Question

Multiple Choice Questions
1. Which of the following statements is correct about the reporting of governmental funds?
a. Fund financial statements measure revenues and expenditures based on modified accrual accounting.
b. Government-wide financial statements measure revenues and expenses based on modified accrual accounting.
c. Fund financial statements measure revenues and expenses based on accrual accounting.
d. Government-wide financial statements measure revenues and expenditures based on accrual accounting.

2. During the current year, a government buys land for $80,000. Which of the following is not true?
a. The land could be reported as an asset by the business-type activities in the government-wide financial statements.
b. The land could be reported as an asset by the governmental activities in the government-wide financial statements.
c. The land could be reported as an asset by the proprietary funds in the fund financial statements.
d. The land could be reported as an asset by the governmental funds in the fund financial statements.

3. The City of Bagranoff holds $90,000 in cash that will be used to make a bond payment when it comes due early next year. The assistant treasurer had made that decision. However, just before the end of the current year, the city council formally approved using this money in thisway. The city council has been designated as the highest level of decision-making authority for this government. What impact does the council’s action have on the reporting of fund financial statements?
a. Fund balance—unassigned goes down and fund balance—restricted goes up.
b. Fund balance—assigned goes down and fund balance—committed goes up.
c. Fund balance—unassigned goes down and fund balance—assigned goes up.
d. Fund balance—assigned goes down and fund balance—restricted goes up.

4. Which of the following statements is true concerning the recording of a budget?
a. At the beginning of the year, debit Appropriations.
b. A debit to the Budgetary Fund Balance account indicates an expected surplus.
c. At the beginning of the year, debit Estimated Revenues.
d. At the end of the year, credit Appropriations.

5. The City of Dylan issues a 10-year bond payable of $1 million at face value on the first day of Year 1. Debt issuance costs of $10,000 are paid on that day. For government-wide financial statements, how is this debt issuance cost reported?
a. $1,000 is recorded as an expense and $9,000 is recorded as an asset.
b. $1,000 is recorded as an expense and $9,000 is recorded as a deferred outflow of resources.
c. $10,000 is recorded as an expense.
d. $10,000 is recorded as an asset.

6. The City of Frost has a 20-year debt outstanding. On the last day of the current year, this debt has an outstanding balance of $4.8 million and five years remaining until it is due. On that date, the debt is paid off early for $5 million. A new debt is issued (with a lower interest rate) for $5.4 million. How is the $200,000 between the amount paid and the outstanding balance of $4.8 million recognized on government-wide financial statements?
a. As an expense.
b. As a reduction in liabilities.
c. As a deferred outflow of resources on the statement of net position.
d. As an asset on the statement of net position.



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  • CreatedJanuary 08, 2015
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