Multiple Choice Questions
Identify the best answer to each question:
1. Each of the following criteria is a factor when determining Special Revenue Fund property tax revenue recognition except:
a. Whether the taxes collected were for future fiscal years’ taxes.
b. Whether the taxes were collected no later than 60 days following the fiscal year being reported.
c. Whether the taxes collected were prior year taxes and were collected not later than 60 days after the beginning of the current year.
d. Whether the property taxes receivable are current or delinquent.

2. Property taxes billed but not collected by the end of the fiscal period or within 60 days following the end of the fiscal period should be
a. Charged to bad debt expense.
b. Reported as deferred revenues, a deferred inflow.
c. Reported as unearned revenues, a liability.
d. Reported as revenues as long as the taxes are expected to be collected within the next year.

3. Wakefield Village levies $6,255,000 in property taxes at the beginning of its fiscal year. Two percent is deemed to be uncollectible. The proper general ledger journal entry that would be made when the taxes are levied would be
a. Debit Taxes Receivable $6,255,000; credit Tax Revenues $6,255,000.
b. Debit Taxes Receivable $6,255,000; credit Tax Revenues $6,129,900; credit Allowance for Uncollectible Taxes $125,100.
c. Debit Taxes Receivable $6,129,900; credit Tax Revenues $6,129,900.
d. Either a or c—Taxes Receivable may be recorded at the levy amount or only at the net realizable value.

4. Which of the following statements reflects the proper accounting treatment for grant revenues?
a. Unrestricted grants are recognized as revenue in governmental funds when cash is received and appropriate expenditures are incurred.
b. Restricted grants are recognized as revenue in governmental funds when cash is received.
c. Restricted grants are recognized as revenue in governmental funds as eligibility requirements and the availability criteria are met.
d. All grants are recognized as revenues in the period awarded by the grantor—without regard to timing of expenditures or cash receipt.

5. Which of the following are governmental fund revenues that are typically recognized only as cash is collected?
a. Speeding fines.
b. Property taxes.
c. Sales taxes.
d. Sales of general capital assets.

6. GASB Statement No. 31 requires
a. All investment income, including increases or decreases in the fair value of all investments that are reported at fair value, to be reported as revenue in the operating statement.
b. Changes in the fair value of investments to be reported separately from interest and dividend income that has been earned.
c. All investments to be adjusted to their fair value for reporting purposes.
d. Governmental entities to report changes in the fair value for investments only if the change is a reduction in the value of the investment portfolio overall.

7. Which of the following statements regarding the accounting and reporting requirements for governmental fund investments is false?
a. Certain governmental fund investments may be reported at amortized cost rather than fair value.
b. Many general government investments are exempt from fair value standards.
c. Money market investments with remaining maturities of less than one year as of the end of the reporting period are exempt from fair value reporting standards.
d. A change in the fair value of investments is reported in revenue, whether the change is an increase or a decrease.

8. If a government has an established legal claim associated with a revenue source, but has not collected any of the revenues, governmental fund revenues
a. Should be recognized.
b. Should be recognized if the resources also are legally usable.
c. Should be recognized at the point the revenues are collected.
d. Should be recognized when collected if they are also legally usable.

9. If a government has collected revenues for which it has a valid legal claim, governmental fund revenues
a. May be reported in the current year if that is the government’s policy.
b. May only be reported in the current year if they are also legally usable for expenditure in that year.
c. May be reported in the current year if they become legally usable during the first 60 days (or fewer) of the next fiscal year.
d. Should have been recognized in the previous fiscal year if collected in the first 60 days of the current fiscal year.

10. Which criteria are sufficient for grant revenues to be recognized in a government’s General Fund?
a. Cash must be received by year end or within not more than 60 days (or shorter period specified by policy) after the end of the fiscal year.
b. Cash must be collected by year end.
c. The eligibility criteria for the grant must be met, and cash must be collected within not more than 60 days after the end of the fiscal year.
d. The eligibility criteria under the grant must be met, but the cash collection criterion does not apply because another government is involved—and is assumed creditworthy.