Question

Choose the best answer.
Items 1 through 3 relate to the following information.
The county collects taxes on behalf of the county, city, and a special purpose district. For 2014, the taxes to be levied by the government are:
County ....... $ 632,000
City ........ 917,000
Special purpose district .. 26,000
Total ....... $1,575,000
1. What type of fund will the county use to account for tax collection and distribution?
a. The county must use a trust fund.
b. The county must use an agency fund.
c. The county should use a special revenue fund.
d. Unless mandated by law, the county may use a governmental or proprietary fund; however, an agency fund is typically used.
2. On the date the taxes are levied, the county would credit which of the following accounts in the fund used to account for tax collection and distribution?
a. Due to Other Funds and Governments.
b. Revenues—Taxes.
c. Additions—Other Funds and Governments.
d. Accrued Taxes.
3. If the county assessed a 1 percent administrative fee, it would be recorded by the county as a credit to:
a. Revenue.
b. Transfer In.
c. Additions—Fund Equity.
d. Due to County.
Items 4 through 6 relate to the following information:
The city council of the City of Great Falls decided to pool the investments of its General Fund with that of Great Falls School District and Great Falls Township, each of which carried its investments at fair value as of the prior balance sheet date. All investments are revalued to current fair value at the date of the creation of the pool. At that date, the prior and current fair value of the investments of each of the participants were as follows:


4. At the date of the creation of the investment pool, each of the participants should:
a. Debit its Fund Balance account and credit its Investments account for the prior fair value of the assets transferred to the pool.
b. Debit or credit its Investments account as needed to adjust its carrying value to current fair value. The offsetting entry in each fund should be to Fund Balance.
c. Debit Equity in Pooled Investments for the current fair value of investments pooled, credit Investments for the prior fair value of investments pooled, and credit or debit Revenues—Change in Fair Value of Investments for the difference.
d. Make a memorandum entry only.
5. One day after creation of the pool, the investments that had belonged to Great
Falls Township were sold by the pool for $1,760,000.
a. The loss of $40,000 is borne by each participant in proportion to its equity in the pool.
b. The loss of $10,000 is borne by each participant in proportion to its equity in the pool.
c. The loss of $40,000 is considered to be a loss borne by Great Falls Township.
d. The loss of $10,000 is considered to be a loss borne by Great Falls Township.
6. One month after creation of the pool, earnings on pooled investments totaled $59,900. It was decided to distribute the earnings to the participants, rounding the distribution to the nearest dollar. The Great Falls School District should receive:
a. $36,000.
b. $35,940.
c. $36,339.
d. $37,000.
Items 7 through 10 are based on the following information:
The City of Lindenwood contributes to and administers a single-employer defined benefit pension plan on behalf of its covered employees. The city uses a trust fund to account for and report its pension plan. Annual pension cost and actual contributions made for the past three years were as follows:


7. For 2014, what would be the credit to Additions—Employer Contributions in the pension trust fund?
a. $32,000.
b. $31,500.
c. $1,000.
d. $500.
8. To record the 2014 pension contribution to the pension trust fund, what account would the General Fund debit?
a. Other Financing Uses—Interfund Transfers Out.
b. Expenditures.
c. Due to Pension Fund.
d. Deductions—Employer Contributions.
9. Over the three-year time period, what has happened to the net pension obligation?
a. It has increased.
b. It has decreased.
c. It has stayed the same.
d. The reader cannot tell based on the information provided.
10. Most of the pension contributions are paid by the General Fund. Which of the following is reported in the General Fund financial statements?
a. Net pension obligation related to General Fund employees.
b. Actuarial accrued liability related to General Fund employees.
c. Actual pension contributions for General Fund employees.
d. Pension cost for General Fundemployees.


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  • CreatedJanuary 11, 2014
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