Deck 8: Government-Wide Statements, capital Assets, long-Term Debt

Question 1

GASB Statement No.37 specifically requires interest during construction in governments' funds to be capitalized in the government-wide statements.

Answer 1

False

Question 2

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.

Answer 2

False

Question 3

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.
FALSE

Answer 3

False

Question 4

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 5

When an asset is sold during the year,the proceeds from the sale which was listed as an "other financing source" is eliminated and the gain or loss is recorded when preparing the government-wide statements.

Question 6

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 7

When preparing government-wide statements,depreciation expense must be eliminated.

Question 8

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 9

When preparing the government-wide statements,a worksheet entry is required to record depreciation expense on general capital assets.

Question 10

In addition to the fund basis statement,GASB Statement 34 requires government-wide statements that are prepared using the modified accrual basis and the economic resources measurement focus.

Question 11

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

Question 12

Fiduciary activities are not reported in the government-wide statements.

Question 13

Fixed assets acquired through proprietary funds are reported in the Statement of Net Assets of those funds.

Question 14

GASB requires a reconciliation from proprietary fund financial statements to the government-wide statements business-activities columns from modified accrual accounting to accrual accounting.

Question 15

When preparing the government-wide statements,worksheet entries must be made to add the balances of the fiduciary funds.

Question 16

GASB Statement No.34 states that general capital assets should not be reported as assets in governmental funds but should be reported in the governmental activities column of the government-wide statement of net assets.

Question 17

When preparing the government-wide statements,a worksheet entry is required to eliminate the charge to expenditures for capital outlay and record those expenditures as capital assets,as is required for accrual accounting.

Question 18

Worksheet entries are posted to the general ledger when preparing the government-wide statements and then reversed at the beginning of the next fiscal year.

Question 19

GASB requires that general fixed assets be included in the government-wide financial statements.These assets are usually acquired through General,special revenue or capital projects funds.

Question 20

Enterprise funds are reported in the business-type activities column of the government-wide statements.

Question 21

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 22

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

Question 23

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

Question 24

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 25

Internal Service funds use the accrual basis of accounting.

Question 26

Internal Service Funds are a category of proprietary funds.

Question 27

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 28

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

Question 29

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.

Question 30

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

Question 31

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

Question 32

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 33

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

Question 34

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

Question 35

When preparing the government-wide statements,worksheet entries are not posted to the general journal.

Question 36

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 37

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

Question 38

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

Question 39

GASB requires that all infrastructure be capitalized and depreciated.

Question 40

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

Question 41

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

Question 42

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

Question 43

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

Question 44

Governments must capitalize infrastructure assets under GASB Statement 34.

Question 45

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

Question 46

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

Question 47

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

Question 48

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

Question 49

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

Question 50

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

Question 51

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

Question 52

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 53

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

Question 54

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

Question 55

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

Question 56

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

Question 57

When preparing the government-wide statements,worksheet entries are never booked; they are only used on the worksheets.

Question 58

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

Question 59

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

Question 60

Worksheet entries involve reestablishing certain balance sheet accounts every year.

Question 61

A government incurred expenses for its infrastructure as follows: $20 million for general repairs; $15 million to extend the life for existing infrastructure; and $18 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) $38 million.
B) $33 million.
C) $53 million.
D) $35 million.

Question 62

The City of Charlotte levied property taxes in 2012 in the amount of $10 million.It is estimated that 2% will be uncollectible.During 2012,$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? (ignore any possible effect resulting from the previous year's deferral)

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

Question 63

With respect to government-wide statement,which of the following statements is correct?

A) GASB requires a reconciliation from proprietary fund financial statements to the government-wide statements business-activities columns from modified accrual accounting to accrual accounting.
B) GASB Statement No. 34 states that general capital assets should not be reported as assets in governmental funds but should be reported in the governmental activities column of the government-wide statement of net assets.
C) In addition to the fund basis statement, GASB Statement 34 requires government-wide statements that are prepared on the modified accrual basis using the economic resources measurement focus.
D) Fiduciary activities are reported in the government-wide statements in a separate column.

Question 64

A governmental fund Statement of Revenues,Expenditures,and Changes in Fund Balances reported expenditures of $30 million,including capital outlay expenditures of $5 million.Capital assets for that government cost $90 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 $5 million.
D) Increase of $4 million.

Question 65

A local government recorded the sale of a capital asset by recording a debit to cash and credit to proceeds of sale of capital asset.What is the worksheet entry when preparing the government-wide statements?

A) Debit to Proceeds of sale of capital asset and credit to Gain on sale of capital asset
B) Debit to Cash and credit to capital asset (net) and credit to Gain on sale of capital asset
C) Debit to Proceeds of sale of capital asset and credit to capital asset (net) and gain/loss on sale of capital asset
D) None of the above

Question 66

A local government purchased a building and recorded the event by debiting Expenditures - Capital Outlay and crediting Cash.What would be the worksheet entry to prepare the government-wide statements?

A) Debit to Capital Assets and credit to Expenditures - Capital Outlay
B) Debit to Capital Assets and credit to Cash
C) Debit to Capital Assets and credit to Accumulated Depreciation-Capital Assets and Expenditures - Capital outlay
D) Debit to Capital Assets for the book value of the asset and credit to Expenditures - Capital outlay

Question 67

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 68

Which of the following statements is not correct?

A) Worksheet entries are posted to the general ledger when preparing the government-wide statements and then reversed at the beginning of the next fiscal year.
B) Fixed assets acquired through proprietary and fiduciary funds are reported in the Statement of Net Assets of those funds.
C) GASB requires that general fixed assets be included in the government-wide financial statements. These assets are usually acquired through General, special revenue or capital projects funds.
D) GASB Statement No. 37 specifically prohibits interest during construction in governments' funds to be capitalized in the government-wide statements.

Question 69

Which of the following statements is not correct with respect to the year-end adjustments for the government wide-statements?

A) Net Assets will be the offset to worksheet entries that affect revenues or expenses recognized in a prior year.
B) When an asset is sold during the year, the proceeds from the sale which was listed as an "other financing source" is eliminated and the gain or loss is recorded when preparing the government-wide statements.
C) End of year assets can only be determined after all revenues and expenses have been adjusted.
D) When preparing government-wide statements, depreciation expense must be eliminated.

Question 70

Which of the following statements is not correct with respect to the preparation of government-wide statements?

A) A worksheet entry is required to record depreciation expense on capital assets.
B) Enterprise funds are reported in the business-type activities column of the government-wide statements.
C) Worksheet entries must be made to eliminate operating profits earned by enterprise funds.
D) A worksheet entry is required to eliminate the charge to expenditures for capital outlay and record those expenditures as capital assets, as is required for accrual accounting.

Question 71

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 72

When preparing government-wide financial statements,the modified accrual based governmental funds are adjusted for which of the following events?

A) Capital asset related events
B) Long-term debt related events
C) Internal service fund activities
D) All of the above

Question 73

In its Statement of Net Assets,a government reported:
The government also reported $10 million of net assets were restricted for payment of debt service.The government's unrestricted net assets would be reported as:

A) $5 million.
B) $15 million.
C) $20 million.
D) $25 million.

Question 74

A local government recorded the payment of bond principal by debiting Expenditure: Bond principal and crediting cash.What is the worksheet entry when preparing the government-wide statements?

A) Debit Bonds Payable and credit Cash
B) Debit Bonds Payable and credit Expenditure: Bond Principal
C) Debit Cash and credit Expenditure: Bond Principal
D) None of the above

Question 75

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,100,000; (2)a transfer from the General Fund to an enterprise fund in the amount of $1,300,000; and (3)a transfer from the General Fund to an internal service fund in the amount of $500,000.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) $1,300,000.
C) $2,400,000.
D) $2,900,000.

Question 76

When preparing government-wide financial statements,the modified accrual based governmental funds are adjusted for all of the following events except:

A) Long-term debt related events
B) Change in current assets and current liabilities from year to year
C) Internal service fund activities
D) Interfund activities

Question 77

Which of the following would not be an adjustment for long-term debt when preparing government-wide financial statements?

A) Changing "proceeds of bonds' to debt liabilities
B) Changing expenditures for debt service principal to reduction of liabilities
C) Amortizing bond premiums
D) Recording the cash received from a debt issue

Question 78

A local government issued bonds and recorded the event by debiting cash and crediting Other Financing Source - Proceeds of Bonds and Other Financing Source - Premium on Bonds.What is the worksheet entry when preparing the government-wide statements?

A) Debit Other Financing Sources - Proceeds of Bonds and Other Financing Sources - Premium on bonds and Credit Bonds payable and Premium on Bonds
B) Debit Cash and credit Bonds Payable and Premium on bonds
C) Debit Other Financing Sources - Proceeds of Bonds and Credit Bonds payable and Premium on Bonds
D) No adjustment is necessary

Question 79

A government reported an "other financing source" in the amount of $750,000,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 $275,000.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 $475,000.
B) Decrease of $475,000.
C) Increase of $275,000.
D) Decrease of $275,000.

Question 80

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.