Deck 8: Government-Wide Statements, Capital Assets, Long-Term Debt

Question 1

An example of a program revenue in the government-wide Statement of Activities would be motor fuel taxes dedicated to street repairs.

Answer 1

False

Question 2

An asset may be considered impaired if either the decline in the service utility is unexpected or the amount of the decline in service utility is large.

Answer 2

False

Question 3

Internal Service Funds are a category of proprietary funds.

Answer 3

True

Question 4

Assume a government reported Proceeds of Bonds in the amount of $1,000,000 in the governmental fund Statement of Revenues, Expenditures and Changes in Fund Balances. When preparing the reconciliation from the changes in fund balances in that statement to the changes in net assets in the governmental funds column in the Statement of Activities, a decrease of $1,000,000 would be entered.

Question 5

GASB Statement 37 specifically requires capitalization of interest during construction in governmental funds for government-wide statements.

Question 6

In preparing the government-wide financial statements, worksheet entries are not posted to the general ledger. Therefore, new worksheet entries for existing fixed assets must be made each year.

Question 7

Assume a government reported $300,000 in capital outlay expenditures in the governmental fund Statement of Revenues, Expenditures and Changes in Fund Balances. Secondly, assume depreciation of capital assets amounted to $250,000, in the governmental activities column in the Statement of Activities. Those adjustments would cause a decrease of $50,000 when preparing the reconciliation between the change in governmental fund balances to the change in net assets of governmental activities in the Statement of Activities.

Question 8

General obligation debt, which has as backing the full faith and credit of the governmental unit is reported in both the government-wide statements and the fund basis statements.

Question 9

When converting from governmental fund financial statements to the governmental activities column of the government-wide statements, it is necessary to make a number of adjustments, many of which convert from modified accrual accounting to accrual accounting.

Question 10

Debt margin is the difference between the amount of debt limit calculated as prescribed by law and the net amount of outstanding indebtedness subject to limitation.

Question 11

When converting from fund financial statements to government-wide statements, it is necessary to eliminate those fund transfers that are between the categories of governmental activities and business-type activities.

Question 12

Few adjustments to internal service funds are necessary when converting from proprietary funds statements to the government-wide statements as internal service funds are generally reported as business-type activities in the government-wide statements.

Question 13

GASB does not require that "collections" be capitalized and depreciated.

Question 14

GASB requires that all infrastructure be capitalized and depreciated

Question 15

When converting from the enterprise funds Statement of Net Assets to the government-wide Statement of Net Assets (government-wide statements), it is necessary to add fixed assets and to deduct long-term debt.

Question 16

When using the modified approach to record infrastructure, expenditures to widen a 2-lane road to 4-lanes would be charged to an expense, in lieu of depreciation.

Question 17

The Statement of Net Assets and Statement of Activities are the only two statements for the government-wide financial statements.

Question 18

Internal Service Funds are most commonly included in the business-type activities category of the government-wide statements.

Question 19

Internal Service funds use the accrual basis of accounting.

Question 20

General long-term debt, to be paid out of resources of the government's taxing power is not reflected in the governmental fund Balance Sheet but is reflected in the government-wide Statement of Net Assets.

Question 21

Worksheet entries are never booked; they are only used on the worksheets.

Question 22

Debt limit is the total amount of indebtedness of specified kinds that is allowed by law to be outstanding at any time.

Question 23

Worksheet entries are not posted to the general journal.

Question 24

Worksheet entries are required to change the government fund financial statements to the accrual basis of accounting.

Question 25

Internal service funds primarily serve governmental departments; therefore they are not incorporated into the business-type activities category of the government-wide statements.

Question 26

Government-wide statements are prepared using the accrual basis; therefore, governmental fund-basis statements need to be adjusted from their original modified accrual basis.

Question 27

Debt limit is a measure of effective leverage for enterprise activities.

Question 28

Governments may choose either to depreciate infrastructure assets or use the modified approach.

Question 29

Worksheet entries involve reestablishing certain balance sheet accounts every year.

Question 30

Internal service funds primarily serve governmental departments; therefore they must be incorporated into the governmental activities category of the government-wide statements.

Question 31

General (governmental) long term assets and debt have a balance of zero until the worksheet entries are made.

Question 32

Government-wide financial statements are prepared using the accrual method of accounting

Question 33

Internal Service Funds are most commonly incorporated into the governmental activities category of the government-wide statements.

Question 34

Worksheet entries are used to convert modified accrual statements to accrual.

Question 35

Debt limit is the amount of funds legally required to be set aside to pay outstanding debt.

Question 36

Balances from enterprise fund statements, Statement of Net Assets and Statement of Revenues, Expenses and Changes in Fund Net Assets, are entered directly to the business-type activities sections of government-wide statements.

Question 37

The difference between assets and liabilities in the government-wide statements is called net equity.

Question 38

General fixed assets are not required to be reported on the government-wide balance sheet.

Question 39

The difference between assets and liabilities in the government-wide statements is called Net Assets.

Question 40

Debt limit is the percentage of governmental activities legally allowed to be financed by debt.

Question 41

A governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances reported expenditures of $30 million, including capital outlay expenditures of $2 million. Capital assets for that government cost $70 million, including land of $10 million. Depreciable assets are amortized over 20 years, on average. The reconciliation from governmental changes in fund balances to governmental activities changes in net assets would reflect a(an):

A) Decrease of $1 million
B) Increase of $l million
C) Decrease of $3 million
D) Increase of $2 million

Question 42

A government reported an other financing source in the amount of $600,000 related to the sale of land in its governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances. The land had a cost of $170,000. The amount that would be reported in the government-wide Statement of Activities would be:

A) A gain of $ 770,000
B) A gain of $ 600,000
C) A gain of $ 430,000
D) A gain of $ 170,000

Question 43

A government reported an other financing source in the amount of $800,000, related to the sale of land in its governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances. The land had a cost of $350,000. The adjustment in the reconciliation, when moving from the governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the change in net assets for governmental activities in the Statement of Activities would be a(an):

A) Increase of $450,000
B) Decrease of $450,000
C) Increase of $350,000
D) Decrease of $350,000

Question 44

The City of Charlotte levied property taxes in 2009 in the amount of $10 million. It is estimated that 2% will be uncollectible. During 2009, $9,000,000 was collected and it is anticipated that $400,000 will be collected during the next 60 days. When moving from the changes in fund balances in the Statement of Revenues, Expenditures and Changes in Fund Balances to the changes in net assets in the Statement of Activities, what will be the adjustment?

A) An increase of $800,000
B) An increase of $400,000
C) An increase of $200,000
D) Zero

Question 45

Which of the following is true regarding the reporting of general fixed assets by state and local governments?

A) Fixed assets are reported in the government-wide Statement of Net Assets
B) Fixed assets are reported in the governmental funds Balance Sheet
C) Both of the above
D) Neither of the above

Question 46

Fixed assets are not recorded on the governmental fund balance sheets but must be shown on the government-wide financial statements.

Question 47

A government's Statement of Revenues, Expenditures and Changes in Fund Balances reflected proceeds of bonds in the amount of $1,000,000. That statement also reflected expenditures for debt service in the amount of $3,000,000, including $2,600,000 for principal payments. Assuming no other changes, the effect, when moving from the change in fund balances in the governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances to the change in net assets for governmental activities in the Statement of Activities would be a:

A) $1,000,000 increase
B) $1,000,000 decrease
C) $1,600,000 increase
D) $1,600,000 decrease

Question 48

In its Statement of Net Assets, a government reported: Assets of $90 million, including $30 million in capital assets (net) and liabilities of $50 million, including long-term debt of $15 million, all related to capital asset acquisition. The government also reported $5 million of net assets were restricted for payment of debt service. The government's unrestricted net assets would be reported as:

A) $10 million
B) $20 million
C) $25 million
D) $30 million

Question 49

The City of Bluefield had general obligation debt outstanding in the amount of $64,000,000 and had available resources of $12,000,000 to pay that debt. The assessed valuation of property in the city is $800,000,000. The state applies a 10 percent debt limit, based on assessed valuation. The debt margin to be reported in the City's statistical section of the CAFR would be:

A) $64 million
B) $40 million
C) $36 million
D) $28 million

Question 50

Which of the following is true regarding the government-wide statements?

A) Balances from enterprise funds' statements are entered directly to the business-type activities sections of the government-wide statements without adjustment
B) Government-wide statements are consolidated, within columns
C) Both of the above
D) Neither of the above

Question 51

A government incurred expenditures for its infrastructure as follows: $20 million for general repairs; $21 million to extend the life of existing infrastructure; $22 million for improvements and additions. If depreciation is to be charged, the amount would be $23 million. Which of the following would be true?

A) If the government chose to use the modified approach to record infrastructure, the amount to be charged as expense would be $43 million
B) If the government chose not to use the modified approach to record infrastructure, the amount to be charged to expense would be $41 million
C) Both of the above
D) Neither of the above

Question 52

Which of the following is a purpose of the worksheet to convert from fund financial records to government-wide financial statements?

A) Eliminate expenditures for capital assets
B) Eliminate fiduciary funds
C) Both A and B
D) Neither A nor B

Question 53

With the inception of GASB Statement 34, governments have the option to capitalize infrastructure assets.

Question 54

GASB requires a reconciliation from fund financial statements to government-wide financial statements.

Question 55

When using the modified approach to account for infrastructures, expenditures to extend the life of the infrastructure assets are capitalized.

Question 56

A government had the following transfers reported in its governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances: (1) a transfer from the General Fund to a debt service fund in the amount of $l,000,000; (2) a transfer from the General Fund to an enterprise fund in the amount of $1,200,000; and (3) a transfer from the General Fund to an internal service fund in the amount of $400,000. The amount that would be shown as a transfer out in the governmental activities column in the Statement of Activities would be:

A) $2,600,000
B) $1,400,000
C) $1,200,000
D) $ 800,000

Question 57

The total amount of indebtedness of specified kinds that is allowed by law to be outstanding at any time is known as:

A) Debt margin
B) Debt limit
C) Borrowing power
D) Maximum debt

Question 58

A government incurred expenses for its infrastructure as follows: $15 million for general repairs; $13 million to extend the life for existing infrastructure; and $12 million for additions and betterments. The government chooses to use the modified approach to record infrastructure. The infrastructure has a basis of $400 million and would be depreciated over a 40 year life, if depreciation were charged. The amount that would be shown as expense in the Statement of Activities would be:

A) $40 million
B) $28 million
C) $27 million
D) $25 million

Question 59

Governments must capitalize infrastructure assets with the inception of GASB Statement 34.

Question 60

When using the modified approach to account for infrastructures, expenditures to extend the life of the infrastructure assets are expensed.

Question 61

A government's Statement of Revenues, Expenditures and Changes in Fund Balances reported proceeds of bonds in the amount of $500,000. It also reported expenditures for bond principal in the amount of $1,000,000. The last interest payment was on the last day of the fiscal year. The reconciliation from the governmental funds changes in fund balances to the governmental activities change in net assets would reflect a(an):

A) Increase of $500,000
B) Decrease of $500,000
C) Increase of $1,500,000
D) Decrease of $1,500,000

Question 62

A government reported the following transfers in its governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances: (1) a transfer from the General Fund to a special revenue fund in the amount of $400,000; (2) a transfer from the General Fund to an internal service fund in the amount of $300,000; (3) a transfer from the General Fund to a permanent fund in the amount of $200,000. The amount that would be shown as a transfer out in the governmental activities column in the Statement of Activities would be:

A) $500,000
B) $300,000
C) $200,000
D) $0; no transfer would be shown

Question 63

A donated collection is not required to be capitalized. If a government decides not to capitalize them, how will they be accounted for at the time of the donation?

A) Debit revenue, credit expense
B) Debit expense, credit revenue
C) Debit collections, credit revenue
D) Debit collections, credit cash

Question 64

The City of Smithfield levied property taxes in and for 2009 in the amount of $200 million. It is estimated that 1% will be uncollectible. During 2009, $180 million was collected and $12 million was collected during the next 60 days. Smithfield recognizes the maximum possible property taxes in its governmental funds. The adjustment, when moving from the governmental funds changes in fund balances to the governmental activities change in net assets would be:

A) $8 million increase
B) $8 million decrease
C) $6 million increase
D) $6 million decrease

Question 65

Which of the following is true regarding the government-wide Statement of Activities?

A) Fiduciary activities are not reported
B) Discretely presented component units are not reported
C) Both of the above
D) Neither of the above

Question 66

Which of the following must be done to convert modified accrual basis to accrual basis?

A) Record capital assets
B) Change expenditures for debt service principal to reduction of liabilities
C) Make adjustments to revenues to convert to the accrual basis of revenue recognition
D) All of the above

Question 67

A government's Statement of Revenues, Expenditures and Changes in Fund Balances reflected expenditures for debt service in the amount of $12,000,000, including $5,000,000 for principal. It also reflected proceeds of bonds in the amount of $4,000,000. No interest accruals were involved. When moving from the changes in fund balances reported for the governmental funds to the change in net assets for governmental activities, the net change would be:

A) $1,000,000 decrease
B) $1,000,000 increase
C) No change
D) $8,000,000 decrease

Question 68

Which of the following is true regarding the government-wide Statement of Net Assets?

A) Discretely presented component units are reported separately
B) Governmental and business-type activities are reported separately and are consolidated within columns
C) Both of the above
D) Neither of the above

Question 69

Which of the following is true regarding the government-wide Statement of Activities?

A) Program revenues include charges for services, operating grants and contracts, capital grants and contracts and taxes levied for specific purposes
B) The accrual basis of accounting is used to calculate revenues and expenses
C) Both of the above
D) Neither of the above

Question 70

A government recorded transfers out of the General Fund to the debt service fund in the amount of $ 600,000 and to the capital projects fund in the amount of $ 300,000. The amount that would be shown as a transfer in the governmental activities column of the Statement of Activities would be:

A) $900,000
B) $600,000
C) $300,000
D) $ 0

Question 71

Which of the following would be considered a program revenue in the Statement of Activities of a local government?

A) A grant from the state to construct utility plant
B) A motor fuel tax, restricted for road repairs
C) Both of the above
D) Neither of the above

Question 72

A government reported expenditures for infrastructure as follows: $20 million for improvements and additions; $18 million to extend the life of existing infrastructure; $16 million for general repairs. The cost of its infrastructure, excluding land is $750 million and the infrastructure has an estimated life of 50 years, on average. Which of the following would be the reported expense (in millions) under each of the following options?

A) Depreciation Approach: $53; Modified Approach: $34
B) Depreciation Approach: $49; Modified Approach: $31
C) Depreciation Approach: $31; Modified Approach: $31
D) Depreciation Approach: $31; Modified Approach: $34

Question 73

A government reported another financing source in the amount of $500,000 related to the sale of land in its governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances. The land had a cost of $100,000. The adjustment in the reconciliation when moving from the changes in fund balances in the Statement of Revenues, Expenditures and Changes in Fund Balances to the change in net assets in the Statement of Activities would be:

A) Increase of $400,000
B) Decrease of $400,000
C) Increase of $100,000
D) Decrease of $100,000

Question 74

A governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances reported expenditures for capital outlay in the amount of $6,000,000. Capital assets for that government cost $120,000,000, including $20,000,000 in land. Depreciable assets are amortized over 20 years, on average. The reconciliation from the governmental funds changes in fund balances to the governmental activities change in net assets would reflect a(an):

A) Increase of $3,000,000
B) Decrease of $3,000,000
C) Increase of $1,000,000
D) Decrease of $1,000,000

Question 75

Which of the following is true regarding the government-wide Statement of Net Assets?

A) A classified approach is required, reflecting current assets separately from noncurrent assets and current liabilities from noncurrent liabilities
B) Major funds are reported for governmental and enterprise funds
C) Both of the above
D) Neither of the above

Question 76

Resources and activities related to which of the following fund types is not included in the government-wide financial statements?

A) General Fund
B) Capital Projects Fund
C) Enterprise Fund
D) Pension Trust Fund

Question 77

The following balances exist at year end within the governmental activities of a government unit: Transfers In: 100,000
Transfers Out: 80,000
When compiling the government-wide financial statements, the journal entry to eliminate the transfer activity will include:

A) A debit of 20,000 to Transfers In
B) A debit of 80,000 to Transfers In
C) A debit of 80,000 to Transfers Out
D) None of the above

Question 78

A governmental funds Statement of Revenues, Expenditures and Changes in Fund Balances reported expenditures of $40 million, including capital outlay expenditures of $11 million. Capital assets for that government cost $80 million, including land in the amount of $10 million. Depreciable assets are amortized over 10 years, on average. The reconciliation from governmental fund changes in fund balances to governmental activities change in net assets would reflect a(an):

A) $4 million decrease
B) $4 million increase
C) $3 million decrease
D) $11 million decrease

Question 79

The City of Casper levied property taxes for 2009 in the amount of $8,000,000. The amount estimated to be uncollectible is 2%. By the end of the year, $7,200,000 had been collected. It was estimated that $400,000 would be collected during the next 60 days of 2008 and that $240,000 would be collected after that. The City has a policy of recognizing the full amount possible for property taxes. Which of the following statements is true?

A) The amount reported for property tax revenue in the government-wide Statement of Activities would be $7,840,000
B) The amount reported for property tax revenue in the governmental fund Statement of Revenues, Expenditures and Changes in Fund Balances would be $7,600,000
C) Both of the above
D) Neither of the above

Question 80

In its government-wide Statement of Net Assets, a government reported assets of $150 million, including $50 million in capital assets (net of depreciation) and liabilities of $80 million, including long-term debt of $60 million, $40 million of which was issued to acquire capital assets. In addition, $25 million was restricted for debt service and other purposes. The government's unrestricted net assets would be reported as:

A) $35 million
B) $45 million
C) $55 million
D) $90 million