Questions and Answers of Accounting Governmental Nonprofit Entities

The following transactions affected various funds and activities of the Town of Big Springs.1. The Fire Department, a governmental activity accounted for within the General Fund, purchased $100,000
The following transactions occurred during the 2020 fiscal year for the City of Evergreen. For budgetary purposes, the city reports encumbrances in the Expenditures section of its budgetary
The City of Water ville applied for a grant from the state government to build a pedestrian bridge over the river inside the city’s park. On May 1, the city was notified that it had been awarded a
The Town of Bedford Falls approved a General Fund operating budget for the fiscal year beginning on July 1. The budget provides for estimated revenues of $2,700,000 as follows: property taxes,
Download a copy of the most recent comprehensive annual financial report (CAFR) for a city of your choice. Many cities with 25,000 or more population provide Internet access to their CAFRs.*
The NCES provides a wide variety of resources and information at its website. Go to the NCES website (https://nces.ed.gov/) for this project. You will need to use the About Us and the Data and Tools
The Town of Willingdon adopted the following General Fund budget for the fiscal year beginning July 1:Estimated revenues:Taxes
During July, the first month of the fiscal year, the Town of Willingdon issued the following purchase orders and contracts (see Problem 3–22):General government
During the current year, the City of Plattsburgh recorded the following transactions related to its property taxes:1. Levied property taxes of $6,600,000, of which 2 percent is estimated to be
1. Under GASB standards, which of the following would be considered an example of an intangible asset?a. A lake located on city property.b. Water rights associated with the springs that supply the
The City of Castleton€™s General Fund had the following post-closing trial balance at June 30, 2019, the end of its fiscal year:During the year ended June 30, 2020, the following
Jacqueline Ponce de Leon, a descendent of Juan Ponce de Leon, made a cash contribution of $1,500,000 to the City of Fountains to create and maintain a large fountain in front of City Hall in honor of
The GASB recently adopted a new standard for lease accounting by governments. The GASB follows due process, which refers to the steps taken prior to issuing authoritative guidance. Due process
Using the finance or similarly named department link of a city or county’s website, locate the government’s comprehensive annual financial report (CAFR). (You also may be able to find the
For each of the independent transactions listed, indicate which of the revenue or contribution classifications apply by choosing one or more of the letters from the listed items in the right-hand
What criteria must be met before an NFP organization can record donated services? If the criteria are met, how should donated services be recorded? Give examples to support your answer.
Bluff County€™s schedule of changes in net pension liability and related ratios is shown below. RequiredCompute the missing amounts. BLUFF COUNTY EMPLOYEE RETIREMENT SYSTEM Schedule of
What is the value of reporting expenses by function and nature? What is the FASB’s position on who should disclose expense information by function and nature?
Distinguish between program services expenses and supporting services expenses. Why is it important that NFPs report expenses for program services separately from those for supporting services?
Choose the best answer.1. Which of the following organizations would be considered a nongovernmental not-for-profit organization?a. An organization that provides shelter for men who have been victims
In April of 2015, the FASB issued an Exposure Draft related to financial reporting of not-for-profit organizations. As a result of feedback received from constituents, the FASB decided to divide the
Do bond anticipation notes represent current or long-term liabilities? Explain your answer.
What are the two categories into which NFPs must classify their net assets? Describe which net assets are included in each category. Would board designated net assets be reported as net assets with
Identify the authoritative accounting standard-setting bodies for governmental not-for-profit organizations and nongovernmental not-for-profit organizations.
In 2013, the Tampa Bay Times published a series of four articles uncovering some of the worst charities in America. Read the articles (www.tampabay.com/topics/ specials/worst-charities.page) and
The City of Fort Collins, Colorado, has adopted the budgeting for outcomes entrepreneurial budgeting method as a basis for its budgeting process.RequiredLocate the city’s most recent budget
Following is the audit report for the City of Prairie View.Citizens of Prairie View:Split Responsibility for Financial StatementsWe have audited the accompanying financial statements of the City of
Following is Grant County€™s debt service fund pre-closing trial balance for the fiscal year ended June 30.RequiredUsing information provided by the trial balance, answer the following.a.
In preparation for a proposed bond sale, the city manager of the City of Appleton requested that you prepare a statement of legal debt margin and a schedule of direct and overlapping debt for the
Following are a number of unrelated transactions for the Village of Center ville, some of which affect governmental activities at the government-wide level. None of the transactions has been recorded
This case focuses on the analysis of a city€™s general obligation debt burden. After examining the accompanying table that shows a city€™s general obligation (tax-supported) debt
A citizens’ group in your state has placed an amendment on an upcoming election ballot. The measure would prohibit new debt issuances by state or local governments, which would presumably reduce
The City and County of Denver allocates its governmental fund balances among the classifications specified by GASB standards. Go to Denver’s website and locate its CAFR report for the 2016 fiscal
A city has approached you concerning the audit of its financial statements. State law requires the city to have an audit and submit the audited financial report to the state. New elections at the
The City of Alma has captured the following trend indicator information for five years. For a description of the indicators included, see Illustration 10€“3 in this
Is “dual-track” accounting appropriate for proprietary funds?
What is the purpose of the Restricted Assets section of an enterprise fund statement of fund net position? Provide examples of items that might be reported in the Restricted Assets section.
Although proprietary funds are often compared to for-profit organizations, there are several differences between financial reporting for proprietary funds and for-profit organizations. Identify and
Residents from the Town of Mountain View authorized a $5,000,000 renovation to their historic town hall on November 15, 2019. Financing for the project consists of $2,500,000 from a 5 percent serial
Although the most common type of general long-term liabilities are those arising from financing activities (e.g., bonds, notes, and lease agreements), general long-term liabilities also can be
Governments are prevented from borrowing unlimited funds through the enforcement of debt limits. Explain the concept of a debt limit. How is the concept of borrowing power or debt margin connected to
How do term bonds differ from serial bonds? Which type of bonds have governments been more likely to issue in recent years? Why do you think this trend has occurred?
How are debt issuance costs accounted for at the fund and government-wide levels?
You€™ll be moving to a nearby state after graduation and are focusing on two cities near your new job. After reading this chapter, you decide to look at the debt held by each of the
Choose the best answer.1. Which of the following would not be considered a general long-term liability?a. The estimated liability to clean up the hazardous waste storage sites of the
The City of Amarillo is authorized to issue $8,000,000, 3 percent regular serial bonds in 2020 for the construction of a new exit off the interstate highway within city limits. The bonds mature in
McCormick County agreed to acquire a new recreation equipment storage facility under a lease financing agreement. At the inception of the lease, a payment of $750,000 will be made; four additional
As of December 31, 2019, Sandy Beach had $9,500,000 in 4.5 percent serial bonds outstanding. Cash of $509,000 is the debt service fund’s only asset as of December 31, 2019, and there are no
On July 1, 2019, the first day of its 2020 fiscal year, the Town of Bear Creek issued at par $2,000,000 of 6 percent term bonds to renovate a historic wing of its main administrative building. The
What is a special assessment? How does funding for a special assessment capital improvement differ from that of other capital improvements in a local government?
If a capital project is incomplete at the end of a fiscal year, what happens to Encumbrances and all operating statement accounts at year-end?
What is the accounting difference between using the modified approach for infrastructure assets and depreciating infrastructure assets? Under the modified approach, what happens if infrastructure
What are examples of intangible assets held by governments? How are they reported?
What entries are required in the general journals of a governmental fund and governmental activities at the government-wide level to record an asset acquired with lease financing upon initial
Explain what disclosures the GASB requires for capital assets and leased assets in the notes to the financial statements.
What are general capital assets? How are they reported in the fund and government-wide financial statements?
For the past two editions of the textbook, this case has followed the financial condition of Detroit, Michigan. As this text goes to print, Detroit has emerged from bankruptcy and in accordance with
What is the financial reporting model project, and why is it important?
Give examples of items (transactions) that would require reconciliation of total governmental fund balances to net position of governmental activities.
What financial statement reconciliations are required by the GASB, and why are they required?
Explain the difference between a blended and a discretely presented component unit, and explain how each is reported.
Section A provides a list of items related to various investment portfolios that have been reviewed by an auditor. Section B provides a list of types of risk exposure the auditor needs to consider
Mantee County administers a pension fund and a post retirement benefits fund for some of its workers, an investment trust fund for itself and three other governments, a private-purpose trust fund to
Ray County administers a tax custodial fund, an investment trust fund, and a private-purpose trust fund. The tax custodial fund acts as custodian for the county, a city within the county, and the
Evergreen County acts as the disbursing agent for a state grant for the performing arts. The state is responsible for determining which local governments are eligible for the grant money and for
The Albertville City Council decided to pool the investments of its General Fund with Albertville Schools and Richwood Township in an investment pool to be managed by the city. Each of the pool
Following is a list of fund names and descriptions from comprehensive annual financial reports (CAFRs).RequiredIndicate which of the following are fiduciary funds. If not a fiduciary fund, identify
Residents of Green Acres, a gated community located in the City of Foothills, voted to form a local improvement district to fund the construction of a neighborhood park. The city agreed to administer
The county collector of Sun coast County is responsible for collecting all property taxes levied by funds and governments within the boundaries of the county. To reimburse the county for estimated
Choose the best answer.1. Which of the following financial statements is prepared by fiduciary funds?a. Statement of fiduciary activities.b. Statement of fiduciary net position.c. Statement of
Choose the best answer.1. Which of the following helps identify the existence of a fiduciary relationship?a. The reporting entity does not control the assets.b. The assets are derived from the
In January 2017, the GASB issued a new standard related to the reporting of fiduciary activities. The standard is effective for reporting periods beginning after December 15, 2018.RequiredGo to the
Policymakers in your state have been talking about shifting from a defined benefit pension plan to a defined contribution pension plan or a hybrid alternative for new state employees. You work for a
GASB standards require that governments report other postemployment benefits offered to employees, which in some cases will be huge. To investigate the extent of the problem, examine the required
While the examples in this chapter have focused on a single-employer plan, many states operate statewide plans, referred to as Public Employee Retirement Systems (PERS), to which multiple employers
What is OPEB and how is OPEB reported by governments?
Compare the accounting for pension expenditures in a governmental fund with the accounting for pension expenses for governmental activities at the government wide level.
What is a private-purpose trust fund? There are two types of assets that can be held by a private-purpose trust; what are the two types of assets and how do the asset types compare to governmental
How are external investment pool activities reported?
What is a “pass-through” custodial fund and under what conditions is it appropriate to use such a fund?
Describe the basic activities conducted by a tax custodial fund. What are some of the issues that make tax custodial fund accounting complex?
Explain the distinction(s) between custodial funds and trust funds. What financial statements are prepared for each?
What are the criteria for determining if a fiduciary relationship exists?
Brown County operates a solid waste landfill for the citizens of the county. The following events occurred during the county’s fiscal year ended September 30.1. The county paid interest costs of
The following information (presented in thousands) is available for the Cumberland County Utility Enterprise Fund during the current year:1. The beginning balance for cash and cash equivalents was
The Village of Shelburne operates a nine-hole golf course as an enterprise fund. You are provided with the following information for the current year:1. Net income for the year was $161,511.2. The
Following is the June 30, 2019, statement of net position for the City of Bay Lake Water Utility Fund.Requireda. For fiscal year 2020, prepare general journal entries for the Water Utility Fund using
The Town of Elizabeth operates an old train station as an enterprise fund. The train station is on the national register of historic buildings. Because the town has held the building for such a long
During the current year, the Town of Falmouth had a number of transactions that affected net position of its town skating rink, which is operated as an enterprise fund. You are provided with the
The City of Saltwater Beach established an enterprise fund two years ago to construct and operate Tribute Aquatic Center, a public swimming pool. The pool was completed and began operations last
Inglis City had a beginning cash and cash equivalents balance in its internal service fund of $895,635. During the current year, the following transactions occurred:1. Interest received on
Washington City created an Information Technology department four years ago to centralize information technology (IT) functions for the city. The goal of the department was to reduce costs, avoid
For each of the phrases below, indicate whether the statement is consistent with an Enterprise Fund (“EF”), an Internal Service Fund (“ISF”), both (“B”), or neither (“N”).1. Uses
Choose the best answer.1. Within the government-wide financial statements, the column for Business type Activities will generally includea. Internal service funds only.b. Enterprise funds only.c. All
Use the 2016 CAFR for the City and County of Denver to respond to the following questions.Requireda. Does the City and County of Denver report any internal service funds? If so, identify the internal
Calhoun County has prepared the following operating statement for its proprietary funds. The county has three enterprise funds and two internal service funds.RequiredThe statement as presented is not
When its mission is completed, how is an internal service fund dissolved?
The MD&A for the 2016 City and County of Denver CAFR is included as Appendix B in this chapter. Following are two tables that have been adapted from the statistical section of the CAFR. Use the
Following are descriptions of several relationships between primary governments and other organizations.RequiredUsing just the information provided, indicate whether you believe the primary
Use the comprehensive annual financial report (CAFR) you obtained for Exercise 1–17, or another CAFR you have downloaded for this case. It is recommended that you print a copy of the two

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