Question 1

A city is the recipient of a cash bequest of $500,000 that must be used to plant flowers and shrubs in the city parks.During the year only $200,000 is actually received from the bequest and $150,000 is spent on shrubs.The amount that should be recognized as revenue by the city in its government-wide financial statements in the current year is

Accepted Answer

A)  $-0-.
B)  $150,000.
C)  $200,000.
D)  $500,000. C

Question 2

As used in defining the modified accrual basis of accounting, the term "available" means

Accepted Answer

A)  received in cash.
B)  will be received in cash within 60 days after year-end.
C)  collection in cash is reasonably assured.
D)  collected within the current period or expected to be collected soon enough thereafter to be used to pay liabilities of the current period. D

Question 3

A city with a 12/31 fiscal year-end requires that restaurants buy a license, renewable yearly.Proceeds of the license fees are intended to pay the salaries of inspectors in the health department.Licenses are issued for a fiscal year from October 1 to September 30.During 2014, cash collections related to licenses were as follows  It is anticipated that during 2015 the amount collected on licenses for the 10/1/14-9/30/15 fiscal year will be $45.In September 2013 the amount collected related to 10/1/13-9/30/14 licenses was $144.What amount should be recognized as revenue in the fund financial statements for the fiscal year ended 12/31/14?

Accepted Answer

A)  $180.
B)  $183.
C)  $210.
D)  $225. C

Question 4

Taxes that are imposed on the reporting government's citizens are considered general revenues, even if they are restricted to specific programs.

Accepted Answer

A) True 
 B)False

Question 5

Under the modified accrual basis of accounting, license fees, permits, and other miscellaneous revenue are generally recognized for practical purposes

Accepted Answer

A)  when cash is received.
B)  when the exchange takes place.
C)  over the period during which the government obtains an enforceable legal claim.
D)  when related expenditures are incurred.

Question 6

A city levies a 2 percent sales tax that is collected for them by the state.Sales taxes must be remitted by the merchants to the state by the twentieth day of the month following the month in which the sale occurred.The state has a policy of remitting sales taxes to the city within 30 days of collection by the state.Cash received by the state related to sales taxes is as follows:  Assuming the city uses the same period to define "available" as the maximum period allowable for property taxes, what amount should it recognize as sales tax revenue in its government-wide financial statements for the fiscal year ended 12/31/14?

Accepted Answer

A)  $430.
B)  $530.
C)  $540.
D)  $550.

Question 7

During 2014, a state has the following cash collections related to state income taxes  Assuming that the state defines "available" as the maximum period allowable for property taxes, what is the amount of revenue that will be recognized in the 2014 government-wide financial statements related to state income taxes?

Accepted Answer

A)  $400.
B)  $475.
C)  $430.
D)  $465.

Question 8

During 2014, the city issued $300 in fines for failure to keep real property in 'acceptable' condition.During that period the city spent $200 to mow and clean up the unoccupied properties for which the fines were assessed.The city estimates that $30 of the fines issued in 2014 will be uncollectible.During 2014 the city collected $230 related to 2014 fines and $20 related to 2013 fines.The amount of revenue that the city should recognize in its 2014 governmental fund financial statements related to fines is

Accepted Answer

A)  $230.
B)  $250.
C)  $270.
D)  $300.

Question 9

Reimbursement-type grant revenues are recognized in the accounting period in which

Accepted Answer

A)  the award is made.
B)  the cash is received.
C)  the grantee is notified of the award.
D)  expenditures are recorded on grant-related activities.

Question 10

Under the accrual basis of accounting used by governments, investment revenues for the current period should include

Accepted Answer

A)  only interest and dividends received.
B)  all interest and dividends received during the period plus all accruals of interest and dividends earned.
C)  all interest and dividends received plus gains and losses on securities that were sold during the period.
D)  all interest and dividends received, all gains and losses on securities sold, and all changes in market values on securities held in the portfolio at year-end.

Question 11

If an entity elects to focus on all economic resources, then it should adopt a modified accrual basis of accounting.

Accepted Answer

A) True 
 B)False

Question 12

A government is the recipient of a bequest of a multi-story office building that the government intends to use as a new city hall.The building has a historical cost of $850,000; a book value in the hands of the benefactor of $700,000; and a fair value of $1,050,000.The city should recognize on its governmental fund financial statements donations revenue of

Accepted Answer

A)  $-0-.
B)  $700,000.
C)  $850,000.
D)  $1,050,000.

Question 13

The modified accrual basis of accounting is used in presenting the fund financial statements of the governmental funds because

Accepted Answer

A)  it is the superior method of accounting for the economic resources of any entity.
B)  it provides information as to the extent the entity achieved interperiod equity.
C)  it is budget oriented while facilitating comparisons among entities.
D)  it results in accounting measurements based on the substance of transactions.

Question 14

Under the modified accrual basis of accounting, gains and losses on disposal of capital assets

Accepted Answer

A)  are not recognized.
B)  are recognized when the proceeds (cash) of the sale are received (on the installment basis) .
C)  are recognized only if there is a gain.
D)  are recognized when the sale occurs, regardless of when the cash is collected.

Question 15

A wealthy philanthropist donates three buildings to H-Town.Each building has a fair market value of $5 million.The town plans to use Building 1 as a new fire station and sell Buildings 2 and 3. Building 2 is sold after year-end, but within the availability period.Building 3 fails to sell by the time the town issues the financial statements.Which of the following correctly records revenue from these donations in the governmental fund financial statements?

Accepted Answer

The answer of A wealthy philanthropist donates three buildings to...

Question 16

Under the modified accrual basis of accounting, imposed nonexchange revenues (such as fines)should be recognized

Accepted Answer

A)  when assessed.
B)  when the government has an enforceable legal claim.
C)  when collected.
D)  when the government has an enforceable legal claim and when collected within the current period or soon enough thereafter to be used to pay the liabilities of the current period.

Question 17

Under GAAP, property taxes levied in one fiscal period to finance the activities of the following fiscal period are recognized as revenue in the governmental fund financial statements

Accepted Answer

A)  in the year levied.
B)  in the year for which they are intended to finance the activities.
C)  when collected, regardless of when levied.
D)  in the year for which they are intended to finance the activities, if collected within that period or within a period no greater than 60 days after the close of the fiscal year.

Question 18

Paul City received payment of two grants from the state during its fiscal year ending September 30, 2013.Grant A can be used to cover any operating expenses incurred during fiscal 2014.Grant B can be used at any time to acquire equipment for the city's fire department.Should the city report these grants as grant revenues or deferred inflows in its governmental fund financial statements for fiscal 2013?

Accepted Answer

The answer of Paul City received payment of two grants...

Question 19

The budgetary measurement focus of governments is determined by applicable state or local laws.

Accepted Answer

A) True 
 B)False

Question 20

Under the accrual basis of accounting, property tax revenues are recognized

Accepted Answer

A)  when they are received in cash.
B)  in the year for which they were levied.
C)  in the year for which they were levied and when collection in cash is reasonably assured.
D)  when they are available to finance expenditures of the fiscal period.

Exam 4: Recognizing Revenues in Governmental Funds

As used in defining the modified accrual basis of accounting, the term "available" means

Taxes that are imposed on the reporting government's citizens are considered general revenues, even if they are restricted to specific programs.

Under the modified accrual basis of accounting, license fees, permits, and other miscellaneous revenue are generally recognized for practical purposes

Reimbursement-type grant revenues are recognized in the accounting period in which

Under the accrual basis of accounting used by governments, investment revenues for the current period should include

If an entity elects to focus on all economic resources, then it should adopt a modified accrual basis of accounting.

The modified accrual basis of accounting is used in presenting the fund financial statements of the governmental funds because

Under the modified accrual basis of accounting, gains and losses on disposal of capital assets

Under the modified accrual basis of accounting, imposed nonexchange revenues (such as fines) should be recognized

Under GAAP, property taxes levied in one fiscal period to finance the activities of the following fiscal period are recognized as revenue in the governmental fund financial statements

The budgetary measurement focus of governments is determined by applicable state or local laws.

Under the accrual basis of accounting, property tax revenues are recognized