Question 1

The modified accrual basis of accounting is used in presenting the fund financial statements of the governmental funds because

Accepted Answer

A)  it is the superior method of accounting for the economic resources of any entity. 
B)  it ensures the entity achieved interperiod equity. 
C)  facilitates comparisons among entities by standardizing reporting for all non-Federal governments 
D)  it results in accounting measurements based on the substance of transactions. 
A)  it is the superior method of accounting for the economic resources of any entity. 
B)  it ensures the entity achieved interperiod equity. 
C)  facilitates comparisons among entities by standardizing reporting for all non-Federal governments 
D)  it results in accounting measurements based on the substance of transactions.

Question 2

Income taxes are classified as ad valorem taxes.

Accepted Answer

A) True 
 B)False

Question 3

A wealthy philanthropist donates three buildings to H-Town. Each building has a fair market value of $5 million. The town plans to use Building 1 as a new fire station and sell Buildings 2 and 3. Building 2 is sold after year-end, but within the availability period. Building 3 fails to sell by the time the town issues the financial statements. Which of the following correctly records revenue from these donations in the governmental fund financial statements?

Accepted Answer

The answer of A wealthy philanthropist donates three buildings to...

Question 4

Governments use modified accrual accounting to determine when transactions and events will be recognized in the financial statements of the governmental fund types.
a.) What is modified accrual accounting and how does it affect revenue recognition for the following types of revenue: property taxes; sales and income taxes; fines; grants of all types; and investment income.
b.) In your opinion is modified accrual accounting the best basis of accounting for governments? Why or why not?

Accepted Answer

(a) Basis of accounting refers to when t

Question 5

Taxes that are imposed on the reporting government's citizens are considered general revenues, even if they are restricted to specific programs.

Accepted Answer

A) True 
 B)False

Question 6

A city with a 12/31 fiscal year-end requires that restaurants buy a license, renewable yearly. Proceeds of the license fees are intended to pay the salaries of inspectors in the health department. Licenses are issued for a fiscal year from October 1 to September 30. During 2017, cash collections related to licenses were as follows Licenses issued during 2016 for the 10/1/16-9/30/17 fiscal year $ 30
Licenses issued during 2017 for the 10/1/17-9/30/18 fiscal year $180
It is anticipated that during 2018 the amount collected on licenses for the 10/1/17-9/30/18 fiscal year will be $45. In September 2016 the amount collected related to 10/1/16-9/30/17 licenses was $144. What amount should be recognized as revenue in the fund financial statements for the fiscal year ended 12/31/17?

Accepted Answer

A)  $180. 
B)  $183. 
C)  $210. 
D)  $225. 
A)  $180. 
B)  $183. 
C)  $210. 
D)  $225.

Question 7

As used in defining the modified accrual basis of accounting, the term "available" means

Accepted Answer

A)  received in cash. 
B)  will be received in person within 60 days after year-end. 
C)  collection in cash is reasonably assured. 
D)  collected within the current period or expected to be collected soon enough thereafter to be used to pay liabilities of the current period. 
A)  received in cash. 
B)  will be received in person within 60 days after year-end. 
C)  collection in cash is reasonably assured. 
D)  collected within the current period or expected to be collected soon enough thereafter to be used to pay liabilities of the current period.

Question 8

Reimbursement-type grant revenues are recognized in the accounting period in which

Accepted Answer

A)  the award is made. 
B)  the cash is received. 
C)  the grantee is notified of the award. 
D)  expenditures are recorded on grant-related activities. 
A)  the award is made. 
B)  the cash is received. 
C)  the grantee is notified of the award. 
D)  expenditures are recorded on grant-related activities.

Question 9

Under the modified accrual basis, revenues are "available" if they are collected within the current period or are expected to be collected soon enough after the end of the period to be used to pay liabilities of the current period.

Accepted Answer

A) True 
 B)False

Question 10

A city receives notice of a $150,000 grant from the state to purchase vans to transport physically challenged individuals. Although the city did not receive any of the grant funds during the current year, the city purchased a bus for $65,000 and issued a purchase order for a van for $60,000. The grant revenue that the city should recognize in the government-wide financial statements in the current year is

Accepted Answer

A)  $-0-. 
B)  $ 65,000. 
C)  $125,000. 
D)  $150,000. 
A)  $-0-. 
B)  $ 65,000. 
C)  $125,000. 
D)  $150,000.

Question 11

At the beginning of its fiscal year, a local government was given 100 acres that the town council voted to use as a central park and business center. The land had an historical cost of $100 but was appraised at the time of donation at $500. The amount that should be recognized on the governmental fund financial statements for the year as revenue is

Accepted Answer

A)  $-0-. 
B)  $100 
C)  $400 
D)  $500 
A)  $-0-. 
B)  $100 
C)  $400 
D)  $500

Question 12

Under the modified accrual basis of accounting used by governments, transactions that result in long-term liabilities

Accepted Answer

A)  are included on the fund statements as an expenditure. 
B)  are included as a contra-account to revenue. 
C)  are not recorded as expenditures. 
D)  hidden for 10 years from the taxpayers. 
A)  are included on the fund statements as an expenditure. 
B)  are included as a contra-account to revenue. 
C)  are not recorded as expenditures. 
D)  hidden for 10 years from the taxpayers.

Question 13

For purposes of recognizing property tax revenues in governmental funds, "available" is defined as

Accepted Answer

A)  revenues received within 90 days after year-end. 
B)  revenues received within 60 days after year-end. 
C)  revenues received within 120 days after year-end. 
D)  being up to the judgment of the preparer. 
A)  revenues received within 90 days after year-end. 
B)  revenues received within 60 days after year-end. 
C)  revenues received within 120 days after year-end. 
D)  being up to the judgment of the preparer.

The modified accrual basis of accounting is used in presenting the fund financial statements of the governmental funds because

Income taxes are classified as ad valorem taxes.

Taxes that are imposed on the reporting government's citizens are considered general revenues, even if they are restricted to specific programs.

As used in defining the modified accrual basis of accounting, the term "available" means

Reimbursement-type grant revenues are recognized in the accounting period in which

Under the modified accrual basis, revenues are "available" if they are collected within the current period or are expected to be collected soon enough after the end of the period to be used to pay liabilities of the current period.

Under the modified accrual basis of accounting used by governments, transactions that result in long-term liabilities

For purposes of recognizing property tax revenues in governmental funds, "available" is defined as

The Government and Not-For-Profit Environment

Fund Accounting

Issues of Budgeting and Control

Recognizing Expenditures in Governmental Funds

Accounting for Capital Projects and Debt Service

Capital Assets and Investments in Marketable Securities

Long-Term Obligations

Business-Type Activities

Pensions and Other Fiduciary Activities

Issues of Reporting, Disclosure, and Financial Analysis

Not-For-Profit Organizations

Colleges and Universities

Health-Care Providers

Auditing Governments and Not-For-Profit Organizations

Federal Government Accounting

Filters

Exam 4: Recognizing Revenues in Governmental Funds

The modified accrual basis of accounting is used in presenting the fund financial statements of the governmental funds because

Income taxes are classified as ad valorem taxes.

Taxes that are imposed on the reporting government's citizens are considered general revenues, even if they are restricted to specific programs.

As used in defining the modified accrual basis of accounting, the term "available" means

Reimbursement-type grant revenues are recognized in the accounting period in which

Under the modified accrual basis, revenues are "available" if they are collected within the current period or are expected to be collected soon enough after the end of the period to be used to pay liabilities of the current period.

Under the modified accrual basis of accounting used by governments, transactions that result in long-term liabilities

For purposes of recognizing property tax revenues in governmental funds, "available" is defined as

The Government and Not-For-Profit Environment

Fund Accounting

Issues of Budgeting and Control

Recognizing Expenditures in Governmental Funds

Accounting for Capital Projects and Debt Service

Capital Assets and Investments in Marketable Securities

Long-Term Obligations

Business-Type Activities

Pensions and Other Fiduciary Activities

Issues of Reporting, Disclosure, and Financial Analysis

Not-For-Profit Organizations

Colleges and Universities

Health-Care Providers

Auditing Governments and Not-For-Profit Organizations

Federal Government Accounting

Filters