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Question(s) / Instruction(s):

.Multiple Choice

     1.     A government would refer to its property tax calendar to determine whether property taxes receivable at any given time are
          a.     collectible in part or in full
          b.     delinquent or current
          c.     sufficient to finance planned expenditures
          d.     larger or smaller than those of the prior year


     2.     At the time a government levies the property tax, an allowance for uncollectible property taxes is established so that
          a.     probable delinquent taxpayers can be identified individually
          b.     property tax receivables are carried at net realizable value
          c.     an expenditure for bad debts is recorded in the accounts
          d.     property tax revenues will exceed the total amount of the levy


     3.     A municipality uses the allowance method to record uncollectible property taxes. If it decides to write off an account as uncollectible, it should:
          a.     debit bad debts expenditures; credit allowance for uncollectible property taxes
          b.     debit allowance for uncollectible property taxes; credit property taxes receivable
          c.     debit allowance for uncollectible property taxes; credit property tax revenues
          d.     debit property tax revenues; credit property taxes receivable

 

     4.     If a taxpayer fails to pay his property taxes on time and the city intends to foreclose the property, what accounting entry should the city make?
          a.     write off the property tax receivable as uncollectible
          b.     reduce property tax revenues by the amount of the receivable
          c.     reclassify the property tax receivable account to a delinquent receivable account
          d.     reclassify the property tax receivable account to a tax lien receivable account


     
     5.     A property owner receives a property tax bill for $4,000 and appeals the assessment. Before he pays the bill, the city reduces his property tax to $3,000. If the city had previously established an allowance for property tax refunds, what entry should it make to record the reduction?
          a.     Revenues - property taxes          3,000
                    Property taxes receivable               3,000
          b.     Revenues - property taxes          1,000
                    Property taxes receivable               1,000
          c.     Allowance for property tax refunds     1,000
                    Property taxes receivable               1,000
          d.     Tax liens receivable          1,000
                    Property taxes receivable               1,000


     6.     A city uses the allowance method to provide for uncollectible property taxes. At the start of the year, the city established an allowance of $100,000 for uncollectible taxes. During the year, it wrote off $80,000 as uncollectible. At year-end, the city still has some uncollected taxes, but believes it will need an allowance of only $15,000 to cover any receivables that it may need to write off as uncollectible. What adjusting entry should it make?     
          a.     revenues - property taxes           5,000                         allowance for uncollectible property taxes          5,000
          b.     revenues - property taxes          15,000
                    allowance for uncollectible property taxes          15,000
          c.     allowance for uncollectible property taxes     15,000
                    property taxes receivable                 15,000
          d.     allowance for uncollectible property taxes     5,000
                    revenues - property taxes                5,000


     7.     At the beginning of the year 2009, a town recorded General Fund property tax receivables of $600,000. By year-end (December 31), taxpayers had paid a total $575,000. Based on previous experience, the town expected to collect the $25,000 of delinquent taxes as follows: $10,000 in January and February of 2010 and $15,000 between March and August of 2010. How much should the town report as property tax revenue in its General Fund statements for the year 2009?
          a.     $585,000
          b.     $600,000
          c.     $590,000
          d.     $575,000

     

     8.     On January 1, 2009, a city recorded General Fund property tax revenues of $750,000, but made no provision for uncollectible receivables or tax refunds. During the year, it collected property taxes of $720,000, wrote off $4,000 as uncollectible, and made tax refunds of $3,000. At year-end, the city finance director concluded that $10,000 of the delinquent taxes would be collected in January and February of 2010, $12,000 would be collected later in 2010, and $1,000 would need to be written off as uncollectible. How much should the city report as property tax revenue in its General Fund financial statements for the year 2009?
          a.     $720,000
          b.     $730,000
          c.     $742,000
          d.     $713,000


     9.     Which of the following best describes the general principle for recognizing property tax revenues in the General Fund?
          a.     They should be recognized in the current period to the extent that cash is collected
          b.     They should be recognized for the entire amount levied for the current period, regardless of when they are collected in cash
          c.     They should be recognized in the current period, less appropriate allowances for uncollectible accounts, tax refunds, and discounts
          d.     They should be recognized in the current period to the extent collected and also if collected early in the following year


     10.     At the beginning of the year, a town adopted a budget based on estimated revenues of $1,800,000 and appropriations of $1,780,000. Because of an emergency late in the year, the town found it necessary to increase the sanitation department appropriation by $8,000. What entry should the town make to record the emergency appropriation?
          a.     debit estimated revenues; credit appropriations for $8,000
          b.     debit appropriations; credit budgetary fund balance for $8,000
          c.     debit budgetary fund balance; credit appropriations for $8,000
          d.     debit appropriations; credit estimated revenues for $8,000

 

 


     
     11.     On January 1, 2009, a city adopted a budget wherein estimated revenues were $30,000 greater than the appropriations. Because of a slowdown in the economy, it became apparent in June that there would be a shortfall of $25,000 in sales tax collections. The city amended its budget to take account of the reduction in estimated sales tax collections. What entry should the city make?
          a.     debit sales tax revenues and credit estimated revenues - sales tax for $25,000
          b.     debit appropriations and credit estimated revenues - sales tax for $25,000
          c.     debit estimated revenues - sales tax and credit sales tax revenues for $25,000
          d.     debit budgetary fund balance and credit estimated revenues - sales tax for $25,000


     12.     Which of the following is a purpose of allotment accounting?
          a.     to help ensure that cash flows evenly into the government over the entire year
          b.     to control the rate of agency expenditures, in anticipation of possible revenue shortfalls
          c.     to authorize agency expenditures when the legislature fails to make timely appropriations
          d.     to allow property taxpayers to pay property taxes at their convenience


     13.     A city that uses encumbrance accounting places a purchase order for three fire trucks at a cost of $100,000 each, specifying that two are to be delivered in March and one in August. The vendor delivers the first two trucks, and sends an invoice for $200,000. How should the city handle the encumbrance accounting when it prepares the $200,000 voucher to pay for the first two trucks?
          a.     it should make no encumbrance entry until all three trucks have been received
          b.     it should reduce encumbrances by $100,000
          c.     it should reduce encumbrances by $200,000
          d.     it should reduce encumbrances by $300,000


     14.     In what part of a county's General Fund balance sheet would you expect to find the account Fund balance reserved for encumbrances?     
          a.     as a contra liability
          b.     as a component of total fund equity
          c.     as a current liability
          d.     as a contra asset



     15.     Based on county laws, the encumbered portion of unexpended appropriations remain open for expenditure in the following year. A county has $3,650,000 of outstanding encumbrances at year-end, December 31, 2008. It expects to accept delivery on all orders in 2009. How should the county handle the outstanding encumbrances in its General Fund balance sheet at December 31, 2008?
          a.     it should report encumbrances as if they were expenditures and liabilities of the year 2008
          b.     it should close the open encumbrances and describe them in notes to financial statements
          c.     it should close the open encumbrances and reserve part of the unreserved fund balance
          d.     it should close the open encumbrances and make no reference to 2008 encumbrances in the financial statements

 

     16.     Which of the following best describes a designation of fund balance?
          a.     it is an informal managerial plan for the use of resources, and has no legal standing
          b.     it is another term for a reserve for encumbrances
          c.     it is the portion of net assets that will be spent to liquid short-term liabilities outstanding at year end
          d.     it is a legal segregation of fund balance, and must be used for the purpose designated


     17.     The General Fund lends cash at the beginning of the year to an Enterprise Fund, expecting to be repaid before the end of the year. What account should be debited in the General Fund?
          a.     transfer out to enterprise fund
          b.     due from enterprise fund
          c.     other financing uses - enterprise fund
          d.     expenditures - enterprise fund loans

 

 

 

 



     18.     A General Fund receives an invoice from the Electric Utility Fund (an Enterprise Fund) for electricity provided by the Utility Fund. When it receives the invoice, what account should be debited in the General Fund?
          a.     due from electric utility fund
          b.     transfer in from electric utility fund
          c.     expenditures - utility services
          d.     due to electric utility fund


     19.     The General Fund of a city pays all utility bills received from private companies for services provided to city agencies. It then bills other funds for their shares of the bills. On May 10, the General Fund pays an electric bill for $230,000. It then sends a bill to the Library Special Revenue Fund for $4,000, representing the library's share of the bill. Which account should the General Fund credit when it sends the bill to the Library Special Revenue Fund?
          a.     expenditures - utilities
          b.     due from library special revenue fund
          c.     transfer out to library special revenue fund
          d.     due to library special revenue fund


     20.     The city council decides to close the Library Special Revenue fund and transfer its remaining resources ($45,000 cash) to the General Fund. What account should the Library Special Revenue Fund debit when it sends the cash to the General Fund?
          a     advance to general fund
          b.     transfer out to general fund
          c.     due from general fund
          d.     expenditures - fund closeout
124
Below is a list of important abbreviations widely used in business. For each abbreviation give the full designation.

     1.     CPA          

     2.     IRS          

     3.     FBI          

     4.     FASB          

     5.     GAAP          

     6.     GAO          

     7.     SEC          
<P>Ex. 124<BR>
Below is a list of important abbreviations widely used in business. For each abbreviation give the full designation.</P>
<P>     1.     CPA          </P>
<P>     2.     IRS          </P>
<P>     3.     FBI          </P>
<P>     4.     FASB          </P>
<P>     5.     GAAP          </P>
<P>     6.     GAO          </P>
<P>     7.     SEC          </P>

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