Exam 5: Recognizing Expenditures in Governmental Funds

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 percent.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

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 they are earned.If they do not take vacation in the allotted period, they forfeit the vacation pay benefit.Traditionally, employees have taken 80 percent of the vacation days earned.During the current year, city employees earned $600,000 in vacation pay.Assuming the city maintains its books and records in a manner to facilitate the preparation of fund financial statements, which of the following entries should be made in the general fund to record the vacation pay earned during the current period?

Star City leased a bulldozer for use in activities accounted for in the general fund.The city paid $40,000 and agreed to pay $40,000 per year for 3 years.The bulldozer has a useful life of six years.The lease qualified as a capital lease.Assuming that the city maintains is 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 would be

Expenditures are generally recognized when resources are acquired; expenses when resources are consumed.

The amount of pension expense that a government should recognize in its government-wide financial statements during the current year is

Governmental fund liabilities are considered current only when they must be liquidated with expendable available financial resources-not, as in businesses and in the government-wide statements, when they must be paid within a year.

When accounting for inventory items in a governmental fund, GASB standards permit the use of the consumption method only.

Which of the following funds would use the accrual basis of accounting in preparing its fund financial statements?

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 percent.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

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

In budgeting for governmental funds, governments appropriate the resources for general capital assets in the periods when they are to be purchased, not in the periods in which the assets will be used.

A transfer of cash from the general fund to a debt service fund to pay interest on debt should be recorded in the general fund as a nonreciprocal transfer-out.

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

On July 1, Gilbert County bought computer equipment for use in the administrative offices of the county.The equipment has an estimated useful life of three years and salvage of $10,000.The county has a 6/30 fiscal year-end.Assuming that the county maintains its books and records in a manner that facilitates the preparation of government-wide financial statements, the $85,000 cost of this equipment would require which of the following entries?

The amount of sick leave expenditures that should appear on the general fund financial statements for the fiscal year ended 6/30/15 is

Paid vacations, paid sick leave, and pensions are employee benefits frequently offered by governments.Discuss the reporting requirements related to each of these benefits and explain, if necessary, any differences between reporting for vacation pay earned but unused, sick leave earned but unused, and pensions earned during the current period.

Use of the consumption method of accounting for inventory is not acceptable for the fund financial statements.

In the governmental fund types, expenditures are generally recognized when resources are acquired.Liabilities are generally recognized if they will be liquidated with available expendable financial resources.Define "available." Relate the definition of available to the recognition of liabilities and expenditures in governmental fund financial statements.Discuss the reporting deficiencies that are directly associated with the use of the available criterion in the governmental funds.

The amount of sick leave liability that should appear on the government-wide financial statements at 6/30/15 is

Proceeds of debt intended to finance general capital assets should be reported in the fund financial statements as a fund liability.