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     21.     Just before the close of its fiscal year, a city government issues $2 million of bonds to finance the acquisition of capital assets. However, no part of the debt is repaid by year-end and no part of the debt is used to purchase capital assets. What adjusting entry is needed to prepare the city's government-wide financial statements from its fund-level financial statements?
          a.     No adjusting entry is needed
          b.     Available for capital assets     2,000,000
                    Bonds payable          2,000,000
          c.     Invested in capital assets, net of related debt     2,000,000
                    Bonds payable          2,000,000
          d.     Proceeds from bond issue     2,000,000
                    Bonds payable          2,000,000

     

22.          During its calendar year 2007, a city issued $800,000 of bonds to acquire various items of capital equipment. By the end of 2008, the city had spent all the bond proceeds to purchase capital assets. Accumulated depreciation on the assets was $120,000, and $150,000 of the bonds had been paid off. How much should the city report in its government-wide statement of net assets as invested in capital assets, net of related debt?
          a.     $0
          b.     $30,000
          c.     $630,000
          d.     $650,000

 

     23.     For the year ended December 31, 2008, a city reported zero sales taxes receivable on its fund-level balance sheet and $10,000 sales taxes receivable in its government-wide statement of net assets. For calendar year 2009, it reported $670,000 of sales tax revenues on its fund-level statement of revenues, expenditures, and changes in fund balances, and zero sales taxes receivable on its fund-level balance sheet. It also estimated that it would receive $15,000 of sales taxes in April, 2010, that merchants had collected from customers in 2009. How much sales tax revenues should it report on its government-wide statement of activities for 2009?
          a.     $670,000
          b.     $675,000
          c.     $680,000
          d.     $685,000

 



     24.     Which of the following is a plausible explanation for the difference between the net change in fund balances of governmental funds (fund-level statement of revenues, expenditures, and changes in fund balances) and the change in net assets of governmental activities (government-wide statement of activities)?
          a.     Some expenses reported in the statement of activities do not require the use of current financial resources and are not reported as expenditures in the fund-level statements
          b.     Amounts reported as expenditures in the statement of activities are reported as capital assets in the fund-level statements
          c.     Debt proceeds provide current financial resources in the statement of activities, but are reported as long-term liabilities in the fund-level statements
          d.     Depreciation of general fixed assets is not reported as an expense in the statement of activities, but it is reported as an expense in the fund-level statements

 

     25.     Which of the following is a typical reconciling item between the fund-level financial statements and the government-wide financial statements?
          a.     reporting the amount of cash on hand for governmental activities
          b.     reporting revenues on the accrual basis, rather than the modified accrual basis, for business-type activities
          c.     reporting depreciation expense, rather than capital outlay expenditures, for governmental activities
          d.     reporting the net effect of transfers between the general fund and debt service fund

 

     26.     Which of the following is the most accurate statement regarding the depreciation of general capital assets in the governmental activities column of the statement of activities?
          a.     All general capital assets must be depreciated
          b.     General capital assets are not required to be depreciated
          c.     General capital assets should be depreciated, but financial statement preparers may choose not to depreciate land and infrastructure assets
          d.     General capital assets should be depreciated, except for land and infrastructure assets that are reported using the "modified approach."

 

 


     27.     What is the general rule for reporting capital assets in the governmental activities column of the government-wide statement of net assets?
          a.     Capital assets are not reported in that column
          b.     Both proprietary fund and general capital assets are reported in that column
          c.     All general capital assets should be reported in that column
          d.     All general capital assets, except infrastructure assets, should be reported in that column.


     28.     What must a government do to avoid depreciating its infrastructure assets and still meet the GASB's financial reporting standards?
          a.     have an asset management system and document that its assets are being preserved at a condition level that it establishes and discloses
          b.     estimate the dollar amount of its infrastructure assets and report that amount in the government-wide statement of net assets
          c.     leave the dollar value of its infrastructure net assets off both the government-wide statement of net assets and the governmental fund balance sheet
          d.     take a compete inventory of its infrastructure assets every year

 

     29.     A government issued $4 million of bonds on November 1, 2008, to build a fire house. The first debt service payment ($200,000 principal plus 6 percent interest per annum on outstanding debt) was due November 1, 2009. To prepare government-wide financial statements at December 31, 2008, what journal entry is needed regarding the debt service due on November 1, 2009?
          a.     no journal entry is needed
          b.     interest expense     40,000
                    interest payable          40,000
          c.     interest expense     40,000
               bond principal expense     33,333
                    debt service payable          73,333
          d.     interest expense     240,000
                    interest payable          240,000

 

 

 



     30.     On January 1, 2008, a county's government-wide financial statements shows general fixed assets of $2,400,000. For the year ended December 31, 2008, the county's fund financial statement shows an amount of $125,000 next to the caption "Expenditures - capital outlay." To prepare its 2008 government-wide financial statements, the preparer makes a worksheet that uses the 2008 fund-level financial statements as the starting point. As a result, the worksheet does not show any capital assets at the beginning of the year. What adjusting entry is needed to report the facts about capital assets on the government-wide statements?
          a.     Capital assets     2,525,000
                    Expenditures - capital outlay          2,525,000
          b.     Capital assets     125,000
                    Expenditures - capital outlay          125,000
          c.     Capital assets     2,525,000
                         Net assets           2,400,000
                         Expenditures - capital outlay          125,000
          d.     Capital assets     2,400,000
               Expenditures - capital outlay     125,000
                    Net assets           2,525,000


     31.     Which of the following elements properly will not be displayed as a specific item in a government-wide statement of activities prepared by a city or county government?
          a.     program revenues
          b.     interfund reimbursements
          c.     interest expense on long-term debt
          d.     the beginning net asset balance(s)

 

     32.     Bosco Township's General Fund reports a balance due from another fund. This item and the corresponding interfund liability will appear in Bosco Township's government-wide statement of net assets only if the debtor fund is
          a.     an enterprise fund
          b.     a capital projects fund
          c.     a pension trust fund
          d.     a permanent fund

 

 

 


     33.     If a government uses the "modified approach" in accounting for its infrastructure assets, which of the following items properly will not appear in its government-wide statement of activities?
          a.     depreciation expense for any capital assets
          b.     interest expense for bonds issued to finance any capital assets
          c.     depreciation expense for infrastructure capital assets
          d.     interest expense for bonds issued to finance infrastructure capital assets

 

     34.     Flockhart City is a municipality having governmental activities, business-type activities, a discrete component unit, and a blended component unit. Which of the following would not properly appear as a specific line item in Flockhart City's government-wide statement of net assets?
          a.     revenues of the blended component unit
          b.     revenues of the discrete component unit
          c.     revenues of the governmental activities
          d.     revenues of the business-type activities

 

     35.     The unrestricted net assets balance for a governmental unit
          a.     cannot be negative
          b.     normally is the largest component of the total net assets balance
          c.     can be negative
          d.     equals the sum of the unreserved fund balances of the major governmental funds

 

 

 

 

 

 

 

 



     36.     A-Town has only two funds, the General Fund (GF), and a Capital Projects Fund (CPF). Summarized operating statements for each of the funds for fiscal 2009 are as follows:
                              GF     CPF     Total
               Revenues          $100     $ --     $100
               Expenditures          89     62     151
               Bond proceeds          --     70     70
               Increase in fund balance          11     8     19
               Beginning fund balance          52     0     52
               Ending fund balance          63     8     71

          The total net assets balance for A-Town's governmental activities at the end of fiscal 2009 is
          a.     63
          b.     43
          c.     68
          d.     75


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