Exam 4: Accounting for Governmental Operating Activities–Illustrative Transactions and Financial Statements

The City of Island Grove uses encumbrance accounting and its fiscal year ends on June 30. On May 6, a purchase order was approved and issued for supplies in the amount of $6,000. Island Grove received these supplies on June 2, and the $6,000 invoice was approved for payment. What General Fund journal entry should Island Grove make on May 6, to record the approved purchase order?

Which of the following would properly be reported in the operating statement of a governmental fund?

Property tax revenue is an example of a nonexchange revenue-one in which the government receives value without directly giving equal value in exchange.

Property taxes due 75 days after the current fiscal year end would be recognized as revenues in the current fiscal year's General Fund general journal.

Select the appropriate term from the list that best matches to the definition. A. Derived tax revenues B. Exchange transactions C. Nonexchange transactions D. Imposed nonexchange transactions E. Voluntary nonexchange transactions _____ 1. Transactions in which the donor derives no direct tangible benefits from the recipient agency _____ 2. A classification of nonexchange transaction, such as income or sales taxes _____ 3. A category of nonexchange transaction that includes certain grants and entitlements and most donations _____ 4. A category of nonexchange transactions, such as property taxes and most fines and forfeitures.

During the current year, the Town of Salo Alto recorded the following transactions related to its property taxes: 1. Levied property taxes of $3,300,000, of which 2 percent is estimated to be uncollectible. 2. Collected current property taxes amounting to $2,987,500. 3. Collected $26,500 in delinquent taxes and $2,400 in interest and penalties on the delinquent taxes. These amounts had been recorded as Deferred Inflows of Resources in the prior year. 4. Imposed penalties and interest in the amount of $3,750 but only expects to collect $3,100 of that amount.  None is expected to be collected this year or within 30 days of year-end. 5. Reclassified uncollected taxes as delinquent. These amounts are not expected to be collected within the first 60 days of the following fiscal year. Prepare the journal entry. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

The City of Island Grove uses encumbrance accounting and its fiscal year ends on June 30. On May 6, a purchase order was approved and issued for supplies in the amount of $6,000. Island Grove received these supplies on June 2, and the $6,000 invoice was approved for payment. What General Fund journal entry or entries should Island Grove make on June 2, upon receipt of the supplies and approval of the invoice?

The Governmental Activities column of the government-wide statement of net position reports both current and noncurrent assets and liabilities.

An interfund transfer occurs when one fund of government pays another fund of the same government for services provided.

Permanent funds use the modified accrual basis of accounting.

On July 1, the first day of its fiscal year, the Town of Eldon levied a $1,000,000 property tax which is payable in full on December 1 of the same year. On September 15, the town decided to borrow $200,000 in 90-day tax anticipation notes to cover operating expenditures until the tax revenues are collected. The journal entry on September 15 to record the issuance of tax anticipation notes will include:

Which of the following financial statement(s) reports both current and noncurrent assets and liabilities?                A-                              B-                                 C-                              D-                               

Encumbrance accounts need not be closed at year-end if the government is required or intends to honor the encumbrances outstanding at year-end.

The Estimated Revenues account of a government is debited when:

In what ways does the government-wide statement of net position differ from the balance sheet for governmental funds?

The General Fund used electricity provided by the city-owned electric utility (an enterprise fund of the city). The General Fund general journal entry to record the transaction will include:

Which of the following accounts would not be closed at the end of each fiscal year?

Current financial resources include cash and items such as marketable securities and receivables expected to be converted into cash in the current period or soon enough thereafter to pay current period obligations.

Encumbrances Outstanding is shown on the balance sheet as a restriction on fund balance.

Identify the four types of nonexchange transactions and discuss the rules for recognition of revenues and expenses/expenditures for each type of transaction.