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Question(s) / Instruction(s):

     21.     The General Fund provides a recurring annual subsidy to the Mass Transit Enterprise Fund to keep bus fares at a reasonable level. How should the General Fund report the subsidy in its financial statements?
          a     as an expenditure
          b.     as a long-term advance
          c.     as a transfer out
          d.     as a reimbursement

 


     22.     Which of the following interfund transactions will be reported as a separate line item in the operating statement of a General Fund?
          a.     short-term interfund loan received
          b.     transfer out to a debt service fund
          c.     reimbursement received from a special revenue fund
          d.     long-term interfund loan received

     
     23.     In the statement of revenues, expenditures, and changes in fund balances, a transfer received by the Debt Service Fund from the General Fund should be reported by the Debt Service Fund as a:
          a.     transfer in, in the other financing sources/uses section
          b.     negative expenditure, in the expenditure section
          c.     direct addition to equity, in the fund balance section
          d.     reimbursement, in the revenue section


     24.     A state will give a city a grant of $500,000 for a special "meals for the homeless" program. The city will receive payment from the state after submitting quarterly cost statements showing expenditures and number of homeless people served. The city bills the state 45 days after the end of each quarter. When should the city recognize revenues under this grant?
          a.     when it receives the quarterly cash payments from the state
          b.     at the end of the grant, when all expenditures have been incurred
          c.     when it sends bills to the state
          d.     when it incurs expenditures under the grant


     25.     A city borrows $800,000 in January because it does not receive property taxes until May. It borrows on a tax anticipation note, which it will repay in May, when the taxes are collected. How would the city classify the note if it were to prepare financial statements on March 31?
          a.     as an other financing source
          b.     as a liability
          c.     as a revenue
          d.     as a direct increase in equity

 



     26.     When counties receive cash advances under grants from the state, what account should they credit?
          a.     grants receivable
          b.     revenues - grants
          c.     deferred revenues - grants
          d.     grant expenditures


     27.     When reporting on the General Fund in the fund financial statements, what is the general principle regarding the accrual of sales taxes collected by merchants but not yet remitted to the taxing government?
          a.     sales taxes should be recognized only if received by the state by year end
          b.     sales taxes should be recognized when the merchant makes the sale provided taxes are received early enough in the following year to finance expenditures of the period covered by the statements
          c.     sales taxes should be accrued provided they are received within 15 days after the end of the accounting period
          d.     sales taxes should be accrued based on an estimate of amounts received by merchants but not yet remitted to the state, regardless of when the taxes are remitted


     28.     A city paid $40,000 for police cars with the expectation that they would have a useful life of four years. After three years, the city sold the cars for $3,000. How should the city account for the sale in the General Fund?
          a.     Debit cash for $3,000, debit accumulated depreciation for $30,000, debit loss on sale of general fixed assets for $7,000, and credit equipment for $40,000.
          b.     Debit cash for $3,000 and credit other financing source--sale of capital assets for $3,000.
          c.     Debit cash for $3,000, debit loss on sale of general fixed assets for $37,000, and credit equipment for $40,000.
          d.     Debit cash for $3,000, debit other financing uses for $37,000, and credit equipment for $40,000.

 

 

 



     29.     A city uses the purchases method of accounting for supplies in the General Fund. At year-end, the amount of supplies on hand is material and the city wants to report the inventory in its balance sheet. How should the General Fund record the inventory?
          a.     debit supplies on hand and credit expenditures--supplies used
          b.     debit supplies on hand and credit vouchers payable--supplies
          c.     debit supplies on hand and credit unreserved fund balance
          d.     debit supplies on hand and credit fund balance reserved for supplies on hand


     30.     Which of the following describes the proper accounting procedure for supplies in the General Fund?
          a.     Supplies may be accounted for as expenditures either when purchased or when consumed. In either case, material amounts of inventory are shown on the balance sheet
          b.     Supplies must be accounted for as expenditures when purchased. Therefore, inventories are not shown on the balance sheet
          c.     Supplies must be initially recorded as assets, and then charged off as expenditures as the supplies are consumed
          d.     Supplies may be accounted for as expenditures either when purchased or when consumed. If the purchases method is used, inventories are not shown on the balance sheet.


     31.     If the General Fund receives proceeds from long-term bonds, how should the proceeds be reported in the General Fund financial statements?
          a.     as a liability
          b.     as a direct addition to the equity of the general fund
          c.     as an other financing source
          d.     as a revenue


     32.     How should marketable securities be valued when reported in a Permanent Fund?
          a.     at the cost to the donor of the investments
          b.     at the fair value of the investments on the date received by the government
          c.     at the fair value of the investments as of the balance sheet date
          d.     at the amount reported by similar governments in similar circumstances

 


     


     33.     Which of the following is the most likely reason that deferred revenue is reported on the General Fund balance sheet?
          a.     qualifying expenditures have been incurred in conjunction with a federal grant
          b.     there are property taxes receivable at year end that probably will not be collected for at least 60 days after the end of the accounting period
          c.     there are property taxes receivable at year end that will probably be collected within 60 days after the end of the accounting period
          d.     the government owes refunds to property owners who have successfully appealed their property tax assessments


     34.     A town's garbage trucks accidentally sideswiped two parked automobiles in the year ended December 31, 2008. One case was settled for $3,000, and the town expects to pay it in January 2009. In the other case, the claimant originally demanded $15,000. The town attorney thinks they can settle the claim for $10,000, but it probably will take two years to settle the case. What amount should the town report as a claims liability on the General Fund's December 31, 2008 fund balance sheet?
          a.     $0
          b.     $3,000
          c.     $13,000
          d.     $18,000


     35.     Which basis of accounting should be used in preparing the "actual" column in the budgetary comparison schedule?
          a.     the same basis of accounting as that used to prepare the budget
          b.     the full accrual basis
          c.     the modified accrual basis
          d.     the full accrual basis, except for depreciation


     36.     What type of fund is most likely to account for the spending of income earned by a Permanent Fund?
          a.     agency fund
          b.     private-purpose trust fund
          c.     enterprise fund
          d.     special revenue fund
     

     
37.     Which of the following is a characteristic of a Permanent Fund?
          a.     both the corpus of the fund and its earnings must be kept intact permanently.
          b.     permanent funds are created to support programs that benefit other governmental units.
          c.     earnings of a permanent fund are used to support programs that benefit the government or its citizens.
          d.     Permanent Funds are established when a government receives a bequest without a legal trust agreement.


     38.     Which of the following is the most likely reason that deferred revenue is reported on the General Fund balance sheet?
          a.     qualifying expenditures have been incurred in conjunction with a federal grant
          b.     there are property taxes receivable at year end that probably will not be collected for at least 60 days after the end of the accounting period
          c.     there are property taxes receivable at year end that will probably be collected within 60 days after the end of the accounting period
          d.     the government owes refunds to property owners who have successfully appealed their property tax assessments

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