Multiple Choice Questions
Select the best answer. Items 1 though 5 refer to Riverview City.
1. Riverview City received a gift of $1 million. The sum is to be maintained as an endowment, with income used to preserve and improve the city’s jogging trails. The $1 million should be reported in a(n)
a. Governmental fund
b. Agency fund
c. Fiduciary fund
d. Proprietary fund
2. Riverview City collected $80 million in property taxes on behalf of the Riverview Independent School District. The $80 million should be reported in a(n)
a. Governmental fund
b. Agency fund
c. Fiduciary fund
d. Proprietary fund
3. The $80 million collected by Riverview City is reflected in statements of the appropriate fund as an increase in cash and an offsetting increase in
a. A liability
b. A reserve
c. Fund balance
d. None of the above
4. In its government-wide statements, the $80 million is reported as
a. A liability
b. A reserve
c. Net assets
d. None of the above
5. The city maintains a $1 million endowment to provide financial assistance to needy retired employees and their families. In its government-wide statements, the $1 million is reported as an asset in the column for
a. Governmental activities
b. Business-type activities
c. Totals, but not in the column for either governmental or business-type activities
d. None of the above
6. As of year-end, a city’s pension plan had $1,500,000 in current obligations to retired employees. The city reports this amount as a liability on
a. The pension fund statements only
b. The pension fund statements and the government-wide statements
c. The government-wide statements only
d. Neither the pension fund statements nor the government-wide statement
7. Depreciation on capital assets is never reported in which of the following funds:
a. Fiduciary
b. Permanent
c. Internal service
d. Enterprise
8. Which of the following is not reported on a pension plan’s statement of plan net assets?
a. Long-term investments at fair value
b. Capital assets used in plan operations at cost less accumulated depreciation
c. Net assets held in trust for pension benefits
d. Actuarial accrued liability to current and retired employees
9. A city maintains a $10 million endowment fund to preserve and improve it sparks. During the year, the fund had investment gains from the sale of securities of $1 million. These investment gains should be
a. Added to the endowment principal and thereby not be expendable
b. Added to the fund that accounts for dividends and interest and thereby be expendable
c. Either added to the endowment or added to the fund that accounts for dividends and interest, depending on the stipulations of the donor that established the endowment or, absent donor stipulations, on the decision of the endowment’s trustees
d. Added to the endowment to the extent necessary to cover losses that are due to inflation; the balance is added to the fund that accounts for dividends and interest
10. In a particular year, the Haynes Independent School District collects $100 million in property taxes. State law requires that property rich school districts contribute 2% of all property taxes that they collect to a state pool, which is divided among property-poor districts. Upon receipt of the taxes, the Haynes district, which the state considers a property-rich district, should account for
a. $100 million in an agency fund
b. $98 million in a governmental fund and $2 million in an agency fund
c. $100 million in a governmental fund
d. $98 million in a governmental fund and $2 million in a fiduciary fund other than an agency fund