Question 1

Under the modified accrual basis, revenues are considered susceptible to accrual if

Accepted Answer

A)   Available to finance current period expenditures.
B)   Objectively measurable.
C)   Collected during the current period.
D)   Both available to finance current period expenditures and objectively measurable. D

Question 2

GASB Statement No.31 requires the following investments to be recorded at fair value except

Accepted Answer

A)   Participating interest-earning investment contracts.
B)   Equity securities with readily determinable fair values.
C)   Debt securities.
D)   Nonparticipating interest-earning investment contracts. D

Question 3

The county received a $1,500,000 restricted grant from the state government to be used to improve its public safety department's communication systems. The county has met all eligibility requirements of the grant. In the current year, the General Fund should report this grant as

Accepted Answer

A)   Other financing sources.
B)   Deferred revenues.
C)   Revenues.
D)   Unearned revenues. C

Question 4

A county anticipated that $6,500 of discounts would be taken on their initial tax levy. Which of the following statements is true if discounts were less than anticipated?

Accepted Answer

A)   Revenues would be increased.
B)   Revenues would be decreased.
C)   Expenditures would be decreased.
D)   Expenditures would be increased.

Question 5

All of the following are examples of intergovernmental revenues except

Accepted Answer

A)   Amounts to which a government is entitled as determined by the federal government pursuant to an allocation formula contained in a federal statute.
B)   Revenues levied by a state government but shared on a predetermined basis with other governments.
C)   Interest earned on investments in bonds issued by other governments.
D)   Cash contributions received from another government to be used for a specified purpose.

Question 6

The county received a $75,000 payment in lieu of taxes from the water Enterprise Fund. The Enterprise Fund receives no service from the county for this payment. The General Fund should report the payment in

Accepted Answer

A)   Other financing sources - transfer.
B)   Interfund charges.
C)   Revenues.
D)   Special item.

Question 7

A city collected $750,000 of taxes levied during the current fiscal year the total levy was $780,000, $50,000 of past due taxes levied in a previous year, and $25,000 of prepayments for next year's taxes. The city should report tax revenue in the General Fund of

Accepted Answer

A)   $750,000.
B)   $800,000.
C)   $825,000.
D)   $855,000.

Question 8

In Year 1, a county levied $1,500,000 of property taxes and collected $1,400,000 of that levy; in Year 2, the levy was $1,550,000 and the related collections totaled $1,495,000; in Year 3, the levy was $1,575,000 and the related collections totaled $1,530,000. Also, collections of past due taxes in Years 1, 2, and 3 were $15,000, $14,000, and $19,000, respectively. Assuming that the General Fund's deferred revenue at the beginning of Year 1 was $410,000, what would deferred revenue be as of the end of Year 3?

Accepted Answer

A)   $362,000.
B)   $562,000.
C)   $610,000.
D)   $658,000.

Question 9

Which of the following statements regarding tax revenue recognition in the General Fund is false?

Accepted Answer

A)   Tax revenues may be recorded when the tax is levied.
B)   Governments may choose to recognize tax revenue as it becomes available, not when it is initially levied.
C)   Tax revenues are generally recorded at gross amounts of the levy, regardless of expected collections.
D)   Tax revenues are generally recorded net of the allowance for uncollectibles.

Question 10

A government received $30,000 of interest on investments of its General Fund during the year. The fair value of its investments increased by $3,500 during the year. In its General Fund statement of revenues, expenditures, and changes in fund balance the government should report

Accepted Answer

A)   Investment income of $30,000 as revenues and the increase in the fair value of investments of $3,500 as an other financing source.
B)   Investment income of $33,500 as revenues.
C)   Investment income of $33,500 as an other financing source.
D)   Investment income of $30,000 as revenues and disclose the increase in the fair value of investments in the notes to the financial statements.

Question 11

A government allows discounts on taxes if payments are made within two months of the levy date. How does the government account for the discounts as they are being taken?

Accepted Answer

A)   Allowance for discounts is debited for the amount of the discounts taken.
B)   Expenditures are debited for the amount of the discounts taken.
C)   Revenue is debited for the amount of the discounts taken.
D)   Allowance is credited for the discount and is recorded at the time the discount is taken.

Question 12

The Ruby Falls Independent School District receives significant payments in lieu of taxes from the federal government to reimburse the district for lost revenues because a military base, which is not subject to property tax, is within the district's boundaries. These payments should be reported as

Accepted Answer

A)   Other financing sources - transfer.
B)   Revenue.
C)   An extraordinary item.
D)   A special item.

Question 13

A government levies property taxes and awards discounts for timely payment. How should the government report discounts that it expects will be taken?

Accepted Answer

A)   Report as expenditures in the year the taxes are levied.
B)   Report as expenditures in the year the discounts are awarded for early payments received.
C)   Report as other financing uses.
D)   Deduct from the amount of taxes levied to determine property tax revenues.

Question 14

The county received a $1,500,000 restricted grant from the state government to be used to improve its public safety department's communication systems. The county will not meet all eligibility requirements of the grant until next fiscal year, when the county plans to begin incurring expenditures for this purpose. In the current year, the General Fund should report this grant as

Accepted Answer

A)   Other financing sources.
B)   Deferred revenues.
C)   Revenues.
D)   Unearned revenues.

Question 15

Pass-through grants are accounted for

Accepted Answer

A)   Only in Agency Funds.
B)   By increasing or decreasing governmental fund assets and liabilities to reflect the agency relationship-no revenues are reported in the governmental fund.
C)   As revenues and expenditures or expenses in the appropriate fund of the pass-through entity primary recipient.
D)   As other financing sources and other financing uses in the appropriate fund of the pass-through entity primary recipient.

Question 16

Inactive bank accounts that revert to the state after a period of time should be

Accepted Answer

A)   Reported at their full fair value as liabilities of the government.
B)   Recognized as revenue-net of any amounts expected to be claimed by heirs.
C)   Reported as unearned revenue.
D)   Reported in a special revenue fund.

Question 17

If a city receives notification of a grant award and the actual proceeds sixty days prior to the start of the grant period, the entry to record the grant in the Special Revenue Fund would be

Accepted Answer

A)   A debit to grants receivable and a credit to grants revenue.
B)   A debit to cash and a credit to grants revenue.
C)   A debit to grants receivable and a credit to unearned revenue.
D)   A debit to cash and a credit to unearned revenue.

Question 18

If an expenditure was inadvertently charged to the General Fund instead of the appropriate Special Revenue Fund, what effect would the correction of this error later in the same fiscal year have on the General Fund?

Accepted Answer

A)   An entry would be made directly to the General Fund's fund balance to correct the error.
B)   Revenues would be increased.
C)   Expenditures would be decreased.
D)   Transfers in would be increased.

Question 19

Assume the following transactions occurred in a school district General Fund during the year: 
-Charges for services collected - $25,000
-Taxes levied - $2,450,000
-Taxes collected from current year levy and prior year tax levies - $2,320,000
-Tax prepayments received - $10,000
-Grants earned and received during the year - $300,000
-Grants awarded but not yet available - $250,000
The amount of revenues recorded in the General Fund for the year would be

Accepted Answer

A)   $2,895,000.
B)   $2,655,000.
C)   $2,645,000.
D)   $2,450,000.

Question 20

Assume that a general capital asset was sold for $2,500. The asset was originally purchased for $10,000 and has been in use for 3 years. It has an estimated life of 5 years. What entry would be made in the General Fund to reflect this sale?

Accepted Answer

The answer of Assume that a general capital asset was...

Exam 5: Revenue Accountinggovernmental Funds