Question 1

The following events take place:
1.Interest payments in the amount of $20,000 that are the responsibility of the Debt Service Fund are paid by the General Fund.
2.The Internal Service Fund bills the Special Revenue Fund $25,000 for services performed.
3.The Special Revenue Fund transfers $10,000 to the Internal Service Fund as a temporary loan.
4.The General Fund transfers $150,000 to start an Internal Service Fund.
Required:
Identify the interfund activity as a loan,services provided and used,interfund transfer,or interfund reimbursement and prepare entries in general journal form to record the transactions on the records of the fund involved.

Accepted Answer

The answer of The following events take place:
1.Interest payments in...

Question 2

For state and local government units,the full accrual basis of accounting should be used for what type of fund?

Accepted Answer

A)  Special revenue
B)  General
C)  Debt service
D)  Internal service D

Question 3

One of the differences between accounting for a governmental unit and a commercial unit is that a governmental unit should:

Accepted Answer

A)  not record depreciation expense in any of its funds.
B)  always establish and maintain complete self-balancing accounts for each fund.
C)  use only the cash basis of accounting.
D)  use only the modified accrual basis of accounting. B

Question 4

Which of the following funds frequently does NOT have a fund balance?

Accepted Answer

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

Question 5

The following transactions take place:
1.On January 1,the city issued 9% general obligation bonds with a face value of $4,000,000 payable in 10 years to finance the construction of city offices.Total proceeds were $4,500,000.
2.On December 20,construction was completed and occupancy taken of the city offices.The full cost of $3,900,000 was paid to the contractor,and appropriate closing entries were made with regard to the project.
3.The General Fund repaid the Special Revenue Fund a loan of $15,000 plus $900 in interest on the loan.
Required:
Prepare entries in general journal form to record these transactions in the proper fund(s).Designate the fund in which each entry is recorded.

Accepted Answer

The answer of The following transactions take place:
1.On January 1,the...

Question 6

The general fund trial balance for Model City held the following balances at June 30,2014,just before closing entries were made:
  Required:
Prepare the necessary closing entries.

Accepted Answer

The answer of The general fund trial balance for Model...

Question 7

Part of the general obligation bond proceeds from a new issuance was used to pay for the cost of a new city hall as soon as construction was completed.The remainder of the proceeds was transferred to repay the debt.Entries are needed to record these transactions in the:

Accepted Answer

A)  general fund and capital projects fund.
B)  general fund and debt-service fund.
C)  trust fund and debt-service fund.
D)  debt-service fund and capital projects fund.

Question 8

Which of the following funds of a governmental unit recognizes revenues and expenditures under the same basis of accounting as the general fund?

Accepted Answer

A)  Debt service
B)  Enterprise
C)  Internal service
D)  Nonexpendable trust

Question 9

When a truck is received by a governmental unit,it should be recorded in the General Fund as a(n):

Accepted Answer

A)  appropriation.
B)  encumbrance.
C)  expenditure.
D)  fixed asset.

Question 10

A nonrecurring contribution from the General Fund to the Enterprise Fund is an example of an interfund:

Accepted Answer

A)  reimbursement.
B)  transfer.
C)  services provided and used.
D)  loan.

Question 11

Which of the following funds would account for operations that are financed and operated in a manner similar to private business enterprises?

Accepted Answer

A)  Debt Service Fund
B)  Enterprise Fund
C)  Internal Service Fund
D)  Special Revenue Fund

Question 12

There are eleven categories of government fund entities that fall under three subheadings.What are the subheadings of government fund entities? What are the main characteristics that set these three subheadings apart?

Accepted Answer

The answer of There are eleven categories of government fund...

Question 13

Encumbrances would NOT appear in which fund?

Accepted Answer

A)  General
B)  Enterprise
C)  Capital projects
D)  Special revenue

Question 14

Repayments from the funds responsible for a particular expenditure to the funds that initially paid for them are interfund:

Accepted Answer

A)  loans.
B)  services provided and used.
C)  transfers.
D)  reimbursements.

Question 15

Fixed assets and noncurrent liabilities are accounted for in the records of:

Accepted Answer

A)  governmental funds
B)  expendable funds
C)  proprietary funds
D)  both governmental and expendable funds.

Question 16

Which of the following is NOT a budgetary account?

Accepted Answer

A)  Appropriations
B)  Estimated Revenues
C)  Encumbrances
D)  Reserve for Encumbrances

Question 17

Revenues of a special revenue fund of a governmental unit should be recognized in the period in which the:

Accepted Answer

A)  revenues become available and measurable.
B)  revenues become available and appropriated.
C)  revenues are billable.
D)  cash is received.

Question 18

The activities of a central computer facility should be accounted for in the:

Accepted Answer

A)  General Fund.
B)  Internal Service Fund.
C)  Enterprise Fund.
D)  Capital Projects Fund.

Question 19

All of the following are Governmental (Expendable)Fund Entities EXCEPT the:

Accepted Answer

A)  Capital Projects Fund.
B)  Debt Service Fund.
C)  Internal Service Fund.
D)  Special Revenue Fund.

Question 20

An interfund transfer should be reported in a governmental fund operating statement as a(n):

Accepted Answer

A)  due from (to) other funds
B)  other financing source (use) 
C)  revenue or expenditure
D)  none of these

Exam 18: Introduction to Accounting for State and Local Governmental Units