Exam 5: Recognizing Expenditures in Governmental Funds

State Community College, a public college, grants faculty members a one-year sabbatical leave after each seven years of service.There are no requirements for research, study or service during the compensated sabbatical leave.A particular faculty member earns $40,000 per year.Assuming that the college maintains its books and records in a manner that facilitates the preparation of the fund financial statements and assuming that any appropriate accruals have been made, what is the appropriate entry to record the employee's salary paid while on sabbatical?

Most governments budget appropriate resources for principal and interest only for the period in which a payment is due-not for future payments.

Sugar City uses the purchases method to record all prepayments.The City has a 6/30 fiscal year-end.On 12/31/10, the City purchased a three-year insurance policy covering all city owned vehicles accounted acquired by the General Fund to be used in general government activity.Cost of the policy was $360,000.After the 6/30/11 closing entries, the appropriate balance sheet accounts and balances associated with this transaction are in the City's General Fund:

Banker County has outstanding $4 million of term bonds that bear interest at 6% payable semiannually each January 30 and July 30.The County's fiscal year-end is 12/31.On December 28, 2011, the County transferred $240,000 to the Debt Service Fund.At December 31, the maximum amount the Debt Service Fund may recognize as interest expenditure is

Employees of the City of Orleans earn ten days paid leave for each 12 months of employment.The City has a policy that employees must take their vacation days during the year following the year in which it is earned.If they do not take vacation in the allotted period, they forfeit the vacation pay benefit.Traditionally, employees have taken 80% of the vacation days earned.During the current year, employees of the City of Orleans earned $600,000 in vacation pay.Assuming the city maintains its books and records in a manner to facilitate the preparation of its fund financial statements, which of the following entries is the correct entry in the General Fund to record the vacation pay earned during the current period?

Bay City uses the purchases method to account for supplies.At the beginning of the year the City had no supplies on hand.During the year the City purchased $600,000 of supplies for use by activities accounted for in the General Fund.The City used $400,000 of those supplies during the year.Assuming that the city maintains its books and records in a manner that facilitates the preparation of its fund financial statements, at fiscal year-end the appropriate account balances related to supplies expenditures and supplies inventory would be

Shoshone County uses the consumption method to account for supplies.At the beginning of the year the City had no supplies on hand.During the year the City purchased $450,000 of supplies for use by activities accounted for in the General Fund.The City used $300,000 of those supplies during the year.At fiscal year-end, the appropriate account balances on the General Fund financial statements would be

The amount of pension expenditures that should be recognized in the General Fund financial statements during the current year is

State University, a public university, has a policy of granting faculty members a one-year paid sabbatical leave after a period of seven years continuous employment.The leave is for further study, research or public service.A particular faculty member earns $90,000 per year.Assuming that the college maintains its books and records in a manner that facilitates the preparation of the fund financial statements and assuming that any appropriate accruals have been made, what is the appropriate entry to record the employee's salary paid while on sabbatical leave?

The City of Upper Falls accounts for its inventory using the purchases method.During the year the City bought $500,000 of supplies, for which it owed $100,000 at year-end.The City will pay for the supplies from available expendable financial resources.The entry that should be recorded in the City's General Fund is

State University, a public university, has a policy of granting faculty members a one-year paid sabbatical leave after a period of seven years continuous employment.The leave is for further study, research or public service.A particular faculty member earns $90,000 per year.Assuming that the college maintains its books and records in a manner that facilitates the preparation of the government-wide financial statements and assuming that any appropriate accruals have been made, what is the appropriate entry to record the employee's salary paid while on sabbatical leave?

This year, Port City was sued for injuries sustained when a citizen slipped and broke her hip on the icy City Hall steps.The City attorney estimates the City will be held liable by the courts and a judgment of $300,000 will result.Because of the nature of the case it will likely be four years before the City makes any payment related to the accident.The present value of the likely future payment is $251,000.In the government-wide financial statements, at the end of the current fiscal year, Port City should recognize a liability of

State Community College, a public college, grants faculty members a one-year sabbatical leave after each seven years of service.There are no requirements for research, study or service during the compensated sabbatical leave.A particular faculty member earns $40,000 per year.Assuming that the college maintains its books and records in a manner that facilitates the preparation of the government-wide financial statements and assuming that any appropriate accruals have been made, what is the appropriate entry to record the employee's salary paid while on sabbatical?

When accounting for inventory items in a governmental fund, a reservation of fund balance is always required when the consumption method is used.

Pocahontas School District, an independent public school district, financed the acquisition of a new school bus by signing a note for $105,000 plus interest on the unpaid balance at 6%.Annual principal payments of $35,000, plus interest, are due each July 1.Assuming that the District maintains its books and records in a manner that facilitates the preparation of the government-wide financial statements, the appropriate entry at the date of acquisition is

The purchases method is consistent with full accrual basis of accounting.

If recording a general long-term liability in a governmental fund upon issuing a bond, the credit should be to a bonds payable account.

Pocahontas School District, an independent public school district, financed the acquisition of a new school bus by signing a note for $105,000 plus interest on the unpaid balance at 6%.Annual principal payments of $35,000, plus interest, are due each July 1.Assuming that the District maintains its books and records in a manner that facilitates the preparation of the fund financial statements, the appropriate entry in the General Fund at the date of acquisition is

Several years ago, Grant County was sued by a former County employee for wrongful discharge.Although it was to be contested by the County, at the time of the lawsuit the attorneys believed that the County was likely to lose the suit and the estimated amount of the ultimate judgment would be $100,000.This year, the case was finally settled with a judgment against the County of $150,000, which was paid.Assuming that the County maintains its books and records in a manner to facilitate the preparation of its fund financial statements, the entry in the current year should be

Assume that the City of Juneau maintains its books and records to facilitate the preparation of its fund financial statements.The City pays its employees bi-weekly on Friday.The fiscal year ended on Wednesday, June 30.Employees had been paid on Friday, June 25.The employees paid from the General Fund had earned $90,000 on Monday, Tuesday, and Wednesday June 28, 29, and 30.What entry, if any, should be made in the City's General Fund?