Accy 161 Exam 2-2.txt

Accountability for general capital asset expenditures funded by tax receipts of a government should be established in
A. The appropriate governmental funds.
B. The capital projects fund
C. The governmental activities accounts at the government-wide level.
D. Both b. and c.
E. a. and b. and c. are all correct answers

Which of the following funds of a government uses the modified accrual basis of accounting?
A. Private-purpose trust fund.
B. Internal service.
C. Capital projects.
D. Enterprise.

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.
A. Capital Projects Fund: No; Debt Service Fund: No
B. None of these answers would be appropriate
C. Capital Projects Fund: Yes; Debt Service Fund: Yes
D. Capital Projects Fund: Yes; Debt Service Fund: No
E. Capital Projects Fund: No; Debt Service Fund: Yes

With regard to depreciation of general capital assets
A. No depreciation can be recorded in any governmental fund, but depreciation expense must be reported in the governmental activities accounts.
B. Depreciation expense must be recorded in the governmental fund, but no depreciation expense can be recorded in the governmental activities accounts.
C. No depreciation can be recorded in any governmental fund, nor is it permissible to record depreciation expense in the governmental activities accounts.
D. Depreciation expense should be charged in the appropriate governmental funds, and reported in the governmental activities accounts.

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)
A. Revenue.
B. Current liability.
C. Could be b. or c.
D. Other financing source.
E. Fund balance addition.

For which of the following assets can the "modified approach" be elected in lieu of depreciation?
A. Newly acquired general capital assets.
B. All capital assets.
C. Just a. and c.
D. a. and b. and c. are all correct.
E. Eligible infrastructure assets.

A debt service fund is a (an)
A. Proprietary fund.
B. Fiduciary fund.
C. Nonexpendable fund.
D. Governmental fund.

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 fund for debt service purposes.
B. Taxes collected by the General Fund and transferred to the debt service fund
C. Transfer of the residual equity of a capital project from a capital projects fund to the debt service fund.
D. Both a. and b. are correct
E. a. and b. and c. are all correct.

Transactions related to capital assets such as acquisitions and disposals are reported in:
A. the government-wide financial statements
B. the fund financial statements
C. both the government-wide and fund financial statements

Interest expenditures on bonds payable should be recorded in a debt service fund
A. At the end of the fiscal period if the interest due date does not coincide with the end of the fiscal period.
B. When bonds are paid off.
C. When paid.
D. When legally payable.
E. All the above are correct depending on the circumstances

Which of the following debt service fund accounts would not be closed at the end of each fiscal year?
A. They would all be closed at the end of the year.
B. Estimated Revenues.
C. Fund Balance.
D. Expenditures—Bond Interest.
E. Revenues.

Debt service funds are used to account for which of the following
A. Payment of principal and interest on all debt of the government, including that of enterprise funds.
B. Payment of interest only on general long-term debt.
C. Payment of principal only on general long-term debt.
D. Payment of principal and interest on general long-term debt.

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.
B. The government must agree to maintain sufficient cash and investment balances in its debt service fund to cover all interest and principal payments for the debt being defeased.
C. The government must pledge to transfer amounts to an escrow agent prior to the due date for each interest and principal payment for the debt being defeased.
D. Any of the above approaches are acceptable under GAAP.

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

When the budget is recorded for City of Caitlin for the sale of the bonds
A. there will be a credit to estimated other financing sources in the general fund
B. there will be a credit to estimated revenues in the general fund
C. a. and b. are correct
D. no entries are required on the debt service fund
E. a. and c. are correct

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

Since the bond repayment are managed by the debt service fund, when debt repayment transaction occurs:
A. there will be no entry on the governmental activities accounts
B. there will be a credit to appropriations
C. there will be a credit to other financing uses
D. only b. and c. are correct
E. none of the above are correct

The term "asset management system" applies to:
A. infrastructure assets
B. all capital assets
C. government-wide financial statements
D. modified accrual accounting

In the section in the text on "Capital Projects Funds" the authors point out that the capital projects have a:
A. "year-to-year" life similar to the special revenue funds
B. there is no "life" discussion in that section in the text
C. "project life"

Bond anticipation notes:
A. can be either current or noncurrent liabilities
B. are noncurrent liabilities
C. are current liabilities

Overlapping debt refers to:
A. public debt having differing payment periods
B. situations where the primary government combines private and pubic debt
C. a combination of debt that is both current and noncurrent
D. debt from differing taxing authorities

The debt margin is:
A. less than the debt limit
B. is not related to the debt limit
C. can be greater than the debt limit
D. is the governmental accounting term for the current portion of long-term debt

Defeasance relates to:
A. capital projects
B. repayment of debt
C. only found in the government-wide financial statements
D. debt covenants

Generally speaking, "interest payable" could be found in:
A. the debt service fund
B. the capital projects fund
C. the government-wide financial statements
D. both a. and c. are correct
E. a. and b. and c. are all correct

Accountability for capital assets used by departments accounted for by the governmental funds of a government should be established in:
A. the appropriate governmental funds
B. the capital projects fund
C. the governmental activities accounts at the government-wide level
D. both b. and c.
E. a. and b. and c. are all correct answers

Which of the following would be considered a general capital asset?
A. a. and b. and c. are all correct
B. a vehicle purchased from general fund revenues
C. a computer purchased from revenues of an internal service fund and used by the supplies department
D. real estate purchased with the assets of a pension trust fund
E. a vehicle purchased and maintained by an enterprise fund

The following items were included in the City of Lone Pine's General Fund expenditures for the year ended June:

Personal computer for the city treasurer  $9,000
Furniture for the mayor's office             $16,000

How much should be classified as capital assets in Lone Pine's General Fund balance sheet at June 30?
A. $0 - capital assets are not in the fund statements
B. $9,000
C. $16,000
D. $25,000
E. none of the above are correct

Which of the following is one of the requirements that must be met to elect not to depreciate certain eligible infrastructure assets?
A. the government gets permission of the Government Accounting Standards Board
B. the government manages the assets using an asset management system that meets specific criteria
C. the government maintains the assets in a condition level that far exceeds the prescribed level
D. the government omits the cost of the assets from the government-wide statement of net assets

Which of the following are properly accounted for in the governmental fund accounts?
A. tax-supported general obligation bonds
B. obligations under capital leases used to finance general capital assets
C. the long-term portion of judgments and claims
D. all of the above
E. none of the above

On the due date for bond interest, the debt service fund journal entry (or entries) will include (there may be other entries as well, but will include):
A. a credit to Encumbrances
B. a. and b. and c. are all correct
C. a debit to Interest Payable
D. a debit to Interest Expense
E. a debit to Expenditures - Bond Interest

Interest expenditures on bonds payable should be recorded in a debt service fund:
A. when paid
B. when legally payable
C. when bonds are issued
D. at the end of a fiscal period if the interest due date does not coincide with the end of the fiscal period

The liability for general obligation bonds should be recorded in:
A. governmental activities journal
B. General Fund
C. capital projects fund
D. debt service fund

Proceeds from general obligation bonds should be recorded in the:
A. debt service fund
B. capital projects fund
C. permanent fund
D. general obligation bond fund

Which of the following assets would not be found in the balance sheet of a debt service fund?
A. cash
B. investments
C. equipment
D. interest receivable
E. all of the above

Which of the following is a difference between enterprise funds and internal service funds?
A. the use of cost accounting by enterprise funds but not internal service funds
B. the number of basic financial statements required
C. the identity of those who benefit from the fund's service
D. the measurement focus on economic resources for enterprise funds and current financial resources for internal service funds

Depreciation on capital assets used by an enterprise fund of a government:
A. should not be recorded for infrastructure assets
B. should be recorded in the General Fund as an expenditure
C. should be recorded in the governmental activities accounts
D. should be recorded in the enterprise fund by a debit to an expense account

An internal service fund normally uses which of the following budgetary accounts?
A. estimated revenues
B. appropriations
C. encumbrances
D. a. and b. and c. are all used for an internal service fund
E. none of the above

Which of the following is a valid reason for establishing a tax agency fund and charging a collection fee to other governments?
A. to increase the total amount of taxes levied
B. to avoid overlapping taxes
C. to help eliminate a General Fund deficit
D. to realize administrative efficiencies from centralizing tax billing and collection activities

Which of the following accounts is least likely to be used by a tax agency fund?
A. cash
B. due to other funds and units
C. taxes receivable for other funds and units
D. revenues

A difference between the accounting for agency funds and governmental funds is:
A. agency funds are not included on any fund financial statements
B. b. and c. are correct
C. agency funds use a different basis of accounting
D. agency funds do not report fund balances; only assets and liabilities

Which of the following is the appropriate measurement focus for agency funds?
A. economic resources
B. current financial resources
C. cash and cash equivalents
D. none of the above

Which of the following would not be included within the financial section of the comprehensive annual financial report (CAFR)?
A. independent auditor's report
B. required supplementary information (RSI)
C. management's discussion and analysis (MD&A)
D. management's letter of transmittal

What constitutes the basic financial statements of a government?
A. financial section of the comprehensive annual finical report (CAFR)
B. government-wide financial statements plus fund financial statements plus fund financial statements plus notes plus required supplementary information (RSI)
C. government-wide financial statements plus fund financial statements plus notes
D. government-wide financial statements plus notes

The term that is defined as determining whether current-year revenues are sufficient to pay for the services provided that year and whether future taxpayers will be required to assume burdens for services previously provided is:
A. financial condition
B. none of these terms
C. interperiod equity
D. financial position

The term that is closely related to the concept of liquidity is:
A. financial condition
B. financial position
C. none of these terms
D. interperiod equity

Which of the following finical concepts has been defined by the GASB as "the probability that a government will meet both its financial obligations to creditors, consumers, employees, taxpayers, suppliers, constituents, and others as they become due and its service obligation to constituents, both currently and in the future?"
A. liquidity
B. financial condition
C. financial leverage
D. financial position

A term that describes a government's ongoing ability and willingness to raise revenues, incur debt, and meet its finical obligations as they become due is:
A. financial condition
B. economic condition
C. fiscal capacity
D. financial position

When bonds are sold, there will be a: 
A. debit to cash in the debt service fund accounts
B. a debit to cash in the General Fund account 
C. a credit to other financing uses
D. both a. and c. are correct
E.  both b. and c. are correct

One of the accounting entries made at the start of the year is to: 
A. #1 reestablish the unexpended encumbrances with a credit entry
B. #2 reestablish the unexpended encumbrances with a debit entry
C. #3 close out the reserve for encumbrances
D. both #1 and #3 are correct
E. both #2 and #3 are correct

Transactions for encumbrances capital assets can be found in:
A. the fund financial statements
B. the government-wide financial statements
C. both the fund financial statements and the
government-wide financial statements

Transactions for capital assets can be found in:
A. the fund financial statements
B.  the government-wide financial statements
C. both the fund financial statements and the government-wide financial statements

Transactions for the fiduciary funds can be found in:
A. the fund financial statements
B. the government-wide financial statements
C. both the fund financial statements and the
government-wide financial statements

The accounting term “original cost” refers to:
A. the modified approach
B. a. and b. and c. are all correct
C. toll road and toll bridges
D.  accounting for utilities

If a capital projects fund starts construction of a building in one year and finishes it in a subsequent year no entry need be made in the governmental activities accounts until the building is completed, inspected, and accepted.
a. true
b. false

If a general capital asset is disposed of without revenue or expenditure to the governmental unit, the event need be recorded only in the governmental activities accounts.
a. true
b. false

a governmental unit must capitalize the cost of improvements such as roads, bridges, sidewalks, and so forth, because the GASB required disclosure of the cost of such assets in the basic financial statements.
a. true
b. false

A certified public accountant should issue a qualified audit opinion on financial statements in which general capital assets are recorded at estimated cost.
a. true
b. false

Property, plant and equipment constructed or acquired by use of special assessment financing is not recorded in the governmental activities accounts because the assets belong to the property owners who paid for them and are not assets of the reporting entity.
a. true
b. false

In addition to required disclosures about general capital assets, a governmental unit must allocate the depreciation expense on those capital assets to the functional categories in which the assets are used.
a. true
b. false

Another required disclosure about general capital assets is the additions to, and deductions from, general capital assets during the course of a fiscal year.
a. true
b. false

Which of the following would not be considered a general capital asset?
A. a vehicle purchased and maintained by an enterprise fund
B. a vehicle purchased from general fund revenues
C. a computer purchased from grant revenues of a special revenue fund and used by the police department
D. lighting on sidewalks constructed form special assessments

A capital projects fund might be used to account for which of the following activities?
A. maintaining roads and bridges
B. building a park or addition to the city council building
C. servicing long-term debt
D. providing water and sewer services

The budgetary account recommended for use by a capital projects fund is:
A. encumbrances
B. estimated revenues
C. estimated other financing sources
D. appropriations

Both general capital assets acquired or constructed from the proceeds of special assessment debt, and the long-term liability, are accounted for in the governmental activities accounts.
a. true
b. false

Debt backed by both special assessments and full faith and credit of a governmental unit should be reported in the CAFR in the business-type activities accounts.
a. true
b. false

Issuance of tax supported debt having a maturity of more than one year from date of issue must be recorded only in the governmental activities accounts.
a. true
b. false

Debt margin is a term used to denote the total amount of indebtedness of specified kinds that is allowed by law to be outstanding at any one time.
a. true
b. false

Debt margin is the difference between the debt limit and the amount of outstanding debt subject to the limitation.
a. true
b. false

Notes to the financial statements of a state or local government should include a schedule, or summary, of annual debt service requirements (principal and interest payments) for the year following the balance sheet date and for all subsequent years until the final maturity of debt outstanding on balance sheet date.
a. true
b. false

Debt service funds exist to accumulate resources to pay tax supported bond issues at maturity. Interest on such bonds is paid from General Fund appropriations, not from debt service fund appropriations.
a. true
b. false

All long-term debt, including bonds, notes, or warrants, and various other long-term obligations, intended to be repaid from tax levies or special assessments are accounted for in debt service funds.
a. true
b. false

At year-end, budgetary and operating statement accounts of a debt service fund are closed in the same manner as is true for a General Fund or for special revenue funds.
a. true
b. false

Expenditures for interest on tax supported long-term debt are not accrued, even though debt service funds are accounted for on the modified accrual basis.
a. true
b. false

Which of the following are properly accounted for in the governmental activities accounts?
A. tax-supported general obligation bonds
B. obligations under capital leases used to finance general capital assets
C. the long-term portion of judgments and claims
D. all of the above

The liability for special assessment bonds that carry a secondary pledge of a city's general credit, if reported in conformity with GAAP, should be reported in the balance sheet(s) of:
A. and agency find
B. an agency fund and disclosed in the notes to the financial statements
C. a debt service fund
D. the governmental activities accounts

General obligation bonds issued for the benefit of enterprise funds, with the intent of paying bond principal and interest from revenues of the enterprise fund, should be reported as a liability in the balance sheet of the:
A. enterprise fund
B. governmental activities
C. both the enterprise fund and the governmental activities accounts
D. enterprise fund and a note to the financial statements explaining the contingent liability of the general government if enterprise funds are insufficient to pay principal and interest

Which of the following budgetary accounts is typically used by a debt service fund?
A. appropriations
B. encumbrances
C. both a. and b.
D. none of the above