Reference no: EM13767512

Part 1:

Question 1. Fiduciary funds are to use which of the following measurement and basis of accounting?

• Economic resource measurement focus and accrual basis of accounting.
• Current financial resources measurement focus and accrual basis of accounting.
• Economic resources measurement focus and modified accrual basis of accounting.
• None of the above, the fiduciary funds have no revenues.

Question 2. Governmental fund statements are prepared using which of the following?

• Economic resources measurement focus and modified accrual basis of accounting.
• Economic resources measurement focus and accrual basis of accounting.
• Current financial resources measurement focus and modified accrual basis of accounting.
• Current financial resources measurement focus and accrual basis of accounting.

 

Question 3. Proprietary funds use which of the following measurement focus and basis of accounting?

• Economic resources measurement focus and modified accrual basis of accounting.
• Current financial resources measurement focus and modified accrual basis of accounting.
• Economic resources measurement focus and accrual basis of accounting.
• Current financial resources measurement focus and accrual basis of accounting.

 

Question 4. Which of the following items would not be considered a nonexchange transaction for a state government?

• Property taxes
• Sales of lottery tickets
• Income taxes
• Fines and forfeits

 

Question 5. Which of the following is a true statement regarding modified accrual accounting?

• Expenditures for claims and judgments, compensated absences, and special termination benefits should be ecognized whether or not the liabilities are to be paid with available funds.
• Expenditures for services used by the General Fund departments should be recognized when those services are received, regardless of whether or not funds are available for payment.
• Both of the above statements are true.
• Neither of the above statements are true.

 

Question 6. Capital assets that are used by an enterprise fund should be accounted for in the following fund?

• Enterprise fund but no depreciation on the capital assets should be recorded.
• Enterprise fund and depreciation on the capital assets should be recorded.
• Business-type activities journal but no depreciation on the capital assets should be recorded.
• Governmental activities journal and depreciation on the capital assets should be recorded.

 

7. When a government acquires general fixed assets under a capital lease agreement, how should the asset be recorded in the government-wide financial statements?

• As an expense when payments are made.
• At the inception of the lease agreement at the lesser of the present value of the minimum lease payments of the fair market value of the property.
• As an expenditure when payments are made.
• None of the above

 

Question 8. Which of the following projects would usually be accounted for in a capital projects fund?

• Payment of interest on bonds that are issued to finance the construction of a new city hall.
• The construction of a parking garage that is operated as an enterprise fund.
• The construction of a fire station addition.
• Both A and B would be accounted for in a capital projects fund.

 

Question 9. Which of the following statements is a true statement regarding the reporting of debt service funds?

• Debt service funds are reported in a separate column in the governmental fund financial statements.
• Debt service funds are reported in the other governmental funds column in the governmental fund financial statements.
• Debt service funds are reported in a separate column in the government-wide financial statements.
• Debt service funds are reported in the governmental activities column in the government-wide financial statements.

 

Question 10. Under GASB Statement No. 33, when would a special revenue fund be considered to have satisfied the eligibility requirement of a reimbursement type federal grant?

• Only as the work is completed for a project.
• When the work has started for the project.
• Only after the work is completely finished for the project.
• When a plan for the use of the funds has been developed and approved by the appropriate personnel.

 

Part 2:

1. You are in a staff meeting with the city controller and one of your colleagues was quoted as follows: "Capital projects funds are established by a government to account for all plant or equipment acquired by construction." Do you agree with this statement? Why or why not?

2. Under the following circumstances should a governmental entity use a Special Revenue Fund? A Capital Projects Fund? A Debt Service Fund?

3. The City of Melvin received a gift of $2,500,000 from a local resident on April 1, 2012 and signed an agreement that the funds would be invested on a permanent basis and the income would be used to purchase books for the city library. The following transactions took place during the fiscal year ended Dec 31, 2012.

a. The gift was recorded on the books on April 1.

b. On April 1, 2012, the PRZ Co. bonds were purchased in the amount of $2,500,000, at par. The bonds carry an annual interest rate of 5 percent, payable semiannually on October 1 and April 1.

c. On October 1, the semiannual interest was received.

d. From October 1 through December 1, payments were made totaling $35,000 to purchase books for the city library.

e. On December 31, an accrual was made for interest.

f. After a review of the bond market on December 31, 2012, the bonds had a market value of $2,511,000, exclusive of accrued interest.

g. The books were closed on December 31.

Required

a. Record the transactions on the books for Library Book Permanent Fund.

b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the Library Book Permanent Fund for the year ended December 31, 2012.

c. Prepare the Balance Sheet for the Library Book Permanent Fund for the year ended December 31, 2012.