Exam 18: Introduction to Accounting for State and Local Governmental Units

Which of the following funds of a governmental unit recognizes revenues and expenditures under the same basis of accounting as the general fund?

Fixed assets and noncurrent liabilities are accounted for in the records of:

The liability for general obligation long-term debt is reported in the:

There are eleven categories of government fund entities that fall under three subheadings. What are the subheadings of government fund entities? What are the main characteristics that set these three subheadings apart?

An interfund transfer should be reported in a governmental fund operating statement as a(n):

GASB Statement No. 34 specifies how governments report capital assets. Describe where capital assets are reported in government financial statements.

During 2013, the City of Atlantis started a street paving project. The project is being financed by the proceeds from the issue of five-year, 6% special assessment bonds payable at a face value of $3,000,000. The bonds were issued July 1, 2013 at their par value. One-fifth of the principal plus interest is payable on June 30 of each year beginning June 30, 2014. Property owners are assessed to provide the funds to pay the principal and interest on the debt. The following transactions occurred during 2013 and 2014: 1. The bonds for the paving of the streets were issued. 2. The street paving was completed at a cost of $3,000,000. 3. Property owners were assessed and billed for the first installment of principal and interest on the special assessment debt. 4. Assessments for the first installment of principal and interest on the special assessment debt were collected. The June 30, 2014, payment of principal and interest was made. Required: Prepare all journal entries for the preceding transactions that are necessary for the City of Atlantis assuming: A. The City of Atlantis has not obligated itself in any manner to the holders of the special assessment bonds. B. The City of Atlantis has made a commitment to the holders of the special assessment bonds to assure the full payment of principal and interest on the due dates.

The activities of a municipal airport should be accounted for in the:

The following events take place: 1. Interest payments in the amount of $20,000 that are the responsibility of the Debt Service Fund are paid by the General Fund. 2. The Internal Service Fund bills the Special Revenue Fund $25,000 for services performed. 3. The Special Revenue Fund transfers $10,000 to the Internal Service Fund as a temporary loan. 4. The General Fund transfers $150,000 to start an Internal Service Fund. Required: Identify the interfund activity as a loan, services provided and used, interfund transfer, or interfund reimbursement and prepare entries in general journal form to record the transactions on the records of the fund involved.

The highest level of priority of pronouncements that a government entity should look to for accounting and reporting guidance is:

Part of the general obligation bond proceeds from a new issuance was used to pay for the cost of a new city hall as soon as construction was completed. The remainder of the proceeds was transferred to repay the debt. Entries are needed to record these transactions in the:

The general fund trial balance for Model City held the following balances at June 30, 2014, just before closing entries were made: Required: Prepare the necessary closing entries.

Which of the following should be accrued as revenues by the general fund of a local government?

What is the underlying reason a governmental unit uses separate funds to account for its transactions?

A nonrecurring contribution from the General Fund to the Enterprise Fund is an example of an interfund:

The following schedule of capital assets was prepared for Johnson County. All capital asset acquisitions were made in the capital projects fund and paid in cash. An asset was sold by the general fund for $40,000 cash. Required: Determine how the above information will be reflected on each of the following statements for the year 2014. A. The governmental funds' statement of revenues, expenditures, and changes in fund balances. List the governmental fund and then list the dollar amount within the appropriate heading on the statement (such as Revenues, Expenditures, or Other Financing Sources (Uses)). B. The government-wide statement of net assets. C. The government-wide statement of activities.

Internal Service Fund billings to government departments for services rendered is an example of interfund:

For state and local government units, the full accrual basis of accounting should be used for what type of fund?

Prepare entries, in general journal form, to record the following transactions in the proper fund(s) and/or account group(s). Designate the fund or account group in which each entry is recorded. 1. Bond proceeds of $2,000,000 were received to be used in constructing a new City Jail. An equal amount is contributed from general revenues. 2. Serial bonds in the amount of $300,000 matured. Interest of $75,000 was paid on these and other serial bonds outstanding. 3. Insurance proceeds amounting to $19,000 were received as a result of the accidental destruction of a garbage truck costing $33,000. Accumulated depreciation on the truck was $21,000. 4. The City Parks Endowment Fund transferred $160,000 in expendable funds to the City Parks Special Revenue Fund. 5. Proceeds of $21,000 were received from the sale of equipment which had been purchased from general revenues at a cost of $100,000. Accumulated depreciation on the equipment was $75,000. 6. The City Power Company (an enterprise fund) issued a bill for $400,000 for electricity provided to municipal government buildings. 7. The City Power Company transferred excess funds of $90,000 to the General Fund. 8. A central data processing center was established by a contribution of $400,000 from the General Fund, a long-term loan of $130,000 from the City Parks Special Revenue Fund, and general obligation bond proceeds of $180,000. 9. The Data Processing Fund billed the General Fund $20,000 and the City Parks Special Revenue Fund $8,500 for data processing services. 10. The City Power Company received $7,000 as customer deposits during the year. The monies are to be held in trust until customers request that their services be discontinued and final bills are collected. 11. In order to retire general obligation term bonds when they become due, it is determined that the Debt Service Fund will require annual contributions of $40,000 and earnings in the current year of $3,000.

It is proper to recognize revenues or expenditures resulting from which of the following classifications of interfund activity?