Deck 15: Governmental Accounting: the General Fund and the Account Groups

Question 1

Which one of the following statements is false concerning the accounting for the budget in the general fund general ledger?

A) The budgetary accounts are affected regularly as revenues and expenditures are recognized.
B) The budgetary accounts can be adjusted during the year to reflect material changes in estimates.
C) The budgetary accounts are closed at the end of the period.
D) The budgetary account for expenditures is called appropriations.

Answer 1

A

Question 2

Which of the following correctly portrays the necessary journalization of the budget journal entry?

Answer 2

C

Question 3

Property taxes in the amount of $3,000,000 are billed to city property owners. It is estimated that two percent will prove to be uncollectible. In recording this event,

A) estimated Revenues would be credited for $2,940,000.
B) bad Debts would be debited for $60,000.
C) tax Liens Receivable would be debited for $60,000.
D) allowance for Uncollectible Current Property Taxes would be credited for $60,000.

Answer 3

D

Question 4

Which of the following would not be considered a budgetary account in the General Fund?

A) Estimated Other Financial Sources
B) Appropriations
C) Estimated Revenues
D) Fund Balances--Reserved for Inventory

Question 5

Which of the following accounts would not be found in the year-end General Fund balance sheet of a city?

A) Cash
B) Allowance for Uncollectible Taxes
C) Land--Parks
D) Fund Balance--Reserved for Encumbrances

Question 6

The entry in the General Fund to record the posting of a tax lien by a city would include a credit to

A) Tax Lien Receivable.
B) Revenue.
C) Taxes Receivable.
D) Tax Receivable--Delinquent.

Question 7

A primary distinction between the flow of resources through a business enterprise and through a governmental entity is that operations in a governmental entity consume resources and assets to

A) produce goods and services to citizens entitled to receive them.
B) generate return on investment.
C) generate net income.
D) generate capital for future investments.

Question 8

The body currently responsible for developing local governmental accounting standards is the

A) Financial Accounting Standards Board (FASB)
B) Governmental Accounting Standards Board (GASB)
C) National Council on Governmental Accounting (NCGA)
D) Governmental Finance Officers Association (GFOA)

Question 9

The modified accrual method of accounting is applied to which of the following funds or asset groups?

A) Proprietary funds
B) Governmental funds
C) Proprietary type fiduciary funds
D) Permanent funds

Question 10

Which of the following correctly identifies how certain transactions are recorded (as a debit or credit) in the general fund?

Question 11

Revenue from other financing sources includes all of the following except for:

A) Issuing general long term debt
B) Receipt of interfund transfers
C) Revenues from the donation of capital assets
D) Sales of capital assets

Question 12

What is the cornerstone of external financial reporting for governmental units and not-for-profit organizations?

A) show the flow of financial resources
B) to determine profit or loss
C) to compare budgeted to actual resources
D) Accountability

Question 13

The entry to record the Warwick City budget for the General Fund includes the following: The entry to record this budget would include a debit to

A) Estimated Other Financing Uses.
B) Appropriations.
C) Budgetary Fund Balance.
D) Encumbrances.

Question 14

The governmental Accounting Standards Board has stated governmental financial reporting should be designed to show:

A) Accountability
B) interperiod equity
C) whether future taxpayers will be required to assume burden for services previously reported
D) all of the above

Question 15

Which of the following items would be found in a city's General Fund statement of revenues, expenditures, and changes in fund balance?

A) Depreciation expenditure
B) Appropriation
C) Encumbrances
D) Other financing sources

Question 16

Property taxes are recorded as revenue in the General Fund

A) when the property taxes are levied.
B) when the property taxes are due.
C) when property tax payments are received.
D) on a monthly pro rata basis.

Question 17

Which of the following is not a type of account classification found in the general fund?

A) permanent balance sheet accounts
B) budgetary accounts
C) forecast accounts
D) operating accounts

Question 18

A special assessment levied on citizens for a service they are receiving from a local government should be accounted for in a fund that matches the nature of the special assessment. Which of the following funds would not match a service activity?

A) Capital Projects Fund
B) General Fund
C) Special Revenue Fund
D) Enterprise Fund

Question 19

Goods ordered and originally encumbered at $7,500 were received with an invoice price of $7,700. In recording this event,

A) Encumbrances would be debited for $200.
B) Fund Balances--Reserved for Encumbrances would be debited for $7,500.
C) Expenditures would be debited for $7,500.
D) Appropriations would be debited for $200.

Question 20

Recently effective accounting standards require the preparation of two separate sets of financial statements. The first set of fund financial statements are similar to the historical fund based reporting model. Which of the following statements is false concerning the additional financial statements that are now required?

A) the statements are designed to focus on the governmental unit as a whole
B) the statements consolidate all government operations on a full accrual basis
C) the statements are designed to report on the profit making ability of the resources collected
D) the statements adopt an economic measurement focus

Question 21

What is infrastructure and where would it be accounted for?

Question 22

GASB Statement 34 allows the government to avoid charging depreciation on infrastructure assets if:

A) the governmental unit can demonstrate they have incurred costs to preserve the assets at or above a conditional level.
B) the asset is not expected to be replaced.
C) the asset has a useful life of less than five years.
D) the asset will be replaced within five years.

Question 23

A city should record a liability for a claim from a citizen who files suit because their toddler drowned in the community swimming pool unattended by a lifeguard if

A) it is probable the lawsuit will be settled.
B) the amount of the judgment or settlement can be estimated.
C) the lifeguard has no private insurance to pay the claim.
D) a and b

Question 24

What is the concept of interperiod equity?

Question 25

The City of Franklin has adopted the General Fund budget for the next fiscal year. The details of the budget are:
Required:
Prepare journal entries to record the budget for the City of Franklin.

Question 26

Describe the three basic fund types and account groups and explain what changes, if any, the adoption of GASB standard #34 has made on these classifications?

Question 27

The following selected account balances for the City of Hampton on January 1, 20X8 are listed below:
Required:
Record the following transactions that occurred during 20X8:
a.
Current property taxes are levied at $750,000 with a 4% allowance for uncollectible property taxes.
b.
Property to which tax liens apply is sold for $6,000 and the account is closed.
c.
Current property taxes are collected in the amount of $702,000.
d.
Previous delinquent property taxes are converted to tax liens and the current uncollected property taxes are considered delinquent.

Question 28

Why should a city be concerned with generally accepted accounting principles (GAAP)?

Question 29

If a government enters into a securities lending agreement or reverse repurchase transaction, they would record as assets

A) the assets lent and the collateral received which would "doublecount" the assets.
B) only the collateral received.
C) only the assets originally held and lent.
D) the fair market value of the asset if sold.

Question 30

The City of Olburg failed to record invoiced expenditures for the last year of $15,000 that were not encumbered. Of this amount, $10,000 was paid this year debited to Expenditures (Control). The unpaid portion has not been vouchered. The entry to record this event would include a

A) $15,000 credit to Expenditures.
B) $15,000 debit to Fund Balance--Unreserved and Undesignated.
C) $5,000 debit to Expenditures.
D) $10,000 credit to Fund Balance--Unreserved and Undesignated.

Question 31

To record the sale of a fixed asset carried in the General Fixed Assets Account Group, a city could debit which one of the following accounts in the GFAAG?

A) Cash
B) Expenditures
C) Accounts Receivable
D) Investment in General Fixed Assets - General Fund

Question 32

If the City of Billings determines that it has $200,000 of unfunded pension liability, it would record this liability as a(n)

A) expenditure in the General Fund
B) deferred liability in the GLTDAG
C) unfunded pension liability in the GLTDAG
D) due to pension trust fund in the General Fund

Question 33

If a city uses a General Fixed Asset Account Group (GFAAG) and records depreciation in anticipation of the city wide financial reports, accumulated depreciation accounts are credited in the GFAAG. What would be the corresponding debit entry?

A) Expenditure in the General Fund
B) Depreciation expenditure in the GFAAG
C) The appropriate investment in general fixed assets account in the GFAAG
D) Accounting for usage is not permitted in the General Fund or GFAAG

Question 34

If the police department purchases a police car for $20,000 and trades in the old car for $6,000 paying a net cash payment of $14,000, the entry in the General Fund would

A) debit Automobiles for $14,000.
B) debit Expenditures for $14,000.
C) credit Automobiles for $6,000.
D) debit Expenditures for $20,000.

Question 35

Which of the following accounts would not be found on a city's General Fund Balance Sheet?

A) Other Financial Sources
B) Vouchers Payable
C) Allowance for Uncollectible Tax Liens
D) Due from State Government

Question 36

When recording the acquisition of a fixed asset in a city's General Fixed Asset Account Group (GFAAG), the debit entry should be selected from one of the following accounts except

A) Land
B) Expenditures
C) Machinery and Equipment
D) Construction in Progress

Question 37

If the city expends more during the budget year than it receives during the budget year in revenues that are available to finance the expenditures, it will

A) increase interperiod equity.
B) decrease interperiod equity.
C) increase taxes.
D) force the city to fire some employees.

Question 38

When recording the acquisition of a fixed asset in a city's General Fixed Asset Account Group, the credit entry may be to which one of the following accounts?

A) Investment in General Fixed Assets--General Fund
B) Fund Balance Reserved for Encumbrances
C) Contributed Capital
D) Fund Balance--Expended

Question 39

Explain why governmental funds use budgetary accounts.

Question 40

After the closing entries have been journalized and posted, but prior to the next accounting period, which of the following accounts would have a balance?

A) Fund Balance--Unreserved, Undesignated
B) Appropriations
C) Other Financing Uses
D) Revenues

Question 41

The following transactions were made by the City of Morrell:
Required:
Make the necessary journal entries to record the transactions in the General Fund.

Question 42

Lake City had the following transactions.
Required:
Make the necessary journal entries to record the transactions in the General Fund. Lake City has a June 30 year end.

Question 43

The following transactions occurred in the City of Maineville during 20X1:
a. General obligation term bonds with a face value of $2,500,000 were sold for $2,550,000. The proceeds from the bond issue were to be used to construct a new library and were received by the Capital Projects Fund.
b. $200,000 was transferred from the General Fund to the Debt Service Fund to begin saving for the retirement of the bonds in transaction a. at maturity.
c. $150,000 was transferred from the General Fund to the Debt Service Fund to retire a portion of a serial bond due in 20X1.
d. A police car was purchased for $18,000 and the trade-in of an old police car originally purchased for $15,000 from the General Fund. The new vehicle had a list price and fair market value of $21,500.
e. The serial bonds funded in transaction c. were retired on their maturity date.
f. By year end, $450,000 of the work had been completed on the new library
Required:
Prepare the necessary journal entries to record the transactions and identify the fund or account group in which it would be recorded. Entries in the Debt Service and Capital Projects Funds should be ignored.

Question 44

The pre-closing trial balance of the General Fund of Volter Village at the end of its fiscal year, June 30, 20X1, is as follows:
Required:
a.
Prepare closing entries.
b.
Prepare a statement of revenues, expenditures, and changes in fund balances for the General Fund for the year ended June 30, 20X1.
c.
Prepare the General Fund balance sheet as of June 30, 20X1.

Question 45

Consider the following events:
a.
The General Fund vouchered the purchase of trucks for $65,000. The purchase had been encumbered earlier in the year at $60,000.
b.
Several years ago, equipment costing $15,000 was acquired with General Fund Revenues. It was sold for $5,000, with proceeds belonging to the General Fund.
c.
Early in the year, a citizen donated land appraised at $100,000 to the city. She submitted plans for a new library and agreed to cover the total cost of construction, paying the company directly as work proceeds. At year end, the building was two-thirds finished, with costs to date of $300,000.
d.
A snow plow was purchased with General Fund cash for $48,000, which represented a cost of $61,000 less trade-in of $13,000 for an old snow plow originally purchased for $35,000 from Special Revenue Funds. As an emergency purchase, the acquisition of the new snow plow had not been encumbered.
Required:
Prepare journal entries to record the events using the General Fund and the General Fixed Assets Account Group:

Question 46

Following is a list of selected transactions for the City of Alpena:
a.
The city used general property taxes to purchase a computer for the police department. The cost of the computer was $30,000. It was not encumbered.
b.
Joseph Green donated land and a building to the city with book values of $25,000 and $150,000, respectively. When the gift was made, the appraisal values were $35,000 for the land and $135,000 for the building.
c.
The city sold an old police car originally purchased by the General Fund for $10,000. The selling price was $2,500.
Required:
Make the necessary journal entries in the funds and account groups affected.

Question 47

The Inventory of Supplies and Fund Balance--Reserved for Inventory of Supplies have been adjusted to reflect ending inventory. The beginning inventory balance was $0. Fund Balance--Unreserved-Undesignated was $5,000 before the adjustment.
Using the information in Figure 15-1, the year-end trial balance for the General Fund of Gotham City, prepare the June 30, 20X9, General Fund balance sheet for Gotham City.

Question 48

The following activities took place in the city of Littlewood during 20X2. Make the necessary journal entries to account for these transactions, including the year end closing entry. Littlewood does not utilize an encumbrance system.

Question 49

The Inventory of Supplies and Fund Balance--Reserved for Inventory of Supplies have been adjusted to reflect ending inventory. The beginning inventory balance was $0. Fund Balance--Unreserved-Undesignated was $5,000 before the adjustment.
Using the information in Figure 15-1, prepare the closing entries for the General Fund of Gotham City on June 30, 20X9.

Question 50

The Inventory of Supplies and Fund Balance--Reserved for Inventory of Supplies have been adjusted to reflect ending inventory. The beginning inventory balance was $0. Fund Balance--Unreserved-Undesignated was $5,000 before the adjustment.
Using the information in Figure 15-1, prepare a Statement of Revenues, Expenditures, and Change in Fund Balance--Budget and Actual for the General Fund for Gotham City for the year end June 30, 20X9.

Question 51

The following transactions were made by Cape City:
August 1, 20X9
A wealthy business person donates a downtown office building to Cape City. Its fair market value is $2,500,000. The city intends to sell the building.
August 15, 20X9
The city purchases a warehouse to be used for storage and pays $1,500,000 from the General Fund.
September 1, 20X9
The donated office building is sold for $2,600,000.
Required:
Make the journal entries necessary to record the transactions in the General Fund and in the General Fixed Assets Account Group.

Question 52

Following is a list of selected transactions for the City of Andrew:
a.
The city issued $750,000 in term bonds. The bonds sold at 102.
b.
After the payment of interest, the city transferred $100,000 from the General Fund to retire serial bonds.
c.
The bonds in b are retired.
Required:
Make the necessary journal entries in the funds and account groups affected except the Debt Service Fund.

Question 53

Which fund and/or account group would account for the following activities?
a. property taxes
b. purchase a fire truck
c. order some general supplies
d. build a city hall
e. pay principal and interest on long-term debt
f. issue long-term debt to build the city hall
g. pay the current portion of pension liability