Exam 4: Accounting for Governmental Operating Activitiesillustrative Transactions and Financial Statements

At the end of the fiscal year,the purchases method of recording inventory adjusts the Expenditures account to reflect the amount of inventory actually used during the period.

The government-wide statement of net position is prepared using the same measurement focus and basis of accounting as the General Fund balance sheet.

The county received a $10,000,000 endowment,the terms of which indicate that earnings on the endowment are to be used by health and welfare to provide medical services to low-income children.Where would the $10,000,000 be recorded?

If the actual liability for goods received in the current year differs from the estimated liability recorded when the goods were ordered in the prior year,the Encumbrances account should be credited in the amount of the estimated liability.

When equipment is ordered by a department of the government,the purchase order should be recorded in the General Fund as a debit to:

All revenues of the City of Capri are accounted for on the modified accrual basis.Below is shown a list of Capri's General Fund transactions of a revenue nature.State which ones should be recognized by the General Fund as a revenue in the year of occurrence.If any item is not a current revenue,state the proper treatment for that item.

Which of the following would be considered an internal exchange transaction?

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

If a governmental fund issues debt to finance a capital acquisition,how should the proceeds of the debt be recorded?

Governments that are temporarily short of cash but that have levied taxes expected to be collectible during the fiscal year are generally able to borrow on short-term notes known as "tax anticipation notes payable."

Why might actual revenues and expenditures reported on the schedule of revenues,expenditures,and changes in fund balances-budget and actual differ from those reported on the GAAP-basis statement of revenues,expenditures,and changes in fund balances?

The Governmental Activities column of the statement of net position includes financial information for all funds of a government.

During January 2017 General Fund supplies ordered in the previous fiscal year and encumbered at an estimated amount of $2,000 were received at an actual cost of $2,200.The entry to record this transaction will require a debit to:

The city's electric utility fund sent $700,000 to the General Fund to help cover the city's operating costs.This transaction would be recorded in the governmental activities journal as

Revenues that are legally restricted for expenditure on specified operating purposes should be accounted for in special revenue funds,including

A payment made by a city-owned utility to the General Fund of the city in lieu of taxes is an example of an "internal exchange transaction."

The General Fund is used to account for:

Property taxes due 75 days after the end of the 2017 fiscal year would be recognized in 2017 as revenues in the General Fund general journal.

Beach City received a gift of corporate stock valued at $1,200,000 on the date of the gift.The donor specified that the principal amount of the gift be maintained in perpetuity,but that earnings can be used to acquire works of art to improve the appearance of public buildings.All changes in fair value are to increase or decrease the principal amount of the gift.Assuming that Beach City uses a permanent fund to account for the endowment and a special revenue fund to account for the earmarked earnings from the endowment,explain the accounting process for (1)receipt of the original gift,(2)receipt of quarterly dividends,(3)notification that fair value of the original stock increased by $3,000 during the year,and (4)the effect on fund balances of closing temporary accounts at year-end.(Note: Ignore the effects of the transactions at the government-wide level).

Estimated uncollectible tax amounts are recorded in the General Fund general journal as a reduction in revenues and in the governmental activities journal as a bad debt expense.