds by Ashley Woods Village will increase the fund balance in the Capital Projects Fund by $4,000,000. This is because general obligation bonds are a form of long-term debt that is used to finance capital projects. When the bonds are issued, the proceeds are added to the Capital Projects Fund, increasing its fund balance. This allows the village to have the necessary funds to finance the widening of the local thoroughfare.Rate this question:
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- 12.
Ashley Woods Village paid $1,000,000 principal and $200,000 interest on its general obligation bonds that it issued to finance the widening of a local thoroughfare. This transaction will most likely
- A.
Decrease fund balance in the Capital Projects Fund by $1,000,000
- B.
Decrease fund balance in the Capital Projects Fund by $1,200,000
- C.
Decrease fund balance in the General Fund by $1,000,000
- D.
Decrease fund balance in the General Fund by $1,200,000
Correct Answer
D. Decrease fund balance in the General Fund by $1,200,000Explanation
The correct answer is "Decrease fund balance in the General Fund by $1,200,000". This is because the payment of $1,000,000 principal and $200,000 interest on the general obligation bonds will result in a decrease in the fund balance of the General Fund. The General Fund is typically used for general government operations, while the Capital Projects Fund is used for specific capital projects. Since the transaction involves the payment of the bonds, it would affect the fund balance of the General Fund rather than the Capital Projects Fund.Rate this question:
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- 13.
The police department of the City of Newport purchased 10 new patrol cars at the beginning of the new budget year at a total cash price of $250,000. This purchase will
- A.
Increase capital assets reported in the General Fund by $250,000
- B.
Have no effect on capital assets in the General Fund, but will increase the total expenditures in the General Fund by $250,000
- C.
Increase capital assets reported in the General Fund by $250,000, as well as decrease fund balance in the General Fund by the same amount
- D.
Have no effect on capital assets or fund balance
- E.
Increase both capital assets and fund balance in the General Fund by $250,000
Correct Answer
B. Have no effect on capital assets in the General Fund, but will increase the total expenditures in the General Fund by $250,000Explanation
The purchase of the patrol cars does not affect the capital assets in the General Fund because capital assets are typically long-term assets such as buildings or equipment, while the patrol cars would be considered current assets. However, the purchase does increase the total expenditures in the General Fund by $250,000 because it is a cash outflow from the fund.Rate this question:
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- 14.
The City of Ruth owns and operates an electric utility. The utility purchases new electric transmission lines for $6,000,000 so that it can provide electricity to new customers. This purchase will most likely
- A.
Increase expenditures reported in the General Fund by $6,000,000
- B.
Increase capital assets reported in the Capital Projects Fund by $6,000,000
- C.
Increase capital assets reported in the Enterprise Fund by $6,000,000
- D.
Increase expenses reported in the Enterprise Fund by $6,000,000
Correct Answer
C. Increase capital assets reported in the Enterprise Fund by $6,000,000Explanation
The purchase of new electric transmission lines for $6,000,000 will likely increase the capital assets reported in the Enterprise Fund by $6,000,000. This is because the Enterprise Fund is responsible for the operations of the electric utility, and the transmission lines are a long-term asset that will be used to provide electricity to new customers. By adding the cost of the transmission lines to the capital assets of the Enterprise Fund, it accurately reflects the value of the utility's infrastructure.Rate this question:
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- 15.
Which of the following would not be classified as an expenditure
- A.
Salaries and Wages
- B.
Departmental supplied
- C.
Depreciation
- D.
Capital outlay
- E.
Debt service- principal and interest
- F.
All of the above would be classified as expenditures
Correct Answer
C. DepreciationExplanation
Depreciation is not classified as an expenditure because it is not a cash outflow. It is a non-cash expense that reflects the decrease in value of an asset over time due to wear and tear, obsolescence, or other factors. While depreciation is recorded on the income statement as an expense, it does not involve actual cash leaving the company. Instead, it is a way to allocate the cost of an asset over its useful life.Rate this question:
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- 16.
Government-wide financial statements include
- A.
A statement of net assets
- B.
A statement of activities
- C.
A statement of cash flows
- D.
All of the above
- E.
Items A & B only
- F.
None of the above
Correct Answer
E. Items A & B onlyExplanation
Government-wide financial statements include a statement of net assets and a statement of activities. These statements provide a comprehensive overview of the financial position and activities of the government as a whole. The statement of net assets shows the government's assets, liabilities, and net position, while the statement of activities presents the government's revenues, expenses, and changes in net position. The statement of cash flows, on the other hand, focuses on the cash inflows and outflows of the government. Therefore, the correct answer is Items A & B only.Rate this question:
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- 17.
Caraway County financed its new $6,000,000 courthouse by issuing general obligation bonds. In the year financing was secured and construction began, the fund(s) and/or nonfund accounts that would most likely be affected would be
- A.
The General Fund
- B.
The Enterprise Fund
- C.
The Capital Projects Fund only
- D.
The General Fund, General Capital Assets Nonfund Account, and the General Long-Term Liability Nonfund Account
- E.
The Capital Projects Fund, General Capital Assets and General Long-Term Liabilities Nonfund Accounts
Correct Answer
E. The Capital Projects Fund, General Capital Assets and General Long-Term Liabilities Nonfund AccountsExplanation
When Caraway County financed its new courthouse by issuing general obligation bonds, the fund that would be most likely affected is the Capital Projects Fund. This fund is specifically used for financing the construction or acquisition of major capital facilities or improvements. Additionally, the General Capital Assets Nonfund Account and the General Long-Term Liability Nonfund Account would also be affected. This is because the county would need to account for the new courthouse as a capital asset and also record the long-term liability of the bonds issued to finance it.Rate this question:
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- 18.
Which of the following is not a fund category used by state and local governments
- A.
Fiduciary funds
- B.
Current funds
- C.
Governmental funds
- D.
Proprietary funds
Correct Answer
B. Current fundsExplanation
Fiduciary funds, governmental funds, and proprietary funds are all fund categories used by state and local governments. However, "current funds" is not a fund category used by state and local governments. This term is not commonly used in the context of government finance.Rate this question:
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- 19.
Which of the following is an official fund category used by state and local governments?
- A.
Current fund
- B.
Expendable funds
- C.
Governmental funds
- D.
General capital asset funds
Correct Answer
C. Governmental fundsExplanation
Governmental funds is an official fund category used by state and local governments. This category includes funds that are used for general government operations, such as public safety, education, and infrastructure. These funds are typically financed through taxes, grants, and other revenues, and are subject to specific regulations and reporting requirements. The other options, current fund, expendable funds, and general capital asset funds, do not specifically refer to official fund categories used by state and local governments.Rate this question:
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- 20.
Which of the following is not considered a fiduciary fund?
- A.
Agency Fund
- B.
Investment Trust Fund
- C.
Permanent Fund
- D.
Private-purpose Trust Fund
Correct Answer
C. Permanent FundExplanation
A permanent fund is not considered a fiduciary fund because it is not managed for the benefit of specific individuals or organizations. Instead, a permanent fund is typically established to provide ongoing financial support for a government entity or a specific public purpose. It is not subject to the same fiduciary responsibilities and restrictions as fiduciary funds, which are managed on behalf of others and require the highest level of accountability and stewardship.Rate this question:
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- 21.
Which of the following is not considered a governmental fund?
- A.
General Fund
- B.
Debt Service Fund
- C.
Permanent Fund
- D.
Internal Service Fund
Correct Answer
D. Internal Service FundExplanation
An Internal Service Fund is not considered a governmental fund because it is used to account for services provided by one department or agency to other departments or agencies within the same government. It operates like a business within the government, charging fees to other departments for the services provided. In contrast, the General Fund, Debt Service Fund, and Permanent Fund are all examples of governmental funds that are used to account for specific activities and resources of the government.Rate this question:
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- 22.
A government issues 10-year bonds to finance the construction of an addition to city hall. The bonds payable should be reported in the
- A.
General Fund
- B.
Capital Projects Fund
- C.
Special Revenue Fund
- D.
Long Term Debt Nonaccount Fund
Correct Answer
D. Long Term Debt Nonaccount FundExplanation
The correct answer is Long Term Debt Nonaccount Fund. This is because the 10-year bonds are a form of long-term debt that is being used to finance a capital project. The Long Term Debt Nonaccount Fund is specifically designated for the reporting of long-term debt obligations. The General Fund is used for general operating expenses, the Capital Projects Fund is used for the construction of capital assets, and the Special Revenue Fund is used for specific revenue sources.Rate this question:
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- 23.
General government financial resources that are required to be used to pay principal and interest on general governmental long-term debts are accounted for in
- A.
A Capital Projects Fund
- B.
A Trust Fund
- C.
The General Fund
- D.
A Special Revenue Fund
Correct Answer
C. The General FundExplanation
The correct answer is The General Fund. The General Fund is used to account for the general government financial resources that are required to be used to pay principal and interest on general governmental long-term debts. This fund is typically used for general operating expenses and is the main fund for most governmental entities. It is responsible for the day-to-day operations and financial activities of the government.Rate this question:
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- 24.
General government financial resources to be used to finance construction of a general government construction project typically should be accounted for in
- A.
A Capital Projects Fund
- B.
A Debt Service Fund
- C.
The General Fund
- D.
A Special Revenue Fund
Correct Answer
A. A Capital Projects FundExplanation
General government financial resources to be used to finance construction of a general government construction project typically should be accounted for in a Capital Projects Fund. A Capital Projects Fund is specifically designed to account for the financial resources used for acquiring, constructing, or improving major capital facilities. It is used to ensure proper tracking and management of funds dedicated to capital projects, such as the construction of government buildings or infrastructure. The Capital Projects Fund provides transparency and accountability in the use of these financial resources, making it the appropriate choice for accounting for such projects.Rate this question:
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- 25.
General government financial resources that are required to be used to ay teacher salaries for a special education program are typically accounted for in
- A.
A Capital Projects Fund
- B.
A Debt Service Fund
- C.
A Permanet Fund
- D.
A Special Revenue Fund
Correct Answer
D. A Special Revenue FundExplanation
General government financial resources that are required to be used to pay teacher salaries for a special education program are typically accounted for in a Special Revenue Fund. This fund is specifically designated for revenue that is legally restricted for a specific purpose, such as funding special education programs. The Special Revenue Fund ensures that these funds are properly allocated and accounted for, separate from other government funds. It allows for transparency and accountability in tracking the financial resources dedicated to special education programs.Rate this question:
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- 26.
In which accounting entities may a government report capital assets?
- A.
A Capital Project Fund
- B.
Enterprise Funds
- C.
General Fund
- D.
Debt Service Fund
Correct Answer
B. Enterprise FundsExplanation
Enterprise Funds are accounting entities that are used by a government to report the activities of a business-like nature. These funds are used to account for activities that are financed and operated in a manner similar to private businesses. Capital assets, such as buildings, equipment, and infrastructure, are typically reported in the financial statements of Enterprise Funds. Therefore, it is appropriate for a government to report capital assets in Enterprise Funds.Rate this question:
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- 27.
The General Fund
- A.
Is used to account for all financial resourced that are not require to be accounted for in another fund
- B.
Is used by all governmental fund activities
- C.
Is established at inception of a government and exists throughout its life
- D.
All of the above
- E.
None of the above
Correct Answer
D. All of the aboveExplanation
The General Fund is used to account for all financial resources that are not required to be accounted for in another fund. It is also used by all governmental fund activities and is established at the inception of a government and exists throughout its life. Therefore, all of the statements given are correct.Rate this question:
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- 28.
A Special Revenue Fund
- A.
Is used to account for resourced restricted or committed to expenditures for capital outlay or debt serviced purposes
- B.
Must be used to account for all expendable restricted or committed resources
- C.
Is used to account for resources that are restricted or committed expenditures for specific purposes other than debt service or capital outlay
- D.
Must be used to account for all nonexpendable restricted or committed resources
Correct Answer
C. Is used to account for resources that are restricted or committed expenditures for specific purposes other than debt service or capital outlayExplanation
A Special Revenue Fund is used to account for resources that are restricted or committed expenditures for specific purposes other than debt service or capital outlay. This means that the fund is designated for specific uses other than paying off debt or funding capital projects. It is used to track and manage resources that have restrictions or commitments for specific purposes, ensuring that they are used only for those purposes.Rate this question:
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- 29.
Each of the following transactions would decrease fund balance in the General Fund except
- A.
The purchase of capital assets
- B.
The principal repayment of long-term debt
- C.
Depreciation
- D.
Salaries and wages
- E.
All of the above would decrease balance in the General Fund
Correct Answer
C. DepreciationExplanation
Depreciation is a non-cash expense that represents the decrease in value of a capital asset over time. It is recorded as an expense in the financial statements, but it does not involve an outflow of cash from the General Fund. Therefore, depreciation does not directly decrease the fund balance in the General Fund.Rate this question:
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- 30.
Ledford County levied property taxes of $10,000,000, 2% of which is expected to be uncollectible. Prior to this new levy, the county still has $350,000 of uncollected taxes from pervious years. How much should be reported as Taxes Receivable after the new levy has been recorded?
- A.
$10,000,000
- B.
$9,800,000
- C.
$10,350,000
- D.
$10,150,000
- E.
None of the above
Correct Answer
C. $10,350,000Explanation
The correct answer is $10,350,000. This is because the county levied property taxes of $10,000,000, and 2% of this amount is expected to be uncollectible, which is $200,000. Additionally, the county still has $350,000 of uncollected taxes from previous years. Therefore, the total amount of taxes receivable after the new levy has been recorded is $10,000,000 + $350,000 - $200,000 = $10,350,000.Rate this question:
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- 31.
A new computer, which has been estimated to cost $28,000, was received. The actual cost of the computed was $29,400. To record this in the special revenue fund
- A.
The general capital assets account should be debited for $28,000
- B.
Expenditures should be debited for $28,000
- C.
Expenditures should be debited for $29,400
- D.
None of the above
Correct Answer
C. Expenditures should be debited for $29,400Explanation
The correct answer is "Expenditures should be debited for $29,400". This is because the actual cost of the computer is $29,400, not $28,000. When recording the purchase of the computer in the special revenue fund, the expenditures account should be debited for the actual cost of the computer, which is $29,400.Rate this question:
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- 32.
If General Fund employees earn salaries during the year that have not been paid at year end (accrued salaries at year end), they should be reported as expenditures
- A.
In the current year in all cases
- B.
In the current year if paid within the first 60 days of the next year
- C.
In the next year in all cases
- D.
In either the current year or in the next year depending upon the government's policy. The policy must be applied consistently
Correct Answer
A. In the current year in all casesExplanation
Accrued salaries at year end should be reported as expenditures in the current year in all cases. This means that even if the salaries have not been paid by the end of the year, they should still be recognized as expenses in the current year's financial statements. This is in accordance with the accrual basis of accounting, which requires expenses to be recognized when they are incurred, regardless of when they are paid.Rate this question:
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- 33.
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
- A.
Expenditures of $500,000
- B.
A capital asset of $500,000 and a note payable of $500,000
- C.
A note payable of $500,000
- D.
A capital assets of $500,000
- E.
Expenditures of $500,000 and revenues of $500,000 from issuance of the note
- F.
Both items A and C
Correct Answer
F. Both items A and CExplanation
The correct answer is Both items A and C. This is because when the school district issues a short-term note payable to purchase recreation equipment, it incurs an expenditure of $500,000. This expenditure is reported in the General Fund as an expense. Additionally, the note payable of $500,000 is also reported in the General Fund as a liability. Therefore, the General Fund would report both the expenditures of $500,000 and the note payable of $500,000.Rate this question:
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- 34.
What effect would outstanding purchase orders have on the fun balance of a General Fund if no resources have been restricted or committed?
- A.
Assigned fund balance would include the value of the outstanding purchase orders
- B.
Unassigned fund balance would include the value of the outstanding purchase orders
- C.
Nonspendable fund balance would include the value of the outstanding purchase orders
- D.
Outstanding purchase orders have no effect on how fund balance is reported
Correct Answer
A. Assigned fund balance would include the value of the outstanding purchase ordersExplanation
The assigned fund balance represents resources that have been specifically designated for a particular purpose by the government. If there are outstanding purchase orders, it means that the government has already committed to spending those funds for specific goods or services. Therefore, the value of the outstanding purchase orders would be included in the assigned fund balance, as it represents resources that have been designated for a specific purpose.Rate this question:
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- 35.
Under the modified accrual basis, revenues are considered susceptible to accrual if
- A.
Available to finance current period expenditures
- B.
Objectively measurable
- C.
Collected during the current period
- D.
Both available to finance current period expenditures and objectively measurable
Correct Answer
D. Both available to finance current period expenditures and objectively measurableExplanation
Under the modified accrual basis, revenues are considered susceptible to accrual if they are both available to finance current period expenditures and objectively measurable. This means that the revenue must be collected during the current period and it must be able to be used to fund the expenses incurred in the same period. Additionally, the amount of revenue must be objectively measurable, meaning that it can be determined with a reasonable degree of certainty.Rate this question:
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- 36.
State reimbursement to schools for a portion of any special education costs incurred is an example of which category of nonexchange transactions
- A.
Derived tax revenue
- B.
Imposed tax revenue
- C.
Government mandated nonexchange revenue
- D.
Voluntary nonexchange revenue
Correct Answer
C. Government mandated nonexchange revenueExplanation
State reimbursement to schools for a portion of any special education costs incurred is considered government mandated nonexchange revenue. This is because the reimbursement is mandated by the government and does not involve a direct exchange between the schools and the state. The schools are required to provide special education services, and the state provides reimbursement to cover a portion of the costs incurred.Rate this question:
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- 37.
Which of the following should be included in tax revenues for the current year?
- A.
Taxes collected this year that have been levied for next year
- B.
Prior year taxes collected during the first 60 days of this year
- C.
Taxes levied this year but not collected until mid-year of the next year
- D.
Taxes levied 2 years ago and collected in first 60 days of the next year
Correct Answer
D. Taxes levied 2 years ago and collected in first 60 days of the next year -
- 38.
A government has a fiscal year end of June 30, 20X6. Tax bills for each fiscal year are prepared and mailed in June prior to the beginning of the fiscal year for which they apply. Tax revenue for the fiscal year ending June 30, 20X6, which include
- A.
Only taxes levied in June 30, 20X6 which came available in either June 20X5 or between July 1, 20X5, and June 30, 20X6, as well as any taxes associated with the June 20X5 levy collected within 60 days following June 30, 20X6
- B.
Only the levy as of June 30, 20X6
- C.
Only the levy as of June 20X5
- D.
Only taxes levied in June 20X5 which came available in either June 20X5 or between July 1, 20X5, and June 30, 20X6, as well as any taxes associated with either June 20X5 or the June 20X6 levy collected within 60 days following June 30, 20X6
Correct Answer
A. Only taxes levied in June 30, 20X6 which came available in either June 20X5 or between July 1, 20X5, and June 30, 20X6, as well as any taxes associated with the June 20X5 levy collected within 60 days following June 30, 20X6Explanation
The correct answer states that tax revenue for the fiscal year ending June 30, 20X6 includes taxes levied in June 30, 20X6 which came available in either June 20X5 or between July 1, 20X5, and June 30, 20X6, as well as any taxes associated with the June 20X5 levy collected within 60 days following June 30, 20X6. This means that the tax revenue for the fiscal year includes taxes that were levied in the current fiscal year as well as any taxes associated with the previous year's levy that were collected within 60 days after the fiscal year end.Rate this question:
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- 39.
Which of the following governmental fund revenue sources are typically recorded as revenues only as they are actually received in cash?
- A.
Property taxes
- B.
Interest
- C.
Building permit fees
- D.
Reimbursement grants
Correct Answer
C. Building permit feesExplanation
Building permit fees are typically recorded as revenues only as they are actually received in cash because they are considered a type of user fee. Unlike property taxes or reimbursement grants, which may be collected over a period of time or in installments, building permit fees are paid upfront by individuals or organizations when they apply for a building permit. Therefore, they are recognized as revenue at the time of cash receipt, ensuring accurate and timely recording of the funds received by the governmental fund.Rate this question:
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- 40.
The City of Jonesboro allows discounts on taxes. Specifically, taxpayers get a 1% discount on the total tax if it is paid within one month of the initial levy. What would the journal entry be to record the levy of $700,000 if the government anticipates there will be a 2% uncollectible rate and it is anticipated that the discounts will be $5,000?
- A.
Taxes receivable $700,000 Allowance for uncollectible taxes $14,000 Allowance for discounts $5,000 Revenues $681,000
- B.
Taxes receivable $700,000 Revenues $700,000
- C.
Taxes receivable $695,000 Expenditures $5,000 Allowance for uncollectible taxes $14,000 Revenues $686,000
- D.
Taxes receivable $700,000 Allowance for uncollectible taxes $14,000 Revenues $686,000
Correct Answer
A. Taxes receivable $700,000 Allowance for uncollectible taxes $14,000 Allowance for discounts $5,000 Revenues $681,000Explanation
The journal entry correctly records the levy of $700,000 in taxes receivable. The allowance for uncollectible taxes is recorded at 2% of the levy, which is $14,000. The allowance for discounts is recorded at the anticipated discount amount of $5,000. Finally, the revenues are recorded as the difference between the levy and the allowances, which is $681,000. This entry accurately reflects the anticipated uncollectible rate and the discounts allowed by the City of Jonesboro.Rate this question:
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- 41.
A city levies $200,000 of property taxes for its current fiscal year. One percent of the tax levy id expected to be uncollectible. The city collects $170,000 of its taxes during the year and another $25,000 during the first two months of the following year. What amount of property tax revenues should the city report in the General Fund financial statements for the current fiscal year.
- A.
$200,000
- B.
$198,000
- C.
$195,000
- D.
$170,000
Correct Answer
C. $195,000Explanation
The city levies $200,000 of property taxes for the current fiscal year. However, one percent of the tax levy is expected to be uncollectible. This means that $2,000 ($200,000 x 1%) of the taxes will not be collected. Therefore, the city can only expect to collect $198,000 ($200,000 - $2,000) of the property taxes. The city then collects $170,000 during the year, and an additional $25,000 during the first two months of the following year. The total amount collected during the current fiscal year is $195,000 ($170,000 + $25,000). Therefore, the city should report $195,000 in property tax revenues in the General Fund financial statements for the current fiscal year.Rate this question:
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- 42.
When a governmental entity is decreasing the fair market value of an investment, the appropriate debit would be to
- A.
Investments
- B.
Investment income
- C.
Cash
- D.
Loss on investments
Correct Answer
B. Investment incomeExplanation
When a governmental entity is decreasing the fair market value of an investment, the appropriate debit would be to Investment income. This is because a decrease in the fair market value of an investment results in a loss, which is recorded as a debit to Investment income.Rate this question:
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- 43.
The county received a $1,500,000 restricted grant from the state government to be used to improve its public safety department's communication systems. The county has met all eligibility requirements of the grant. In the current year, the General Fund should report this grant as
- A.
Other financing sources
- B.
Deferred reveues
- C.
Revenues
- D.
Unearned revenues
Correct Answer
C. RevenuesExplanation
The county received a restricted grant from the state government, which means it is specifically intended for a particular purpose, in this case, to improve the public safety department's communication systems. Since the county has met all eligibility requirements of the grant, it can be considered as revenue for the current year. Therefore, the General Fund should report this grant as revenues.Rate this question:
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- 44.
The City of Ruth has been awarded a $1,000,000 federal reimbursement grant to improve bike trails. The city has incurred $418,000 of qualifying expenditures during the current year, for which the federal government has reimbursed the city $180,000. How much should the city of Ruth recognize as revenue for the current year?
- A.
$1,000,000
- B.
$598,000
- C.
$418,000
- D.
$180,000
Correct Answer
C. $418,000Explanation
The city of Ruth should recognize $418,000 as revenue for the current year. This is because the city has incurred $418,000 of qualifying expenditures and has been reimbursed by the federal government for the same amount. Therefore, the reimbursement grant should be recognized as revenue.Rate this question:
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- 45.
Which of the following is not a typical government fund liability, and thus not an expenditure that is recognized when the liability is incurred?
- A.
Accounts payable
- B.
Long-term note payable
- C.
Salaries payable
- D.
Vouchers payable
Correct Answer
B. Long-term note payableExplanation
A long-term note payable is not a typical government fund liability because it represents a borrowing arrangement between the government and a lender, rather than an obligation to pay for goods or services received. Unlike accounts payable, salaries payable, and vouchers payable, which are liabilities that arise from day-to-day operations and require immediate payment, a long-term note payable is a long-term debt that is typically repaid over a period of several years. Therefore, it is not recognized as an expenditure when the liability is incurred.Rate this question:
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- 46.
Expenditures in a governmental fund are recognized when due for
- A.
Interest on general long-term debt
- B.
Salaries and wages
- C.
Capital outlay
- D.
Rent
Correct Answer
A. Interest on general long-term debtExplanation
Expenditures in a governmental fund are recognized when due for various expenses, including interest on general long-term debt. This means that when the interest payment on the government's long-term debt becomes due, it is recognized as an expenditure in the governmental fund. This is because the government is obligated to pay interest on its outstanding debt, and it represents a cash outflow for the government. Other expenses such as salaries and wages, capital outlay, and rent may also be recognized as expenditures when they become due.Rate this question:
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- 47.
The purchases method of accounting is permitted for
- A.
Materials and supplies, but not for prepaid insurance
- B.
Prepaid insurance, but not for materials and supplies
- C.
Neither prepaid insurance not materials and supplies
- D.
Both prepaid insurance and materials and supplies
Correct Answer
D. Both prepaid insurance and materials and suppliesExplanation
The purchases method of accounting is permitted for both prepaid insurance and materials and supplies. This means that both types of expenses can be recorded as purchases in the accounting records.Rate this question:
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- 48.
The General Fund reported a beginning balance of inventory of materials and supplies of $122,000. The ending balance was $150,000. Supplies purchased during the year totaled $600,000. The county uses the consumption method. The General Fund should report expenditures for materials and supplies for the year of
- A.
$450,000
- B.
$572,000
- C.
$600,000
- D.
$628,000
Correct Answer
B. $572,000Explanation
The General Fund reported a beginning balance of $122,000 for inventory of materials and supplies. Throughout the year, supplies purchased totaled $600,000. The consumption method is used, which means that the ending balance of $150,000 should be subtracted from the sum of the beginning balance and purchases to calculate the expenditures for the year. Therefore, the correct answer is $572,000 ($122,000 + $600,000 - $150,000).Rate this question:
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- 49.
In the year a city enters into a capital lease for finance a new sanitation truck, the General Fund will report
- A.
An increase in capital assets
- B.
A decrease in fund balance equal to the cost of the new sanitation truck
- C.
Another financing use
- D.
A decrease in fund balance equal to the amount of any down payment required
Correct Answer
D. A decrease in fund balance equal to the amount of any down payment requiredExplanation
When a city enters into a capital lease for financing a new sanitation truck, it will result in a decrease in the fund balance equal to the amount of any down payment required. This is because the city will have to make a down payment as part of the lease agreement, which reduces the available funds in the General Fund. The other options, such as an increase in capital assets or another financing use, may also occur in this situation, but the specific impact on the fund balance is reflected by the decrease equal to the down payment amount.Rate this question:
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- 50.
As payments are being made for debt service payments related to a capital lease, a General Fund will report
- A.
An increase in capital assets equal to the amount of principal retired
- B.
Expenditures for interest only
- C.
Expenditures for principal reduction only
- D.
Expenditures for the full amount of the debt service payment
Correct Answer
D. Expenditures for the full amount of the debt service paymentExplanation
When payments are made for debt service payments related to a capital lease, the General Fund will report expenditures for the full amount of the debt service payment. This is because the debt service payment includes both the principal reduction and the interest payments. Therefore, the General Fund will record the entire payment as an expenditure.Rate this question:
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