Question 1

The City of Ames uses the consumption method to report its inventory of supplies on its general fund balance sheet.What account is debited in the general fund when Ames acquires supplies?

Accepted Answer

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

Question 2

Which of the following funds are classified as proprietary funds?

Accepted Answer

A) Agency and special revenue funds. 
B) Enterprise and internal service funds. 
C) Debt service and capital projects funds. 
D) Agency and pension trust funds.

Question 3

At the end of the fiscal year,uncollected property taxes in the general fund should be:

Accepted Answer

A) reclassified from current to delinquent. 
B) written off as uncollectible. 
C) charged against unassigned fund balance. 
D) reclassified from current to noncurrent.

Question 4

Which of the financial statements described below is prepared by the general fund of a state or local government?

Accepted Answer

A) A statement of cash flows. 
B) An income statement. 
C) A statement of revenues,expenses,and changes in retained earnings. 
D) A statement of revenues,expenditures,and changes in fund balance.

Question 5

Which of the following characteristics are emphasized in the accounting for state and local government entities?
I.Revenues should be matched with expenditures to measure success or failure of the government entity.
II.There is an emphasis on expendability of resources to accomplish objectives of the governmental entity.

Accepted Answer

A) I only 
B) II only 
C) I and II 
D) Neither I nor II

Question 6

Gotham City acquires $25,000 of inventory on November 1,20X7,having held no inventory previously.On December 31,20X7,the end of Gotham City's fiscal year,a physical count shows $8,000 still in stock.During 20X8,$6,500 of this inventory is used,resulting in a $1,500 remaining balance of supplies on December 31,20X8.
-Based on the preceding information,which of the following would be the correct account balances for 20X7 if Gotham City used the purchase method of accounting for inventories?

Accepted Answer

A) Option A 
B) Option B 
C) Option C 
D) Option D

Question 7

In a statement of revenues,expenditures,and changes in fund balance,the unassigned fund balance will be increased by:
I.a decrease in the fund balance-Nonspendable.
II.an excess of other financing sources over other financing uses.

Accepted Answer

A) I only 
B) II only 
C) Both I and II 
D) Neither I nor II

Question 8

The general fund of Richmond was billed $22,000 on August 15,20X8,for using the services of one of its internal service funds (ISF).What accounts should be debited and credited,respectively,in the general fund on August 15,20X8,to record this transaction?

Accepted Answer

A) Expenditures and Transfer Out to ISF 
B) Expenditures and Due to ISF 
C) Encumbrances and Due to ISF 
D) Encumbrances and Transfer Out to ISF

Question 9

The general fund of Park City acquired computer equipment at a cost of $50,000 on May 18,20X9.To record acquisition of this equipment,the general fund of Park City should debit:

Accepted Answer

A) expenditures. 
B) encumbrances. 
C) equipment. 
D) vouchers payable.

Question 10

Accounting processes differ between a for-profit entity and a governmental entity.Discuss three differences between a governmental entity and a for-profit entity.

Accepted Answer

The answer of Accounting processes differ between a for-profit entity...

Question 11

What is the correct sequence in the expenditure process in governmental accounting?

Accepted Answer

A) Appropriation,Encumbrance,Expenditure,and Disbursement. 
B) Encumbrance,Expenditure,Disbursement,and Appropriation. 
C) Expenditure,Encumbrance,Disbursement,and Appropriation. 
D) Appropriation,Expenditure,Encumbrance,and Disbursement.

Question 12

In a town's general fund operating budget for the year,the amount of its estimated revenues exceeded the amount of its appropriations.This excess should be:

Accepted Answer

A) credited to Budgetary Fund Balance-Unassigned. 
B) debited to Budgetary Fund Balance-Unassigned. 
C) credited to Fund Balance-Unassigned. 
D) debited to Fund Balance-Unassigned.

Question 13

Blue Ridge Township uses the consumption method of accounting for its inventory of supplies.On the December 31,20X7 balance sheet for the general fund,the township reported $10,000 of supplies inventory.During 20X8,expenditures for supplies amounted to $40,000,and,at December 31,20X8,unused supplies totaled $7,000.In the adjusting entry for supplies at December 31,20X8,

Accepted Answer

A) Expenditures should be credited for $3,000. 
B) Expenditures should be debited for $3,000. 
C) Fund Balance-Nonspendable should be debited for $7,000. 
D) Fund Balance-Nonspendable should be credited for $7,000.

Question 14

Which governmental fund includes resources that are legally restricted so that the governmental entity must maintain the principal and can use only the earnings from the fund's resources to benefit the government's programs for all of its citizens?

Accepted Answer

A) General fund 
B) Special revenue fund 
C) Capital projects fund 
D) Permanent fund

Question 15

Which of the following funds provides goods and services only to other departments or agencies of the government on a cost-reimbursement basis?

Accepted Answer

A) Internal service funds 
B) Enterprise funds 
C) Special revenue funds 
D) The general fund

Question 16

The general fund of the City of Atlanta received a check for $10,000 from an Atlanta resident on July 1,20X8.Of the amount received,$4,800 represented full payment of property taxes for 20X8,and the remaining $5,200 represented an advance payment for property taxes of 20X9.On July 1,20X8,the general fund should record the receipt by debiting Cash for $10,000 and by crediting

Accepted Answer

A) Revenue-Property Tax for $10,000. 
B) Property Taxes Receivable-Current for $4,800 and Deferred Revenue for $5,200. 
C) Revenue-Property Tax for $4,800 and Deferred Revenue for $5,200. 
D) Property Taxes Receivable-Current for $4,800 and Revenue- Property Tax for $5,200.

Question 17

The general fund of Gillette levied property taxes of $400,000 on November 1,20X8.However,the property taxes are not collectible until May and August of 20X9.Assume Gillette reports on the calendar year.On Gillette's general fund balance sheet at December 31,20X8,the property taxes levied on November 1 should:

Accepted Answer

A) be reported as an asset and as a decrease in unassigned fund balance. 
B) be reported as an asset and as an increase in unassigned fund balance. 
C) be reported as an asset and as a reservation of fund balance. 
D) be reported as an asset and as a deferred revenue.

Question 18

Which organization has the authority to establish generally accepted accounting principles for state and local government entities?

Accepted Answer

A) The National Council on Governmental Accounting 
B) The Governmental Accounting Standards Board 
C) The Financial Accounting Standards Board 
D) The Municipal Officers Finance Organization

Question 19

The general fund of Wold Township ordered office furniture for the mayor's office on August 1,20X8.The office furniture was estimated to cost $12,000.The office furniture was received on September 1,20X8,with the actual cost being $11,800.Which of the following accounts decreased on September 1,20X8?

Accepted Answer

A) Encumbrances only. 
B) Expenditures only. 
C) Encumbrances and Budgetary Fund Balance-Assigned for Encumbrances. 
D) Expenditures and Budgetary Fund Balance-Assigned for Encumbrances.

Question 20

Which of the following observations concerning interfund transfers is true?

Accepted Answer

A) They are expected to be repaid. 
B) They are classified as fund revenues or expenditures. 
C) The receiving fund recognizes these transfers as revenue. 
D) These transfers are classified under "Other Financing Sources or Uses."

Exam 17: Governmental Entities: Introduction and General Fund Accounting