Deck 4: The Governmental Fund Accounting Cycle

Question 1

Which of the following could be reported in the balance sheet for a General Fund?

A)Tax anticipation notes
B)Revenue anticipation notes
C)Serial bonds
D)all of the above
E)only a and b

Answer 1

E

Question 2

The Village of Titus borrows money using a tax anticipation note.The proceeds from the borrowing are deposited in the General Fund.When the note is repaid,a debit will be made in the General Fund to:

A)tax anticipation notes payable
B)expenses-tax anticipation note
C)expenditures-tax anticipation note
D)cash

Answer 2

A

Question 3

When a city borrows cash short-term in anticipation of the receipt of property tax revenues,which account would it credit?

A)property taxes receivable
B)property tax revenues
C)estimated other financing sources
D)tax anticipation notes payable

Answer 3

D

Question 4

Expenditures of a city or county's governmental funds include

A)cash disbursements made to settle short-term liabilities
B)depreciation of general fixed assets
C)decreases in fund balance for operating purposes but not for capital asset acquisitions
D)decreases in fund balance for operating purposes,repayment of debt principal and interest,and capital asset acquisitions

Question 5

What is the general rule for recognizing revenues in governmental funds?

A)revenues should be recognized when the budget is adopted
B)revenues should be recognized when available and measurable
C)revenues should be recognized when collected in cash
D)revenues may be recognized either when collected in cash or when the budget is adopted,at the option of the government

Question 6

What basis of accounting is used to recognize revenues in the General fund?

A)cash basis
B)modified accrual basis
C)accrual basis
D)budgetary basis

Question 7

Liabilities in the General Fund and Special Revenue Fund represent:

A)claims against the fund's cash resources
B)claims against the fund's current financial resources
C)claims against the fund's economic resources
D)claims that must be paid within one year

Question 8

At year-end,a city's expenditures exceed its revenues.When the accounts are closed,which of the following entries will be made to record this fact?

A)a credit to fund balance
B)a debit to fund balance
C)a credit to Appropriations
D)a debit to Budgetary fund balance

Question 9

Which of the following journal entries is a budgetary entry?

A)debit estimated revenues and credit appropriations
B)debit expenditures and credit cash
C)debit property taxes receivable and credit property tax revenues
D)debit cash and credit property taxes receivable

Question 10

What is budgetary fund balance?

A)budgetary fund balance is assigned
B)budgetary fund balance is permanent in nature
C)budgetary fund balance is the anticipated change in fund balance as a result of adopting the budget
D)budgetary fund balance can be appropriated

Question 11

Which line item does not properly appear in the Statement of Revenues,Expenditures,and Changes in Fund Balance (operating statement)of a governmental fund?

A)expenditures--debt service
B)expenditures--capital outlay
C)property taxes receivable
D)beginning fund balance

Question 12

When should property tax revenues be recognized in the accounting records?

A)when the budget is prepared
B)when the appropriations bill is signed into law
C)when property taxes are levied and available
D)when property taxes are actually received in cash

Question 13

Accounting for a Special Revenue Fund is most like the accounting for which of the following?

A)the General Fund
B)an Internal Service Fund
C)a Pension Trust Fund
D)an Enterprise Fund

Question 14

A local government always will have

Question 15

The City of Seales has a December 31^st fiscal year end.Salaries earned by city's General Fund employees for the period December 24^th through December 31^st will not be paid until January 7^th of the next year.On December 31^st,the City of Seales' accounting personnel would:

A)debit salaries expense and credit salaries payable.
B)debit expenditures-salaries and credit cash.
C)make no journal entry because cash has not yet been paid.
D)none of the above

Question 16

A village derives about .005 percent of its General Fund revenues from traffic violation fines.Violators of the law have 30 days to appeal the fines.Experience shows that the village ultimately collects on about 75% of the violations.When should the village recognize these revenues in the General Fund?

A)when the budget is prepared
B)at the beginning of the year,based on an estimate of collections
C)when the traffic violation tickets are issued
D)when the cash is collected

Question 17

Which line item does not properly belong in the balance sheet of a governmental fund?

A)short-term investments
B)fixed assets
C)cash
D)accounts (or vouchers)payable

Question 18

The City of Watsonville places a purchase order for street maintenance supplies of $56,000.This would result in:

A)a debit to expenditures-street maintenance supplies
B)a debit to encumbrances-street maintenance supplies
C)a credit to assigned fund balance
D)a credit to vouchers payable

Question 19

At the beginning of its fiscal year,the Town of Harmon estimates that its revenues for street maintenance activities are $100,000,and it appropriates $90,000 for street maintenance supplies.It currently has outstanding encumbrances for street maintenance supplies of $40,000 and has incurred expenditures for street maintenance supplies of $30,000.How much does the Town of Harmon currently have available to spend for street maintenance supplies?

A)$20,000
B)$30,000
C)$40,000
D)$50,000
E)$60,000

Question 20

Which of the following financial statements normally are prepared for the General Fund?

Question 21

The total amount of taxes receivable from all taxpayers within a government's jurisdiction will be posted to which type of account?

A)a control account
B)a contra account
C)a net assets account
D)a subsidiary account

Question 22

Which of the following is not required to be prepared for the General Fund according to GASB standards?

A)budgetary comparison statement or schedule
B)statement of revenues,expenditures,and changes in fund balance
C)balance sheet
D)all of the above are required

Question 23

A city that uses encumbrance accounting places a purchase order for three fire trucks at a cost of $100,000 each,specifying that two are to be delivered in March and one in August.The vendor delivers the first two trucks,and sends an invoice for $200,000.How should the city handle the encumbrance accounting when it prepares the $200,000 voucher to pay for the first two trucks?

A)it should make no encumbrance entry until all three trucks have been received
B)it should reduce encumbrances by $100,000
C)it should reduce encumbrances by $200,000
D)it should reduce encumbrances by $300,000

Question 24

If the fund balance of a Special Revenue Fund has a debit balance at the end of the fiscal year,it means that

A)revenues are less than expenditures for the year
B)actual revenues are less than estimated revenues
C)total liabilities exceed total assets
D)expenditures consistently exceeded encumbrances

Question 25

Which line item would not properly appear in the closing entry of a governmental fund?

A)expenditures-public safety salaries
B)expenditures-debt service
C)fund balance
D)expenditures-depreciation

Question 26

Which of the following accounts properly would not appear in the General Fund's closing entry at fiscal year end?

A)revenues
B)fund balance
C)taxes receivable
D)expenditures

Question 27

A county borrows cash on a short-term basis.Which of the following account could be credited in this transaction?

A)tax anticipation notes payable
B)revenues from borrowing
C)appropriations--borrowed money
D)assigned fund balance

Question 28

A city borrows $800,000 in January because it does not receive property taxes until May.It borrows on a tax anticipation note,which it will repay in May,when the taxes are collected.How would the city classify the note if it were to prepare financial statements on March 31?

A)as an other financing source
B)as a liability
C)as a revenue
D)as a direct increase in equity

Question 29

In governmental accounting,vouchers payable is most similar to which of the following accounts used by business enterprises?

A)contributed capital
B)accounts payable
C)dividends payable
D)unearned revenues

Question 30

Under the modified accrual basis of accounting

A)expenditures are recognized when paid in cash if not previously encumbered
B)property tax revenues are recognized when earned
C)property tax revenues are recognized when measurable and available
D)encumbrances are equivalent to expenditures

Question 31

The accounting and financial reporting for the General Fund is least similar to that of a

A)capital projects fund
B)debt service fund
C)pension trust fund
D)special revenue fund

Question 32

On January 1,2009,a city adopted a budget wherein estimated revenues were $30,000 greater than the appropriations.Because of a slowdown in the economy,it became apparent in June that there would be a shortfall of $25,000 in sales tax collections.The city amended its budget to take account of the reduction in estimated sales tax collections.What entry should the city make?

A)debit sales tax revenues and credit estimated revenues - sales tax for $25,000
B)debit appropriations and credit estimated revenues - sales tax for $25,000
C)debit estimated revenues - sales tax and credit sales tax revenues for $25,000
D)debit budgetary fund balance and credit estimated revenues - sales tax for $25,000

Question 33

A favorable expenditures variance signifies that,during the year,

A)Unassigned fund balance increased
B)actual spending was less than budgeted spending
C)estimated revenues were less than actual revenues
D)total expenditures did not exceed total encumbrances

Question 34

If the Budgetary fund balance account was debited when the budget was recorded in the City of Mustangville's General Fund,then

A)appropriations exceed estimated revenues
B)actual expenditures exceed appropriations
C)estimated revenues exceed appropriations
D)appropriations exceed actual revenues

Question 35

Within a city's General Fund,which source of revenues is least likely to be accrued in advance of receipt in cash?

A)building inspection fees
B)property taxes
C)interest on investments
D)sales taxes

Question 36

Which of the following financial statements normally are prepared for a Special Revenue Fund?

Question 37

Which of the following basis of accounting should be used when preparing a budgetary comparison schedule for a government's General Fund?

A)budgetary basis of accounting
B)accrual basis of accounting
C)modified accrual basis of accounting
D)GASB recommends the accrual basis of accounting be used,but does not require it.

Question 38

At the beginning of the year,a town adopted a budget based on estimated revenues of $1,800,000 and appropriations of $1,780,000.Because of an emergency late in the year,the town found it necessary to increase the sanitation department appropriation by $8,000.What entry should the town make to record the emergency appropriation?

A)debit estimated revenues;credit appropriations for $8,000
B)debit appropriations;credit budgetary fund balance for $8,000
C)debit budgetary fund balance;credit appropriations for $8,000
D)debit appropriations;credit estimated revenues for $8,000

Question 39

In governmental accounting,expenditures are

A)equal to expenses minus depreciation
B)incurred for operating purposes,capital acquisitions,and debt service
C)equal to encumbrances plus appropriations
D)incurred to generate revenue in order to promote the well-being of the citizens