Question

For each of the following, indicate whether the statement is true or false and include a brief explanation for your answer.
a. A pension trust fund appears in the government-wide financial statements but not in the fundbased financial statements.
b. Permanent funds are included as one of the governmental funds.
c. A fire department placed orders of $20,000 for equipment. The equipment is received but at a cost of $20,800. In compliance with requirements for fund-based financial statements, an encumbrance of $20,000 was recorded when the order was placed, and an expenditure of $20,800 was recorded when the order was received.
d. The government reported a landfill as an enterprise fund. At the end of Year 1, the government estimated that the landfill will cost $800,000 to clean up when it is eventually full. Currently, it is 12 percent filled. At the end of Year 2, the estimation was changed to $860,000 when it was 20 percent filled. No payments are due for several years. Fund-based financial statements for Year 2 should report a $76,000 expense.
e. A city reports a landfill in the General Fund. At the end of Year 1, the government anticipated the landfill would cost $900,000 to clean up when it is full and reported that it was 11 percent filled. At the end of Year 2, the estimates were changed to $850,000 and 20 percent filled. No payments are due for several years. Government-wide financial statements for Year 2 should report a $71,000 expense.
f. A lease for a computer (that has a six-year life) is signed on January 1, Year 1, with six annual payments of $10,000. The police department will use the computer. The first payment is to be made immediately. The present value of the $60,000 in cash flows is $39,000 based on a 10 percent rate. Fund-based financial statements for Year 1 should report total expenditures of $10,000.
g. An agency fund has neither revenues nor expenditures but reports expenses.
h. A lease for a computer (that has a six-year life) is signed on January 1, Year 1, with six annual payments of $10,000. The computer is to be used by the police department. The first payment is to be made immediately. The present value of the $60,000 in cash flows is $39,000 based on a 10 percent rate. Government-wide financial statements for Year 1 should report expenses of $9,400.



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  • CreatedOctober 04, 2014
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