Accy 161 Exam 2

  1. Accountability for general capital asset expenditures funded by tax receipts of a government should be established in

    B. The capital projects fund
  2. Which of the following funds of a government uses the modified accrual basis of accounting?

    C. Capital projects.
  3. The city of Columbus issued bonds at par for the construction of a new city office building. Receipt of the bond proceeds would result in journal entries in which funds? Select the best answer.

    C. Capital Projects Fund: Yes; Debt Service Fund: No
  4. With regard to depreciation of general capital assets

    C. No depreciation can be recorded in any governmental fund, but depreciation expense must be reported in the governmental activities accounts.
  5. Interfund transfers from the General Fund to a capital projects fund to provide partial financing of a capital project would be reported by the capital projects fund as a (an)

    B. Other financing source.
  6. For which of the following assets can the "modified approach" be elected in lieu of depreciation?

    B. Eligible infrastructure assets
  7. A debt service fund is a (an)

    C. Governmental fund.
  8. Which of the following resource inflows would be recorded as a revenue of a debt service fund?

    A. Property taxes levied by the debt service
  9. Transactions related to capital assets such as acquisitions and disposals are reported in:

    C. both the government-wide and fund financial statements
  10. Interest expenditures on bonds payable should be recorded in a debt service fund

    D. When legally payable.
  11. Which of the following debt service fund accounts would not be closed at the end of each fiscal year?

    C. Fund Balance.
  12. Debt service funds are used to account for which of the following

    A. Payment of principal and interest on general long-term debt.
  13. Which of the following is a true statement regarding in-substance defeasance of bonds?

    A. The government must place cash or other assets in an irrevocable trust sufficient to pay all future interest and principal payments for the debt being defeased.
  14. When bonds are issued there will be
    a: a. credit to a bonds payable account on the capital projects funds accounts
    b. credit to a bonds payable account on the general funds accounts
    c. credit to other financing sources account
    d. a. and c. are both correct e. b. and c. are both correct
    c. credit to other financing sources account
  15. When the budget is recorded for City of Caitlin for the sale of the bonds

    B. no entries are required on the debt service fund
  16. When the bonds were sold, there was a (an): a. debit to cash in the debt service fund accounts
    b. a debit to cash in the general fund accounts
    c. a credit to other financing uses
    d. both a. and c. are correct
    e. both b. and c. are correct
    b. a debit to cash in the general fund accounts
  17. Since the bond repayment are managed by the debt service fund, when debt repayment transaction occurs:

    C. there will be a credit to other financing uses
  18. The term "asset management system" applies to:

    A. infrastructure assets
  19. In the section in the text on "Capital Projects Funds" the authors point out that the capital projects have a:

    A. "project life"
  20. 20. Bond anticipation notes:

    C. can be either current or noncurrent liabilities
  21. Overlapping debt refers to:

    D. debt from differing taxing authorities
  22. The debt margin is:

    B. less than the debt limit
  23. Defeasance relates to:

    C. repayment of debt
  24. Generally speaking, "interest payable" could be found in:

    C. the government-wide financial statements
  25. Capital Projects Funds (CPFs)
    Funds used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Capital projects funds EXCLUDE those types of capital-related outflows financed by proprietary funds or for assets that will be held in trust for individuals, private organizations, or other governments.
  26. Capital Asset
    • Assets of a long-term character that are intended to continue to be held or used, such as land, buildings, machinery, furniture, and other equipment.
    • Note: the term does not indicate the immobility of an asset, which is the distinctive character of "fixture" Also fixed assets.
  27. General Capital Asset (GCA)
    Those capital assets of a government that are NOT RECOGNIZED by a proprietary or fiduciary fund.
  28. Accountability
    • Being obliged to explain one's actions, to justify what one does; the requirement for government to answer to its citizenry- 
    • - to justify the raising of public resources and expenditure of those resources.
    • Also, in the GASB's view,
    • 1. the obligation to report whether the government operated within appropriate legal constraints;
    • 2. whether resources were used efficiently, economically, and effectively;
    • 3. whether current year revenues were sufficient to pay for the services provided in the current year;
    • 4. and whether the burden for services previously provided will be shifted to future taxpayers.
  29. Agency Funds
    • Funds consisting of resources received and held by the government as an agent for others;
    • example taxes collected and held by a municipality for a school district.
    • Note: Sometimes resources held by a government for other organizations are handled through an agency fund known as a pass-through agency fund.
  30. Arbitrage
    Earning a higher interest rate from investing borrowed funds than is applicable to the entity's tax-exempt debt. Federal tax regulations require governments to rebate the investment earnings in excess of that permitted.
  31. Additions and deductions
    In trust funds the revenue and expense are called additions and deductions
  32. Basic financial statements
    Term used in GASB standards to describe required government-wide and fund financial statement.
  33. Benchmarking
    • The method of identifying a number that represents a target to which actual results are compared, or a basis for comparison
    • Example: industry averages.
  34. Blending
    Wanting as few discrete presentations as possible by blending component units such as the department of mosquito and vector control and the park district.
  35. Certificates of participation (COP)
    A long-term debt instrument authorized for construction of municipal facilities, typically issued by a quasi-independent authority but secured by a long-term lease with a general-purpose local government.
  36. Compensated absences
    The value of unused vacation, sick and other leave time for which employees will be paid when they retire or otherwise cease to work for a government.
  37. Component units
    Separate governments, agencies, or not-for-profit corporations that, pursuant to the criteria in the GASB codification, Section 2100, are combined with other component units to constitute the reporting entity.
  38. Construction in progress
    An accountancy term, construction in progress asset or capital work in progress entry records the cost of construction work, which is not yet completed. A CIP item is not depreciated until the asset is placed in service
  39. Debt capacity
    (General definition; not from book) Ability to borrow. The amount a firm can borrow up to the point where the firm value no longer increases.
  40. Debt service fund (DSF)
    Funds used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. Debt service funds should be used to report resources if legally mandated. Financial resources that are being accumulated for principal and interest maturing in future years also should be reported in debt service funds.
  41. Discrete presentation
    The method of reporting financial data of component units in a column(s) separate from the financial data of the primary government.
  42. Dual-track method
  43. Economic condition
    A composite of a government's financial health and its ability and willingness to meet its financial obligations and its commitments to provide services.
  44. Enterprise fund (EF)
    • A fund established to finance and account for the acquisition, operation, and maintenance of governmental facilities and services that are entirely or predominantly self-supporting by user charges; or for when the governing body of the government has decided periodic determination of revenues earned, expenses incurred, and/or net income is appropriate.
    • Example: Governmentally owned utilities and hospitals are ordinarily accounted for by enterprise funds.
  45. Fiduciary funds
    • Any fund held by a government in a fiduciary capacity for an external party, ordinarily as agent or trustee.
    • Example: Also called trust and agency funds.
  46. Financial condition
    The probability that a government will meet its financial obligations as they become due and its service obligations to constituencies, both currently and in the future.
  47. Financial position
    The adequacy of cash and short-term claims to cash to meet current obligations and those expected in the near future.
  48. Fiscal capacity
    A governments ongoing ability and willingness to raise revenues, incur debt, and meet its financial obligations as they become due.
  49. Forward-looking statements
    Some of the information on our Site may contain projections or other forward-looking statements regarding future events or our future financial performance, which are subject to risks and uncertainties.  Actual results may vary from those projected or implied by such forward-looking statements. ...
  50. General capital asset (GCA)
    Those capital assets of a government that are not recognized by a proprietary or fiduciary fund.
  51. General purpose financial statements
  52. Infrastructure assets
    Roads, bridges, curbs and gutters, streets, sidewalks, drainage systems, and lighting systems installed for the common good.
  53. In-substance defeasance
    A transaction in which low-risk U.S. government securities are placed into an irrevocable trust for the benefit of debtholders, and the liability for the debt is removed from the accounts of the entity even though the debt has not been repaid.
  54. Interfund transfers
    Amount transferred from one fund to another
  55. Internal service funds (ISF)
    • Funds established to finance and account for services and commodities furnished by a designated department or to other governments. Amounts expended by the fund are restored thereto either from other funds, so that the original fund capital is kept intact.
    • Formally called working capital fund or intragovernmental service fund.
  56. Investment trust funds
    Funds used to account for the assets, liabilities, net position, and changes in net position corresponding to the equity of the external participants.
  57. Legal defeasance
    A transaction in which debt is legally satisfied based on certain provisions in the debt instrument (e.g. third-party guarantor assumes the debt) even though the debt has not been repaid.
  58. Modified approach
    An approach that allows the government to elect not to depreciate certain eligible infrastructure assets provided certain requirements are met.
  59. Other financing sources
    • An operating statement classification in which financial inflows other than revenues are reported
    • Example: proceeds of long-term debt and transfers in.
  60. Other financing uses
    • An operating statement classification in which financial outflows other than expenditures are reported
    • Example: transfers out
  61. Pension trust funds (PTA) or Public Employee Retirement Systems (PERS)
    The organizations that collect retirement and other employee benefit contributions from government employers and employees, manage assets, and make payments to qualified retirants, beneficiaries, and disabled employees.
  62. Performance measurements
    • Spendable (Governmental)
    •  *this is all I have in my notes.
  63. Permanent fund (PF)
    Funds used to account for and report resources that are restricted to the extent that only earnings, and not principal, may be used for purposes that support the reporting government's programs- that is, for the benefit of the government or its citizenry. Permanent funds do not include private-purpose trust funds, which should be used t report situations in which the government is required to use the principal or earning for the benefit of individuals, private organizations, or other governments.
  64. Popular reports
    Highly condensed financial information, including budgets, summaries, and narrative descriptions.
  65. Pricing policy for internal service funds
  66. Private-purpose trust fund
    Funds that account for contributions received under a trust agreement in which the investment income of an endowment is intended to benefit an external individual, organization, or government.
  67. Proprietary funds
    • Sometimes referred to as income determination, business-like, or commercial-type funds of a state or local government.
    • Examples: enterprise funds and internal service funds
  68. RAP - regulatory accounting principles
    • The accounting principles prescribed by deferral or state regulatory commissions for investor-owned and some governmentally owned utilities.
    • AKA: Statutory accounting principles (SAP)
  69. Reconciliation method
    An accounting process used to compare two sets of records to ensure the figures are in agreement and are accurate. Reconciliation is the key process used to determine whether the money leaving an account matches the amount spent, ensuring that the two values are balanced at the end of the recording period
  70. Required supplementary information (RSI)
    Information that is required by generally accepted principles to be included with the audited annual financial statement, usually directly following the notes to the general purpose external financial statements.
  71. Restricted assets
    Assets (usually of an enterprise fund) that may not be used for normal operating purposes because of the requirements of regulatory authorities, provisions in bond indentures, or other legal agreements, but that need not be accounted for in a separate fund.
  72. Restricted net assets
    A term used in accounting for not-for-profit organizations indicating the portion of the residual of assets and liabilities (i.e. net assets) that has been restricted in purpose or time by parties external to the organization.
  73. Revenue capacity
    (*definition from internet) In economics, the ability of groups, institutions, etc. to generate revenue. The fiscal capacity of governments depends on a variety of factors including industrial capacity, natural resource wealth and personal incomes
  74. Serial bonds
    Bonds the principal of which is repaid in periodic installments over the life of the issue.

    A GO Bond (General Obligation bond)
  75. Service capacity
    A government's ongoing ability and willingness to supply the capital and human resources needed to meet its commitments to provide services.
  76. Solvency
    the ability to meet maturing obligations as they come due
  77. Special assessment districts
    The official list showing the amount of special assessments levied against each property presumed to be benefited by an improvement or service.
  78. Tax agency fund
    Agency fund, usually maintained by a county official, to handle the collection of all property taxes within the county or other jurisdiction and the distribution of proceeds to all governments within the borders of that county or other jurisdiction.
  79. Term bonds
    • Bonds the entire principal of which matures on one date.
    • A GO Bond (General Obligation bond)
  80. Trust funds
    • Funds consisting of resources received and held by the government as trustee, to be expended or invested in accordance with the conditions of the trust.
    • Example: Endowment, Pension trust funds, private purpose trust funds, public purpose trust funds.
  81. Mello-Roos
    • 1. CFD (community Facilities District)
    • 2. Residents vote
    • 3. Approved then sell bonds
    • 4. Receive cash
    • 5. Contract to build (ex: sewer)
Card Set
Accy 161 Exam 2
Accy 161 Exam 2