Question 1

At the end of the 2020 fiscal year the General Fund had $500 in encumbrances that remained opened into fiscal year 2021. In 2021 the encumbered goods were received at an invoiced cost of $520. How much would be recorded as the 2021 expenditure?

Accepted Answer

A)  $0. 
B)  $20. 
C)  $500. 
D)  $520.

Question 2

The City of Burlington borrowed $350,000 via a tax anticipation note.  If the city repaid the note three months later, the General Fund entry to record the repayment and interest of $2,750 will include

Accepted Answer

A)  A debit to Tax Anticipation Notes Payable for $350,000. 
B)  A debit to Expenditures for $352,750. 
C)  A debit to Expenditures for $2,750. 
D)  A debit to Tax Anticipation Notes Payable for $350,000 and a debit to Expenditures for $2,750.

Question 3

Budgetary entries are not recorded at the government-wide level.

Accepted Answer

A) True 
 B)False

Question 4

Estimated uncollectible tax amounts are recorded in the General Fund general journal as a reduction in revenues and in the governmental activities journal as a bad debt expense.

Accepted Answer

A) True 
 B)False

Question 5

The governmental funds operating statement presents all of the following except

Accepted Answer

A)  Expenditures. 
B)  Other financing sources. 
C)  Revenues. 
D)  Encumbrances.

Question 6

The following transactions occurred for the City of Fontaine's General Fund.
1. The budget prepared for the fiscal year included Total estimated revenues of $2,774,000 and appropriations of $2,693,000.
2. Encumbrances issued against the appropriations during the year were $931,000.
3. The current year's tax levy of $2,005,000 was recorded; uncollectibles were estimated as $65,000.
4. Collections of delinquent taxes from prior years' levies totaled $132,000; collections of the current year's levy totaled $1,459,000.
5. Invoices were received and approved for payment for items ordered in documents recorded as encumbrances in Transaction (2) of this problem. The estimated liability was $851,200. Actual costs were $850,500.
6. Revenue other than taxes collected during the year consisted of licenses and permits, $373,000; intergovernmental revenue, $400,000; and $66,000 of miscellaneous revenues.
7. Payments on Vouchers Payable totaled $1,505,000.
Prepare the journal entry. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Accepted Answer

The answer of The following transactions occurred for the City...

Question 7

Under the consumption method for recording supplies that are maintained on a perpetual inventory system, the adjusting entry made at year end would affect which of the following accounts?

Accepted Answer

A)  Fund Balance-Nonspendable-Inventory of Supplies. 
B)  Fund Balance-Restricted-Inventory of Supplies. 
C)  Expenditures. 
D)  Inventory of Supplies.

Question 8

Which of the following transactions is classified as an exchange transaction?

Accepted Answer

A)  Property taxes. 
B)  Fees charged by a municipal airport. 
C)  Bequest left to the city by a wealthy citizen. 
D)  State grant to conduct an after school program for children.

Question 9

Which of the following best describes the proper treatment for uncollectible amounts of taxes?

Accepted Answer

A)  Report as bad debt expense. 
B)  Report as deferred inflows of resources. 
C)  Report as bad debt expenditures. 
D)  Report receivables net of uncollectible amounts.

Question 10

Under the modified accrual basis of accounting applicable to governmental fund types, property tax revenue is accrued and recorded at net realizable value.

Accepted Answer

A) True 
 B)False

Question 11

At the end of the fiscal year, the purchases method of recording inventory adjusts the Expenditures account to reflect the amount of inventory actually used during the period.

Accepted Answer

A) True 
 B)False

Question 12

During fiscal year 2020, the Town of Tonawanda issued purchase orders to various vendors in the amounts shown for the following functions of the town:
  
All goods ordered during the year were received at the following actual costs:
  
a. Prepare a summary journal entry in the General Fund general journal to record the issuance of purchase orders during fiscal year 2020. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
b. Prepare summary journal entries in the General Fund general journal to record the receipt of and payment for goods during fiscal year 2020. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

Accepted Answer

The answer of During fiscal year 2020, the Town of...

Question 13

Governments that are temporarily short of cash but that have levied taxes expected to be collectible during the fiscal year are generally able to borrow on short-term notes known as "tax anticipation notes payable."

Accepted Answer

A) True 
 B)False

Question 14

Under the modified accrual basis of accounting, revenues should be recognized when

Accepted Answer

A)  Realizable. 
B)  Earned. 
C)  Available. 
D)  Spent.

Question 15

When equipment is ordered by a department of the government, the purchase order should be recorded in the General Fund as a debit to:

Accepted Answer

A)  Appropriations. 
B)  Equipment. 
C)  Encumbrances. 
D)  Expenditures.

Question 16

Property taxes due and collectible 90 days after the 2020 fiscal year end would be recorded as revenues in 2020 in which journal?

A-

B-

C-

D-

Accepted Answer

A)  Choice A. 
B)  Choice B. 
C)  Choice C. 
D)  Choice D.

Question 17

The voters of the city passed an ordinance to increase their sales tax by 1/4 percent. The proceeds of the sales tax are to be used for culture and recreation. In the governmental activities journal, how would the 1/4 percent sales tax revenue be recorded?

Accepted Answer

A)  Program Revenue-Culture and Recreation-Sales Tax. 
B)  Program Revenue-Culture and Recreation-Operating Grants and Contributions. 
C)  General Revenue-Sales Tax. 
D)  General Revenue-Culture and Recreation-Sales Tax.

Question 18

The city's electric utility fund sent $700,000 to the General Fund to help cover the city's operating costs. This transaction would be recorded in the governmental activities journal as

Accepted Answer

A)  Interfund transfer in. 
B)  Internal balance. 
C)  Revenue. 
D)  It would not be recorded since the transaction involves two funds of the same government.

Question 19

If state law requires that local governments prepare General Fund and special revenue fund budgets on a basis that differs from the basis of accounting required by GAAP, then the budgetary comparison schedule or statements should

Accepted Answer

A)  Not be included as part of the basic financial statements. 
B)  Be included with the actual figures presented on the budget basis and then reconciled to the GAAP basis. 
C)  Be included with budget figures and actual figures adjusted to the GAAP basis. 
D)  Be included as part of management's discussion and analysis (MD&
A) .

Question 20

In fiscal year 2020 the "Expenditures-2019" account represents

Accepted Answer

A)  Excess expenditures in 2019 that will be offset against appropriations for 2020. 
B)  Goods or services received in 2019 which the government has no record of ordering. 
C)  Amount of expenditures for goods ordered in 2019 that were received in 2020 and chargeable to appropriations of 2019. 
D)  The amounts of purchase orders issued in 2019 that were intended to be paid in full from appropriations for 2020.

Exam 4: Accounting for Governmental Operating Activities–Illustrative Transactions and Financial Statements

At the end of the 2020 fiscal year the General Fund had $500 in encumbrances that remained opened into fiscal year 2021. In 2021 the encumbered goods were received at an invoiced cost of $520. How much would be recorded as the 2021 expenditure?

The City of Burlington borrowed $350,000 via a tax anticipation note. If the city repaid the note three months later, the General Fund entry to record the repayment and interest of $2,750 will include

Budgetary entries are not recorded at the government-wide level.

Estimated uncollectible tax amounts are recorded in the General Fund general journal as a reduction in revenues and in the governmental activities journal as a bad debt expense.

The governmental funds operating statement presents all of the following except

Under the consumption method for recording supplies that are maintained on a perpetual inventory system, the adjusting entry made at year end would affect which of the following accounts?

Which of the following transactions is classified as an exchange transaction?

Which of the following best describes the proper treatment for uncollectible amounts of taxes?

Under the modified accrual basis of accounting applicable to governmental fund types, property tax revenue is accrued and recorded at net realizable value.

At the end of the fiscal year, the purchases method of recording inventory adjusts the Expenditures account to reflect the amount of inventory actually used during the period.

Governments that are temporarily short of cash but that have levied taxes expected to be collectible during the fiscal year are generally able to borrow on short-term notes known as "tax anticipation notes payable."

Under the modified accrual basis of accounting, revenues should be recognized when

When equipment is ordered by a department of the government, the purchase order should be recorded in the General Fund as a debit to:

Property taxes due and collectible 90 days after the 2020 fiscal year end would be recorded as revenues in 2020 in which journal? A- B- C- D-

The voters of the city passed an ordinance to increase their sales tax by 1/4 percent. The proceeds of the sales tax are to be used for culture and recreation. In the governmental activities journal, how would the 1/4 percent sales tax revenue be recorded?

The city's electric utility fund sent $700,000 to the General Fund to help cover the city's operating costs. This transaction would be recorded in the governmental activities journal as

If state law requires that local governments prepare General Fund and special revenue fund budgets on a basis that differs from the basis of accounting required by GAAP, then the budgetary comparison schedule or statements should

In fiscal year 2020 the "Expenditures-2019" account represents