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Wiley CPA Exam Review 2013 Financial Accounting And Reporting 10th Edition O. Ray Whittington - Solutions
. The following transactions were among those reported by Cliff County’s water and sewer enterprise fund for 2012:Proceeds from sale of revenue bonds $5,000,000 Cash received from customer households 3,000,000 Capital contributed by subdividers 1,000,000 In the water and sewer enterprise fund’s
. An enterprise fund would be used when the governing body requires that I. Accounting for the financing of an agency’s services to other government departments be on a cost-reimbursement basis.II. User charges cover the costs of general public services.III. Net income information be reported for
. For governmental units, depreciation expense on assets acquired with capital grants externally restricted for capital acquisitions should be reported in which type of fund?Governmental fund Proprietary funda. Yes Nob. Yes Yesc. No Nod. No Yes
. A state government had the following activities:I. State-operated lottery $10,000,000 II. State-operated hospital 3,000,000 Which of the above activities should be accounted for in an enterprise fund?a. Neither I nor II.b. I only.c. II only.d. Both I and II.
. The following information for the year ended June 30, 2012, pertains to a proprietary fund established by Burwood Village in connection with Burwood’s public parking facilities:Receipts from users of parking facilities $400,000 Expenditures Parking meters 210,000 Salaries and other cash
The billings for transportation services provided to other governmental units are recorded by an internal service fund asa. Transportation appropriations.b. Operating revenues.c. Interfund exchanges.d. Intergovernmental transfers.
. Chase City uses an internal service fund for its central motor pool. The assets and liabilities account balances for this fund that are not eliminated normally should be reported in the government-wide statement of net position asa. Governmental activities.b. Business-type activities.c. Fiduciary
. Cy City’s Municipal Solid Waste Landfill Enterprise Fund was established when a new landfill was opened January 3, 2012. The landfill is expected to reach capacity and close December 31, 2028. Cy’s 2012 expenses would include a portion of which of the year 2028 expected disbursements?I. Cost
. Fish Road property owners in Sea County are responsible for special assessment debt that arose from a storm sewer project. If the property owners default, Sea has no obligation regarding debt service, although it does bill property owners for assessments and uses the monies it collects to pay
. According to GASB 52, real estate held as an investment by a government endowment should be reported ata. Fair value.b. Historical cost.c. Historical cost less accumulated depreciation.d. A nominal value.S. Accounting for Special Assessments
. On March 2, 2012, Finch City issued ten-year general obligation bonds at face amount, with interest payable March 1 and September 1. The proceeds were to be used to finance the construction of a civic center over the period April 1, 2012, to March 31, 2013. During the fiscal year ended June 30,
. Tott City’s serial bonds are serviced through a debt service fund with cash provided by the general fund. In a debt service fund’s statements, how are cash receipts and cash payments reported?Cash receipts Cash paymentsa. Revenues Expendituresb. Revenues Other Financing Usec. Other Financing
. The debt service fund of a governmental unit is used to account for the accumulation of resources for, and the payment of, principal and interest in connection with a Trust fund Proprietary funda. No Nob. No Yesc. Yes Yesd. Yes No
. Wood City, which is legally obligated to maintain a debt service fund, issued the following general obligation bonds on July 1, 2012:Term of bonds 10 years Face amount $1,000,000 Issue price 101 Stated interest rate 6% Interest is payable January 1 and July 1. What amount of bond premium should
. Receipts from a special tax levy to retire and pay interest on general obligation bonds should be recorded in which fund?a. General.b. Capital projects.c. Debt service.d. Special revenue.
On April 1, 2012, Oak County incurred the following expenditures in issuing long-term bonds:Issue costs $400,000 Debt insurance 90,000 Oak County has established a debt service fund for the payment of interest and principal of its long-term bonds. Assuming Oak County’s fiscal year ends of June
. Dale City is accumulating financial resources that are legally restricted to payments of general long-term debt principal and interest maturing in future years. At December 31, 2012, $5,000,000 has been accumulated for principal payments and $300,000 has been accumulated for interest payments.
. Japes City issued $1,000,000 general obligation bonds at 101 to build a new city hall. As part of the bond issue, the city also paid a $500 underwriter fee and $2,000 in debt issue costs. What amount should Japes City report as other financing sources?a. $1,010,000b. $1,008,000c. $1,007,500d.
. In which of the following fund types of a city government are revenues and expenditures recognized on the same basis of accounting as the general fund?a. Pension trust.b. Internal service.c. Enterprise.d. Debt service.
. A government should recognized the impairment of a capital asset when events or circumstances indicate that there is a significant decline in service utility anda. The asset is not in service.b. The event or circumstance is outside the normal life cycle of the asset.c. The asset is not covered by
. An impaired capital asset that is no longer used by a government should be reported in the financial statements ata. Historical cost.b. Historical cost adjusted for depreciation.c. The lower of carrying value or fair value.d. Fair value.
. Financing for the renovation of Fir City’s municipal park, begun and completed during 2012, came from the following sources:Grant from state government $400,000 Proceeds from general obligation bond issue 500,000 Transfer from Fir’s general fund 100,000 In its 2012 capital projects fund
. In 2012, Menton City received $5,000,000 of bond proceeds to be used for capital projects. Of this amount, $1,000,000 was expended in 2012. Expenditures for the $4,000,000 balance were expected to be incurred in 2013. These bond proceeds should be recorded in capital projects funds fora.
. Should a major special revenue fund with a legally adopted budget maintain its accounts on an accrual basis and integrate budgetary accounts into its accounting system?Maintain on accrual basis Integrate budgetary accountsa. Yes Yesb. Yes Noc. No Yesd. No No P. Accounting for Capital Projects
. Lake County received the following proceeds that are legally restricted to expenditure for specified purposes:Levies on affected property owners to install sidewalks $500,000 Gasoline taxes to finance road repairs 900,000 What amount should be accounted for in Lake’s special revenue funds?a.
. In November 2011, Maple Township received an unexpected state grant of $100,000 to finance the purchase of school buses, and an additional grant of $5,000 was received for bus maintenance and operations. According to the terms of the grant, the State reimbursed Maple Township for $60,000 for the
. On the government-wide statement of activities prepared for the year ended December 31, 2012, what amount should be reported for revenues from governmental activities related to the property taxes and the sales taxes?a. $884,000b. $909,000c. $850,000d. $875,000 O. Accounting for Special Revenue
. On the government-wide statement of activities prepared for the year ended December 31, 2012, what amount should be reported for expenses for governmental activities related to the acquisition of the police cars and to the pension transfer?a. $ 42,000b. $105,000c. $ 75,000d. $ 30,000
. On the statement of revenues, expenditures, and changes in fund balances prepared for the governmental funds for the year ended December 31, 2012, what amount should be reported for revenues in Vicksburg’s general fund related to property taxes and sales taxes?a. $884,000b. $909,000c.
. On the statement of revenues, expenditures, and changes in fund balances prepared for the governmental funds for the year ended December 31, 2012, what amount should be reported for expenditures in Vicksburg’s general fund related to the acquisition of police cars and to the pension transfer?a.
. On the statement of revenues, expenditures, and changes in fund balances prepared for the governmental funds for the year ended December 31, 2012, the police cars will be reported asa. Expenditures of $40,000.b. Expense of $7,500.c. Expenditures of $7,500.d. Expense of $40,000.During the year
. On the government-wide statement of net position at December 31, 2012, the police cars will be reported under assets in the governmental activities column at which of the following amounts?a. $40,000b. $32,500c. $0d. $22,500
. On the balance sheet for the governmental funds at December 31, 2012, the police cars will be reported under assets in the general fund column at which of the following amounts?a. $40,000b. $32,500c. $0d. $22,500
. The following revenues were among those reported by Ariba Township in 2012:Net rental revenue (after depreciation) from a parking garage owned by Ariba $ 40,000 Interest earned on investments held for employees’ retirement benefits 100,000 Property taxes 6,000,000 What amount of the foregoing
. Which of the following fund types used by a government most likely would have a Fund Balance—Reserved for Inventory of Supplies?a. General.b. Internal service.c. Enterprise.d. Debt service.
. During the year, a city’s electric utility, which is operated as an enterprise fund, rendered billings for electricity supplied to the general fund. Which of the following accounts should be debited by the general fund?a. Appropriations.b. Expenditures.c. Due to Electric Utility Enterprise
. Which of the following transactions is an expenditure of a governmental unit’s general fund?a. Contribution of enterprise fund capital by the general fund.b. Transfer from the general fund to a capital projects fund.c. Operating subsidy transfer from the general fund to an enterprise fund.d.
. What amount should Oak City report for 2012 property tax revenues in the government-wide Statement of Activities?a. $700,000b. $690,000c. $600,000d. $500,000
. What amount should Oak City report for 2012 property tax revenues in the Statement of Revenues, Expenditures, and Changes in Fund Balances prepared for governmental funds?a. $700,000b. $690,000c. $600,000d. $500,000
. The expenditure element “salaries and wages” is an example of which type of classification?a. Object.b. Program.c. Function.d. Activity.N. Accounting for the General Fund Collections during 2012 $500,000 Expected collections during the first sixty days of 2013 100,000 Expected collections
. Cedar City issues $1,000,000, 6% revenue bonds at par on April 1 to build a new water line for the water enterprise fund. Interest is payable every six months. What amount of interest expense should be reported for the year ended December 31?a. $0b. $30,000c. $45,000d. $60,000 M. Expenditure
. The following information pertains to Pine City’s general fund for 2012:Appropriations Control $6,500,000 Expenditures Control 5,000,000 Other Financing Sources Control 1,500,000 Other Financing Uses Control 2,000,000 Revenues Control 8,000,000 After Pine’s general fund accounts were closed
. The following information pertains to Park Township’s general fund at December 31, 2012:Total assets, including $200,000 of cash $1,000,000 Total liabilities 600,000 Fund balance—Reserved for encumbrances 100,000 Appropriations do not lapse at year-end. At December 31, 2012, what amount
. The budget of a governmental unit, for which the appropriations exceed the estimated revenues, was adopted and recorded in the general ledger at the beginning of the year. During the year, expenditures and encumbrances were less than appropriations, whereas revenues equaled estimated revenues.
. When Rolan County adopted its budget for the year ending June 30, 2012, $20,000,000 was recorded for Estimated Revenues Control. Actual revenues for the year ended June 30, 2012, amounted to $17,000,000. In closing the budgetary accounts at June 30, 2012,a. Revenues Control should be debited for
. Encumbrances outstanding at year-end in a state’s general fund should be reported as aa. Liability in the general fund.b. Fund balance reserve in the general fund.c. Liability in the General Long-Term Debt Account Group.d. Fund balance designation in the general fund.
. A budgetary fund balance reserved for encumbrances in excess of a balance of encumbrances indicatesa. An excess of vouchers payable over encumbrances.b. An excess of purchase orders over invoices received.c. An excess of appropriations over encumbrances.d. A recording error.
. Elm City issued a purchase order for supplies with an estimated cost of $5,000. When the supplies were received, the accompanying invoice indicated an actual price of $4,950. What amount should Elm debit (credit) to Budgetary Fund Balance—Reserved for Encumbrances after the supplies and invoice
. During its fiscal year ended June 30, 2012, Cliff City issued purchase orders totaling $5,000,000, which were properly charged to Encumbrances at that time. Cliff received goods and related invoices at the encumbered amounts totaling $4,500,000 before year-end. The remaining goods of $500,000
. In 2012, New City issued purchase orders and contracts of $850,000 that were chargeable against 2012 budgeted appropriations of $1,000,000. The journal entry to record the issuance of the purchase orders and contracts should include aa. Credit to Vouchers Payable of $1,000,000.b. Credit to
. For the budgetary year ending December 31, 2012, Maple City’s general fund expects the following inflows of resources:Property Taxes, Licenses, and Fines $9,000,000 Proceeds of Debt Issue 5,000,000 Interfund Transfers for Debt Service 1,000,000 In the budgetary entry, what amount should Maple
. To record the $20,000 budgeted excess of estimated revenues over appropriations, Ridge shoulda. Credit Estimated Excess Revenues Control.b. Debit Estimated Excess Revenues Control.c. Credit Budgetary Fund Balance.d. Debit Budgetary Fund Balance.
. To record the appropriations of $80,000, Ridge shoulda. Credit Appropriations Control.b. Debit Appropriations Control.c. Credit Estimated Expenditures Control.d. Debit Estimated Expenditures Control.
. A city government has entered into a service concession arrangement with a company that will operate the city’s parking meters and retain the parking fees for a period of 30 years in exchange for a payment to the city in the amount of $3 billion. Which of the following is correct about the
. The State of Texas is scheduled to receive a substantial amount of revenues as a part of a tobacco settlement. The revenues for the next five years have been sold to a commercial business for $5,000,000. Assuming that Texas has no involvement with the future revenues, how should it account for
. Devon County is developing its own software system to maintain property tax records. Which of the following is not required for Devon to begin capitalizing the software costs?a. Devon has established the objective for the project and the proposed scope of the software system.b. Devon has
. In accordance with GASB 33, Accounting and Reporting for Nonexchange Transactions, which of the following revenues results from taxes and other assessments imposed by governments that are not derived from underlying transactions?a. Income taxes.b. Sales taxes.c. Motor fuel taxes.d. Fines and
. In accordance with GASB 33, Accounting and Reporting for Nonexchange Transactions, which of the following revenues results from taxes assessed by a government on exchange transactions (a derived tax revenue)?a. Property tax revenues.b. Fines and forfeits.c. Motor fuel taxes.d. Unrestricted
. In December 2012, the general fund of Millard City received $25,000 from the state as an advance on the city’s portion of sales tax revenues, and it received $20,000 from property owners for property taxes to be levied in 2013. The advance payment of sales taxes represented the amount that the
. For the year ended December 31, 2012, the general fund of Ward Village reported revenues from the following sources on the statement of revenues, expenditures, and changes in fund balances:Sales taxes $ 25,000 Property taxes 125,000 Income taxes 15,000 Fines 10,000 In accordance with GASB 33,
. For the year ended December 31, 2012, the general fund of Karsten City levied property taxes of $1,000,000. The city estimated that $10,000 of the levy would not be collectible. By December 31, 2012, the city had collected $850,0000 of property taxes and expected to collect the remainder of the
. On July 1, 2012, the general fund of Sun City levied property taxes for the fiscal year ending June 30, 2013. According to GASB 33, Accounting and Financial Reporting for Nonexchange Transactions, property taxes are an example of what type of nonexchange transaction?a. Voluntary.b.
. On the statement of revenues, expenditures, and changes in fund balance for the year ended June 30, 2012, how should the general fund of Eldorado report its share of the sales taxes that will be received in July 2012?a. Deferred inflow of resources.b. Restricted revenue.c. Revenue.d. Unreserved
. From the perspective of Eldorado City, the sales taxes are an example of what type of nonexchange transaction?a. Imposed.b. Voluntary.c. Derived.d. Government-mandated.
. The grant from the state is an example of what type of nonexchange transaction?a. Government-mandated.b. Imposed.c. Voluntary.d. Derived.The merchants of Eldorado City collect a sales tax of 5% on retail sales. The sales taxes are remitted by retailers to the state and distributed by the state to
. What account should be credited in the general fund on the date the grant was received?a. Restricted revenue.b. Deferred inflow of resources.c. Revenue.d. Unreserved fund balance.
. In accordance with GASB 33, Accounting and Financial Reporting for Nonexchange Transactions, which of the following transactions would qualify as a nonexchange transaction in the City of Geneva?a. The water utility (enterprise) fund billed the general fund for water usage.b. Property taxes were
. Property taxes and fines represent which of the following classes of nonexchange transactions for governmental units?a. Derived tax revenues.b. Imposed nonexchange revenues.c. Government-mandated nonexchange transactions.d. Voluntary nonexchange transactions.
. Which of the following funds of a governmental unit recognizes revenues in the accounting period in which they become available and measurable?General fund Enterprise funda. Yes Nob. No Yesc. Yes Yesd. No No K. Accounting by Governments for Certain Events and Transactions
. For governmental fund reporting, which item is considered the primary measurement focus?a. Income determination.b. Flows and balances of current financial resources.c. Capital maintenance.d. Cash flows and balances.
. In accordance with governmental accounting standards, which of the following statements is correct concerning the statement of cash flows prepared for proprietary funds?a. The statement format is the same as that of a business enterprise’s statement of cash flows.b. Cash flows from capital
. Which of the following statements is(are) true?I. Pension trust funds are reported on the statement of changes in fiduciary net position.II. Retained earnings is reported in the net position section of the statement of net position for proprietary funds.a. I only.b. II only.c. Both I and II.d.
. What measurement focus should be used for the preparation of the following financial statements?Statement of changes in fiduciary net position Government-wide statement of net positiona. Financial resources Economic resourcesb. Economic resources Financial resourcesc. Economic resources Economic
. In accordance with governmental accounting standards, a reconciliation must be shown of the items that cause the difference between (1) the net change in fund balances for the governmental funds on the statement of revenues, expenditures, and changes in fund balances, and (2) the change in net
. A reconciliation must be shown of the items that cause the difference between (1) the total of the fund balances that appears on the balance sheet for the governmental funds and (2) the total net position that is disclosed for governmental activities on the government-wide statement of net
. In accordance with governmental accounting standards, which of the following statements is(are) true regarding the statement of cash flows?I. The statement of cash flows is a government-wide financial statement.II. The statement of cash flows reports cash flows from three activities—operating,
. In accordance with governmental accounting standards, which fund type(s) is(are) reported on the statement of cash flows?a. Governmental and fiduciary fund types.b. Governmental and proprietary fund types.c. Fiduciary and proprietary fund types.d. Proprietary fund type only.
. Private-purpose trust funds are reported on which of the following financial statements?I. Government-wide statement of net position.II. Statement of changes in fiduciary net position.a. I only.b. II only.c. Both I and II.d. Neither I nor II.
. In accordance with governmental accounting standards, agency funds are reported on which of the following financial statements?I. Statement of fiduciary net position.II. Statement of changes in fiduciary net position.a. I only.b. II only.c. Both I and II.d. Neither I nor II.
. Which of the following financial statements is prepared using the accrual basis of accounting and the economic resources measurement focus?I. The statement of net position for proprietary funds.II. The statement of revenues, expenditures, and changes in fund balances for the governmental funds.a.
. In accordance with governmental accounting standards, which of the following statements is correct about the information reported on the statement of net position for the proprietary funds?I. Assets and liabilities are classified into current and noncurrent classifications.II. All activities of
. The financial statements required for a proprietary fund includea. The statement of fund balances, the statement of activities, and the statement of cash flows.b. The statement of net position, the statement of revenues, expenses and changes in fund net position, and the statement of cash
. In accordance with GASB 34 (as amended), Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, which of the following statements is correct about the information reported on the balance sheet prepared for the governmental funds?I. The focus is
. In accordance with governmental accounting standards, which of the following financial statements should be prepared for proprietary funds?a. Statement of revenues, expenditures, and changes in fund balances.b. Statement of activities.c. Statement of changes in proprietary net position.d.
. For which of the following governmental entities that use proprietary fund accounting should a statement of cash flows be presented?Tollway authorities Governmental utilitiesa. No Nob. No Yesc. Yes Yesd. Yes No
. The following transactions were among those reported by Corfe City’s electric utility enterprise fund for 2012:Capital contributed by subdividers $ 900,000 Cash received from customer households 2,700,000 Proceeds from sale of revenue bonds 4,500,000 In the electric utility enterprise fund’s
. Which event(s) should be included in a statement of cash flows for a governmental entity?I. Cash inflow from issuing bonds to finance city hall construction.II. Cash outflow from a city utility representing payments in lieu of property taxes.a. I only.b. II only.c. Both I and II.d. Neither I nor
. For which of the following fund balance classifications is the intent of the governing board to use funds for a specific purpose a critical factor?a. Committed.b. Restricted.c. Assigned.d. Nonspendable.
. Which of the following is a characteristic which differentiates a Special Revenue Fund from a General Fund?a. A special revenue fund is required to be budgeted on the accrual basis.b. A special revenue fund is established only if a revenue source is restricted or committed to expenditure for a
. Which of the following is not one of the five fund balance classification provided by GASB Statement 54, Fund Balance Reporting and Governmental Fund Type Definitions?a. Restricted.b. Committed.c. Reserved.d. Assigned.
. The primary authoritative body for determining the measurement focus and basis of accounting standards for governmental fund operating statements is thea. Governmental Accounting Standards Board (GASB).b. National Council on Governmental Accounting (NCGA).c. Governmental Accounting and Auditing
. Dogwood City’s water enterprise fund received interest of $10,000 on long-term investments. How should this amount be reported on the Statement of Cash Flows?a. Operating activities.b. Noncapital financing activities.c. Capital and related financing activities.d. Investing activities.
. Fund accounting is used by governmental units with resources that must bea. Composed of cash or cash equivalents.b. Incorporated into combined or combining financial statements.c. Segregated for the purpose of carrying on specific activities or attaining certain objectives.d. Segregated
. In accordance with governmental accounting standards, which of the following statements is true?I. Infrastructure assets do not need to be reported on the government-wide statement of net position if the government decides to use the modified approach in its accounting for infrastructure.II.
. In accordance with governmental accounting standards, governments should preparea. Combined financial statements, using the modified accrual basis of accounting and the flow of economic resources.b. Combined financial statements, using the accrual basis of accounting and the flow of financial
. Depreciation expense would be reported on which of the following financial statements?I. The government-wide statement of activities.II. The statement of revenues, expenses, and changes in fund net position prepared for proprietary funds.a. I only.b. II only.c. Both I and II.d. Neither I nor II.
. If a state government’s defined benefit pension plan’s net fiduciary position is not expected to be sufficient to make projected benefit payments, the government should use which of the following rates to discount projected future benefit payments?a. The rate for 10-year treasury notes.b. The
. In accordance with GASB 68, the effects on the net pension liability of differences between expected and actual investment returns for a defined benefit plan is recognized in pension expense over:a. A closed period of five years.b. A closed period of ten years.c. A closed period equal to the
. In attributing the actuarial present value of projected benefit payments of each employee to periods under GASB 68, the entity should use which of the following methods?a. The employee service method.b. The entry age actuarial cost method.c. The service cost method.d. The projected cost method.
. Arkansas has a single-employee defined benefit plan covered by GASB 68. What is the amount of liability that should be presented on the state government’s statement of net position related to the plan?a. The amount expected to be contributed to the plan for the next fiscal year.b. The amount
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