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

Which type of fund can be either expendable or nonexpendable?

All of the following are Governmental (Expendable) Fund Entities EXCEPT the:

Which of the following funds frequently does NOT have a fund balance?

Which of the following is NOT a budgetary account?

Repayments from the funds responsible for a particular expenditure to the funds that initially paid for them are interfund:

The activities of a central computer facility should be accounted for in the:

The following activities and transactions are typical of those which may affect the various funds used by a municipal government. Required: Prepare journal entries to record each transaction and identify the fund in which each entry is recorded. 1. The Sparta City Council passed a resolution approving a general operating budget of $6,800,000 for the fiscal year. Total revenues are estimated at $5,800,000. 2. The Sparta City Council passed an ordinance providing a property tax levy of $3.50 per $100 of assessed valuation for the fiscal year. Total property valuation in Sparta City is $320,000,000. Property is assessed at 30% of current property valuation. Property tax bills are mailed to property owners. An estimated 5% will be uncollectible. 3. Sparta City sold a general obligation term bond issue for $1,000,000 at 104 to a major brokerage firm. The stated interest rate is 10%. Construction of a new Municipal Courts Building will be financed by the bond issue proceeds. 4. The premium on bond sale in (3) above is transferred to the Debt Service Fund. 5. At the end of fiscal year, the Sparta City Council approves the write-off of $55,000 of uncollected taxes because of inability to locate the property owners. 6. The Sparta City Municipal Courts Building (3 above) is completed. Contracts and expenses total $1,190,000, and all have been paid and recorded in the Capital Projects Fund. Prepare entries to close this project and record the completion of the project in all other funds and/or account groups affected. Any balance in the Capital Projects Fund is to be applied to payment of interest and principal of the bond issue. 7. On March 1, Sparta City issued 10% serial bonds at par to finance streetlights in an area recently incorporated in the city limits. The face amount of the bonds is $900,000; interest is payable annually, and bonds are to be retired in equal amounts over 6 years from collections from assessments against property affected. In case of default by the property owners, the bond principal will be paid by the city. a. Record the issuance of the bonds on March 1 of the current year. b. Record the payment to bondholders on March 1 of the next year. 8. The street lighting project in (7) above was completed on September 30 at a total cost of $840,000. Record summary entries for expenditure transactions from March 1 - September 30, and on completion of the project.

One of the differences between accounting for a governmental unit and a commercial unit is that a governmental unit should:

Encumbrances would NOT appear in which fund?

A city should record depreciation as an expense in its:

Revenues of a special revenue fund of a governmental unit should be recognized in the period in which the:

Which of the following funds would account for operations that are financed and operated in a manner similar to private business enterprises?

When a truck is received by a governmental unit, it should be recorded in the General Fund as a(n):

The following transactions take place: 1. On January 1, the city issued 9% general obligation bonds with a face value of $4,000,000 payable in 10 years to finance the construction of city offices. Total proceeds were $4,500,000. 2. On December 20, construction was completed and occupancy taken of the city offices. The full cost of $3,900,000 was paid to the contractor, and appropriate closing entries were made with regard to the project. 3. The General Fund repaid the Special Revenue Fund a loan of $15,000 plus $900 in interest on the loan. Required: Prepare entries in general journal form to record these transactions in the proper fund(s). Designate the fund in which each entry is recorded.