Question 1

What are the four classes of nonexchange revenues?

Accepted Answer

The answer of What are the four classes of nonexchange...

Question 2

The modified accrual basis is a distinct system of accounting that:

Accepted Answer

A)  Differs from accrual accounting only in its failure to recognize long term assets and liabilities. 
B)  Records expenses and revenues the same as accrual accounting. 
C)  Records expenditures and fund balances. 
D)  Is equivalent to cash basis accounting

Question 3

Budgetary accounts begin each year with a zero balance and are closed at the end of each year.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following items would typically not need an encumbrance?

Accepted Answer

A)  New Building 
B)  Regular Salaries 
C)  New Computer 
D)  Office Equipment

Question 5

The legal authorization for the administrators of the governmental unit to incur liabilities during the budget period for purposes specified in the appropriations statute or ordinance and not to exceed the amount specified for each purpose is a (an):

Accepted Answer

A)  Appropriation 
B)  Encumbrance 
C)  Other financing source/use 
D)  Expenditure

Question 6

Encumbrances under modified accrual accounting are recognized when fund liabilities are incurred.

Accepted Answer

A) True 
 B)False

Question 7

With respect to reporting for the General Fund,what is the difference between GAAP basis and budgetary basis reporting?

Accepted Answer

The answer of With respect to reporting for the General...

Question 8

Assume encumbrances do not expire at year-end. $16,000 was encumbered during the prior year for a computer and the actual cost of the computer in the current year is $14,000. How does this affect unassigned fund balance?

Accepted Answer

A)  Previous Year: increase $16,000; Current Year: decrease $14,000 
B)  Previous Year: decrease $16,000; Current Year: increase $2,000 
C)  Previous Year: no effect; Current Year: decrease $14,000 
D)  Previous Year: decrease $16,000; Current Year: decrease 14,000

Question 9

The term,Fund Balance,is used to indicate the residual net position of a proprietary fund.

Accepted Answer

A) True 
 B)False

Question 10

The Village of Lake George's General Fund has the following net resources at December 31,2015
• $5,000 of prepaid insurance
• $ 25,000 of property taxes receivable - currently due and expected to be collected within 60 days
• $300,000 rainy day fund approved by the township governing board
• $82,500 of supplies inventory
• $33,000 government grant for city park maintenance
• $10,000 contractual obligations for the purchase of park fixtures
• $200,000 to be used to fund government operations in the future
Required:
 Prepare the fund balance section of the Balance Sheet

Accepted Answer

The answer of The Village of Lake George's General Fund...

Question 11

When purchase orders are filled and the invoice amount differs from the estimated amount,the amount reversed from the encumbrance account equals the invoice amount.

Accepted Answer

A) True 
 B)False

Question 12

A Fair Exchange transaction is one in which a government gives or receives value without directly receiving or giving equal value in exchange.

Accepted Answer

A) True 
 B)False

Question 13

GASB requires a reconciliation between the amount shown as GAAP expenditures in the basic financial statements and the amount shown in the budgetary comparison schedule.

Accepted Answer

A) True 
 B)False

Question 14

The journal entry to record a purchase order in the General Fund would be a debit to encumbrances control account and credit Accounts Payable

Accepted Answer

A) True 
 B)False

Question 15

The only difference between modified accrual accounting and accrual accounting is the difference in the recognition of long-term assets and liabilities.

Accepted Answer

A) True 
 B)False

Question 16

Appropriation is the legal authorization for administrators of governmental unit to incur liabilities for purposes specified and to not exceed the amount specified.

Accepted Answer

A) True 
 B)False

Question 17

Governments may create special revenue funds whenever a tax or other revenue source is legislated to be used for a specific purpose,other than capital assets or debt service.

Accepted Answer

A) True 
 B)False

Question 18

The purpose of an encumbrance is to prevent governments from:

Accepted Answer

A)  Overriding Unauthorized Contracts 
B)  Spending in Excess of the Amounts Authorized 
C)  Revising the Approved Budget 
D)  Misappropriating Tax Revenues

Question 19

Examples of budgetary accounts include Estimated Revenues,Appropriations,and Estimated Other Financing Uses.

Accepted Answer

A) True 
 B)False

Question 20

What is the difference between an exchange and a nonexchange transaction?

Accepted Answer

The answer of What is the difference between an exchange...

Exam 3: Modified Accrual Accounting: Including the Role of Fund Balances and Budgetary Authority

What are the four classes of nonexchange revenues?

The modified accrual basis is a distinct system of accounting that:

Budgetary accounts begin each year with a zero balance and are closed at the end of each year.

Which of the following items would typically not need an encumbrance?

The legal authorization for the administrators of the governmental unit to incur liabilities during the budget period for purposes specified in the appropriations statute or ordinance and not to exceed the amount specified for each purpose is a (an) :

Encumbrances under modified accrual accounting are recognized when fund liabilities are incurred.

With respect to reporting for the General Fund,what is the difference between GAAP basis and budgetary basis reporting?

Assume encumbrances do not expire at year-end. $16,000 was encumbered during the prior year for a computer and the actual cost of the computer in the current year is $14,000. How does this affect unassigned fund balance?

The term,Fund Balance,is used to indicate the residual net position of a proprietary fund.

When purchase orders are filled and the invoice amount differs from the estimated amount,the amount reversed from the encumbrance account equals the invoice amount.

A Fair Exchange transaction is one in which a government gives or receives value without directly receiving or giving equal value in exchange.

GASB requires a reconciliation between the amount shown as GAAP expenditures in the basic financial statements and the amount shown in the budgetary comparison schedule.

The journal entry to record a purchase order in the General Fund would be a debit to encumbrances control account and credit Accounts Payable

The only difference between modified accrual accounting and accrual accounting is the difference in the recognition of long-term assets and liabilities.

Appropriation is the legal authorization for administrators of governmental unit to incur liabilities for purposes specified and to not exceed the amount specified.

Governments may create special revenue funds whenever a tax or other revenue source is legislated to be used for a specific purpose,other than capital assets or debt service.

The purpose of an encumbrance is to prevent governments from:

Examples of budgetary accounts include Estimated Revenues,Appropriations,and Estimated Other Financing Uses.

What is the difference between an exchange and a nonexchange transaction?