Questions and Answers of Accounting For Governmental And Nonprofit Entities

Using the information provided in C14-2, prepare each of the following for the City of Carrollton, Texas, for the year ended September 30, 20X1.a. Governmental Funds Operating Statement Conversion
What is required for a potential component unit to be fiscally dependent on a primary government?
Which of the following statements concerning the accounting and financial reporting for capital assets is false?a. Capitalization thresholds differ among governments and often within governments
Donated capital assets are valued by the recipient government at:a. fair market value at the date of donation.b. the original cost of the donated asset per the donor's records.c. the net book
Assume that a building used by Carter County's police department is totally destroyed by a fire. It is then discovered that the building was not properly insured and that its current net book value
When a capital asset of a department reported in a proprietary fund is transferred to a general government department, the effect of the transaction is reported as:a. a transfer in both the
Which of the following is never reported as a general long-term liability?a. Capital leases.b. Compensated absences.c. Certificates of participation.d. Advances from other funds.
Which of the following statements concerning the reporting of general long-term liabilities is true?a. General long-term liabilities are reported both in the governmental funds and the
GAAP require all of the following note disclosures for capital assets except:a. current year depreciation expense by function.b. a differentiation between depreciable and nondepreciable
In which of the following scenarios would a general long-term liability be reported as a governmental fund liability?a. The current portion of long-term debt should always be reported as a
Joshua Village issued the following bonds during the-year ended June 30, 20X5:How much of these bonds should be accounted for as Joshua’s General Long-Term
The following assets are among those owned by the city of Heidi:How much should be included in Heidi’s General Capital Assets accounts?a. $2,000,000.b. $1,800,000.c. $6,800,000.d. $7,000,000.
Penn City’s Capital Projects Fund incurred expenditures of $4,000,000 on a project in 20X0.$3,600,000 has been paid on these expenditures. Also, encumbrances outstanding on the project at December
Stephen Latzka donated a building to Elizabeth City in 20X3. His original cost of the property was $100,000. Accumulated depreciation at the date of the gift amounted to $60,000.Fair value at the
The following items were among Payne Township's General Fund expenditures during the year ended July 31, 20X3:How much should be classified as capital assets in Payne's General Fund balance sheet at
Other Financing Sources—Bonds is an account of A Governmental Unit that would most likely be included in the:a. Enterprise Fund.b. Internal Service Fund.c. Capital Projects Fund.d. Debt Service
When capital assets purchased from General Fund revenues were received, the appropriate journal entry was made in the General Capital Assets accounts. What account, if any, should have been debited
Which of the following statements about accounting and financial reporting for impaired capital assets is false?a. Impairments deemed to be temporary are not reported as impairment losses.b. GAAP
What is the accounting equation for a proprietary fund? What are the three components of net assets? Explain the nature of each component.
How should a government determine the appropriate balance to report for each of the three components of net assets of an Enterprise Fund?
Virgie Township is retiring Enterprise Fund bonds before their maturity date. How does the difference between the amount paid to retire the debt and the carrying value of the debt affect interest
A government transfers equipment with a book value of $600,000 from its General Capital Assets accounts to an Enterprise Fund. How is this transaction reported in the Enterprise Fund statement of
How is a deferred interest expense adjustment reported in the statement of net assets of an Enterprise Fund? If a government has Refunding Bonds Payable of $5 million with an associated premium of
Which of the following statements about accounting principles used in Enterprise Funds is false?a. Management may choose whether or not to apply recent FASB standards if they do not conflict with
Which of the following activities would be least likely to be operated as and accounted for in an Enterprise Fund?a. Town planning department.b. Sports stadium.c. Parking garage.d. Mass transit
The city of Philaburg arranged for a 10-year, $40 million loan to finance construction of a toll bridge over the Tradewater River. If the toll bridge is accounted for as an Enterprise Fund activity
The fund equity of an Enterprise Fund could include any of the following excepta. invested in capital assets, net of related debt.b. fund balance.c. restricted net assets.d. unrestricted net
The city of Silerville operates a water authority that sells water to city residents. Each new customer is required to pay a $75 deposit at the time of hookup. The deposit cannot be spent, but is
All Enterprise Fund transfers are reported in an Enterprise Fund's operating statement asa. nonoperating revenues.b. other financing sources.c. special items.d. None of the above.
Enterprise Fund transfers are reported in an Enterprise Fund's operating statement fora. "free" services provided to other departments.b. capital assets transferred in from other governments
Depreciation expense on all of an Enterprise Fund's capital assets must be reported as expenses in the fund's operating statement. However, expenditures to maintain certain capital assets may be
Enterprise Fund resources of $3,000,000 are paid yearly to the General Fund. If these payments are payments in lieu of taxes (not payments for services), they should be recorded in the Enterprise
Combining Enterprise Fund statements in the CAFR are required to include at a minimum:a. each individual Enterprise Fund.b. each individual major Enterprise Fund.c. each individual nonmajor
Using the information provided here for the Airport Enterprise Fund of the City of Demere, prepare a statement of revenues, expenses, and changes in net assets for 20X3. Charges for services..
On January 1, 20X7, Clyde County issued $100 million of 5%, 20-year bonds at 102. Interest is payable semiannually. The proceeds were restricted for the construction of a new county water
On January 1, 20X7, Clyde County issued $100 million of 5%, 20-year bonds at 102. Interest is payable semiannually. The proceeds were restricted for the construction of a new county water
On January 1, 20X7, Clyde County issued $100 million of 5%, 20-year bonds at 102. Interest is payable semiannually. The proceeds were restricted for the construction of a new county water
On January 1, 20X7, Clyde County issued $100 million of 5%, 20-year bonds at 102. Interest is payable semiannually. The proceeds were restricted for the construction of a new county water
The town of Brittainville has two Enterprise Funds—one for its water and wastewater operations and another for its cable television operation. The Water and Wastewater Enterprise Fund issued
The town of Brittainville has two Enterprise Funds—one for its water and wastewater operations and another for its cable television operation. The Water and Wastewater Enterprise Fund issued
The town of Brittainville has two Enterprise Funds—one for its water and wastewater operations and another for its cable television operation. The Water and Wastewater Enterprise Fund issued
Enterprise Fund for a utility operation:Invested in capital assets, net of related debt, would bea. $7,310,500.b. $8,310,500.c. ($2,189,500).d. $4,310,500.e. $1,810,500. Outstanding bonds issued
Enterprise Fund for a utility operation:Cash flows for noncapital financing activities would decreasea. $0.b. $10,100,000.c. $9,500,000.d. $500,000.e. None of the above. Outstanding bonds issued
Enterprise Fund for a utility operation:The operating statement of the Enterprise Fund would not be directly affected bya. the amount of unspent bond proceeds at the end of the year.b. the donation
Using the following information, prepare the Statement of Revenues, Expenses, and Changes in Net Assets for the town of Robinson Water and Sewer Enterprise Fund for the year ended June 30, 20X6.Water
The City of Lynn operates its municipal airport. The trial balance of the Airport Fund as of January 1, 20X0, was as follows:The following transactions took place during the year: 1. Revenues
(a) Using the letters provided, indicate how each of the items should be reported in an Enterprise Fund statement of cash flows for Dent County.(b) Using the information in (a), prepare the
Explain how each of the following should be reported in the financial statements of an Enterprise Fund. If assumptions are necessary, state them clearly. 1. Capital grant received in cash, but not
Why is an Internal Service Fund not typically subject to fixed budgetary control?
An Internal Service Fund established by a county is intended to operate on a breakeven basis. How might a government dispose of increases or decreases in net assets remaining at year-end?
Internal Service Fund net assets are sometimes increased over time as a result of charges for services being established at a level that exceeds the costs of providing the services.Why does this
Which of the following activities is not commonly accounted for in an Internal Service Fund?a. Self-insurance.b. Central garage.c. Landfill operations.d. Warehouse facility.e. All of the above
GAAP require the use of an Internal Service Fund for which of the following activities?a. Self-insurance.b. Central garage.c. Landfill operations.d. Warehouse facility.e. All of the
Internal Service Funds are required to be reported in the basic financial statementsa. by major fund.b. by fund type.c. as governmental funds.d. as either governmental or proprietary funds,
GAAP require which of the following statements to be prepared for an Internal Service Fund?a. Statement of net assets.b. Statement of budgetary compliance.c. Statement of cash flows.d. All of the
In the government-wide financial statements, activities of an Internal Service Fund area. always reported as governmental activities.b. always reported as business-type activities. c. reported
Which of the following equity classifications is not commonly reported for an Internal Service Fund?a. Retained earnings.b. Invested in capital assets, net of related debt.c. Restricted net
Which method of cash flow reporting is used to report operating activities?a. Indirect method.b. Direct method.c. Either the indirect or direct method, depending on the method chosen for the
Which of the following accounts would not typically be reported on the operating statement of an Internal Service Fund?a. Salaries and wages expense.b. Supplies expense.c. Depreciation
Which of the following transactions would not be allowed in an Internal Service Fund?a. The purchase of capital items.b. Borrowing from another fund.c. Transfers from other funds.d. None of the
What method of accounting does GAAP require for inventories in an Internal Service Fund?a. Consumption method.b. Purchases method.c. Acquisition method.d. All of the above are acceptable
Which of the following statements about Internal Service Fund liabilities is false?a. Internal Service Funds may report both current and long-term liabilities.b. Internal Service Funds may not
Initial financing for Internal Service Fund activities may be obtained froma. advances from another fund.b. transfers from other funds.c. transfer of related materials held by governmental
The Yourtown Motor Pool Fund estimates that the cost of operating and maintaining its fleet of 20 vehicles during 20X8 will be $150,000. On the basis of past experience, each vehicle can be expected
Transfers are always reported in an Internal Service Fund operating statement asa. revenues.b. other financing sources.c. the last item before changes in net assets.d. part of operating
The charge by an Internal Service Fund department to other departments for a service should includea. the direct cost to the fund of providing the service.b. ithe direct cost to the fund of
If a computer previously recorded in the General Capital Assets accounts is contributed to a department accounted for in an Internal Service Fund, the computer will be recorded in the Internal
The activity level of an Internal Service Fund is normally controlled bya. the appropriations made by its controlling legislative body.b. the flexible budget enacted by its controlling legislative
The actuarially based charges to the General Fund from a Self-Insurance Internal Service Fund should be reported in the Internal Service Fund asa. transfers.b. revenues.c. special
Loans to an Internal Service Fund from another fund are reported in the Internal Service Fund cash flow statement asa. cash flows from operating activities.b. cash flows from noncapital financing
Transfers from an Internal Service Fund to another fund are reported in the Internal Service Fund cash flow statement asa. cash flows from operating activities.b. cash flows from noncapital
1. Sorenson County established a self-insurance program in 20X8 by transferring $2 million of General Fund resources to an Internal Service Fund that is to be used to account for the county's
The trial balance for the Metro School District Repair Shop at January 1, 20X6, was as follows:Required The Repair Shop Fund had the following transactions during 20X6:1. Materials purchased on
From the information in P11-5, prepare the statement of cash flows (direct method) for the Metro School District Repair Shop Internal Service Fund for the year ended December 31, 20X6. (Omit
County of San Luis Obispo, California) The County of San Luis Obispo, California, maintains a Garage Internal Service Fund. The following account captions appear on the County’s preclosing trial
According to the terms of A’s will, the city is to become the owner of an apartment building. The net income from the building is to be used to provide bonus awards to public safety employees who
The earnings of an endowment (nonexpendable as to corpus) Trust Fund are used to support the operation of a not-for-profit museum, art gallery, and park complex. Should these earnings be accounted
The status of a pension plan as reported in its financial statements typically differs significantly from its status as presented in the required supplementary information for the plan.Why? Do you
Using the Montgomery County, Maryland, preclosing trial balance at June 30, 20X9, presented here, prepare the county's Capital Projects Fund (a) statement of revenues, expenditures, and changes in
The city of Lora issued $5,000,000 of general government, general obligation, 8%, 20-year bonds at 103 on April 1, 20X7, to finance a major general government capital project. Interest is payable
The city of Lora issued $5,000,000 of general government, general obligation, 8%, 20-year bonds at 103 on April 1, 20X7, to finance a major general government capital project. Interest is payable
The city of Lora issued $5,000,000 of general government, general obligation, 8%, 20-year bonds at 103 on April 1, 20X7, to finance a major general government capital project. Interest is payable
A county had borrowed $18,000,000 to finance construction of a general government capital project. The debt will be serviced from collections of a special assessment levy made for the project. The
Assume for Questions 5 through 9 that the state of Exuberance issued $10,000,000 of 5%, 20-year refunding bonds in 20X5 at par.If the state used the proceeds to retire $10,000,000 of general
Assume for Questions 5 through 9 that the state of Exuberance issued $10,000,000 of 5%, 20-year refunding bonds in 20X5 at par.If the state placed the $10,000,000 in an irrevocable trust that is to
Assume for Questions 5 through 9 that the state of Exuberance issued $10,000,000 of 5%, 20-year refunding bonds in 20X5 at par.If the state placed the $10,000,000 in an irrevocable trust as in item 6
Assume for Questions 5 through 9 that the state of Exuberance issued $10,000,000 of 5%, 20-year refunding bonds in 20X5 at par.If the state placed $12,000,000 (the $10,000,000 from the advance
Assume for Questions 5 through 9 that the state of Exuberance issued $10,000,000 of 5%, 20-year refunding bonds in 20X5 at par.If the state of Exuberance defeased its $9,000,000 debt in substance as
A government paid $3,500,000 to its fiscal agent on June 30, 20X6, to provide for principal ($2,000,000) and interest payments due on July 1, 20X6. The fiscal agent will make payments to bondholders
Hatcher Village, which operates on the calendar year, issued a 5-year, 8%, $100,000 note to the Bank of Hatcher on January 5, 20X4. The proceeds of the note were recorded in a Capital Projects Fund.
Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the Broadus County Courthouse Bonds Debt Service Fund for 20X6, given the following information:The next debt service
Obtain a comprehensive annual financial report (CAFR) of a state or local government (SLG). Familiarize yourself with the financial statements and disclosures with respect to the SLG’s Debt Service
Which of the following is not a common type of general government long-term liability?a. Bonds.b. Warrants.c. Capital leases.d. Notes.e. All of the above are common types of general government
As a general rule, debt service expenditures in a Debt Service Fund are recognizeda. when the debt service payment is due.b. resources to be used for the repayment are made available to a Debt
Which of the following financial statements are required for a Debt Service Fund?a. Balance Sheet only.b. Statement of Revenues, Expenditures, and Changes in Fund Balance only.c. Balance Sheet and
What are the characteristics of a term bond?a. Term bonds may not exceed 15 years.b. Principal and interest on the entire principal are paid throughout the life of the issue.c. Interest is paid on
6. Which of the following statements concerning debt refundings is true?a. Advance refundings do not result in immediate, direct retirement of existing long-term debt.b. Often, resources of an
In the year that any advance refunding occurs, which of the following disclosures is not required by GAAP?a. Difference in debt service requirements of the old defeased issue and new issue, adjusted
Laperla County entered into a capital lease on June 30, 20X8, for equipment to be used by General Fund departments. The capitalizable cost of the leased asset was $200,000. An initial payment of
The school district should report expenditures for materials in its Special Revenue Fund of:In the school district Special Revenue Fund statement of revenues, expenditures, and changes in fund

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