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Wiley CPA Examination Review Outlines And Study Guides Volume 1 - 2012-2013 39th Edition Patrick R. Delaney, O. Ray Whittington - Solutions
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
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 were
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 this
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 taxes
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.
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. I
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 flows.c.
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 on
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. Statement
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 II.
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 physically
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.
Which of the following statements is correct about the accounting for infrastructure assets using the modified approach?I. Depreciation expense on the infrastructure assets should be reported on the government-wide statement of activities, under the governmental activities column.II. Certain
On the government-wide statement of net position at December 31, 2012, under the governmental activities column, the information related to capital assets should be reported in the net position section at which of the following amounts?a. $3,500,000b. $1,500,000c. $2,250,000d. $2,750,000
The statement of activities of the government-wide financial statements is designed primarily to provide information to assess which of the following?a. Operational accountability.b. Financial accountability.c. Fiscal accountability.d. Functional accountability.Items 19 and 20 are based on the
Hunt Community Development Agency (HCDA), a financially independent authority, provides loans to commercial businesses operating in Hunt County. This year, HCDA made loans totaling $500,000. How should HCDA classify the disbursements of loans on the cash flow statement?a. Operating activities.b.
In the government-wide financial statement, the statement of net position, deferred outflows of resources are presenteda. As a part of liabilities.b. As a part of equity.c. In a separate section following assets.d. In a separate section following liabilities.
Which of the following is an example of a deferred outflow of resources?a. Cost to acquire rights to future revenues.b. Grant amounts received in advance of meeting timing requirements.c. Proceeds from the sale of future revenues.d. Deferred gain from a sale and leaseback transaction.
Which of the following is an example of a deferred inflow of resources?a. Grant expenditures paid in advance of meeting timing requirements.b. Cost to acquire rights to future revenues.c. Proceeds from the sale of future revenues.d. Deferred loss from sale and leaseback of assets.
Which of the following describes the required government-wide financial statements?a. The statement of net position and the statement of activities.b. The statement of net fund balances and statement of changes in fund balances.c. The statement of net position, the statement of activities, and the
Which of the following characteristics would require a component unit to be presented on a blended rather than discretely presented basis?a. The primary government and the component unit are located at the same physical location.b. Substantially all of the debt of the component unit is expected to
Marta City’s school district is a legally separate entity, but two of its seven board members are also city council members and the district is financially dependent on the city.However, major debts of the school district are expected to be paid by school taxes. The school district should be
South City School District has a separately elected governing body that administers the public school system. The district’s budget is subject to the approval of the city council.Major debts of the school district are expected to be paid by school taxes. The district’s financial activity should
What is the basic criterion used to determine the reporting entity for a governmental unit?a. Special financing arrangement.b. Geographic boundaries.c. Scope of public services.d. Financial accountability.
Which of the following statements about the statistical section of the Comprehensive Annual Financial Report(CAFR) of a governmental unit is true?a. Statistical tables may not cover more than two fiscal years.b. Statistical tables may not include nonaccounting information.c. The statistical section
A deferred outflow of resources is most like which of the following financial statement elements?a. An asset.b. A liability.c. Equity.d. Revenue.
Which of the following is true about service efforts and accomplishments reporting (SEA reporting) under GASB Concepts Statements?a. SEA reporting is required for all state and local governments with more than $100 in total assets.b. SEA reporting is more appropriate for governmental business-type
According to GASB Concepts Statements, the elements of resource flows statements includea. Outflow of resources and inflow of resources.b. Outflow of resources, inflow of resources and deferred inflow of resources.c. Outflow of resources, inflow of resources, deferred outflow of resources.d.
According to GASB Concepts Statements which of the following is an essential characteristic of an asset?a. An asset has present service capacity.b. An asset is tangible.c. An asset is acquired through purchase.d. An asset provides future benefits to the citizenry.
Which of the following is an accurate statement from the GASB Concepts Statements about service efforts and accomplishments reporting?a. Service efforts and accomplishments reporting is required for large governmental entities.b. Service efforts and accomplishments reporting is necessary for
Which of the following is the least authoritative guidance based on the GAAP Hierarchy for state and local governments?a. AICPA Industry Audit and Accounting Guide for state and local governments.b. GASB Technical Bulletins.c. GASB Implementation Guides.d. AICPA Statements of Position.B.
Which of the following pronouncements provides the most authoritative guidance applicable to financial reporting for state and local governments?a. GASB Interpretations.b. FASB Accounting Standards Codification.c. AICPA Industry Audit and Accounting Guide for state and local governments.d. GASB
Which of the following is not a IFRS requirement regarding foreign currency translation?a. Nonmonetary items measured at historical cost are translated at the historical exchange rate.b. Monetary items are translated at the year-end spot rate.c. If the functional currency is the same as the
For IFRS reporting, if the functional currency is the same as the presentation currency, any translation gains or losses are generally reported asa. A gain or loss on the statement of income.b. A gain or loss in other comprehensive income.c. A gain or loss directly in the retained earnings
For IFRS reporting, the functional currency isa. The currency in which the company reports its earnings.b. The currency in which the company primarily conducts banking activities.c. The currency in which the company primarily operates.d. The currency in which the company presents its financial
For IFRS reporting purposes, currencies are defined asa. International and functional.b. Foreign, functional, and presentation.c. Domestic and international.d. Operating, international, and presentation.
In preparing consolidated financial statements of a US parent company with a foreign subsidiary, the foreign subsidiary’s functional currency is the currencya. In which the subsidiary maintains its accounting records.b. Of the country in which the subsidiary is located.c. Of the country in which
Park Co.’s wholly owned subsidiary, Schnell Corp., maintains its accounting records in euros. Because all of Schnell’s branch offices are in Switzerland, its functional currency is the Swiss franc. Remeasurement of Schnell’s 2010 financial statements resulted in a $7,600 gain, and translation
When remeasuring foreign currency financial statements into the functional currency, which of the following items would be remeasured using historical exchange rate?a. Inventories carried at cost.b. Marketable equity securities reported at market values.c. Bonds payable.d. Accrued liabilities.
A balance arising from the translation or remeasurement of a subsidiary’s foreign currency financial statements is reported in the consolidated income statement when the subsidiary’s functional currency is the Foreign currency US dollara. No Nob. No Yesc. Yes Nod. Yes Yes
The functional currency of Nash, Inc.’s subsidiary is the euro. Nash borrowed euros as a partial hedge of its investment in the subsidiary. In preparing consolidated financial statements, Nash’s translation loss on its investment in the subsidiary exceeded its exchange gain on the borrowing.How
A foreign subsidiary’s functional currency is its local currency, which has not experienced significant inflation.The weighted-average exchange rate for the current year would be the appropriate exchange rate for translating Sales to customers Wages expensea. No Nob. Yes Yesc. No Yesd. Yes No
Which of the following should be reported as a stockholders’equity account?a. Discount on convertible bonds.b. Premium on convertible bonds.c. Cumulative foreign exchange translation loss.d. Organization costs.
A wholly owned subsidiary of Ward, Inc. has certain expense accounts for the year ended December 31, 2010, stated in local currency units (LCU) as follows:LCU Depreciation of equipment (related assets were purchased January 1, 2008) 120,000 Provision for doubtful accounts 80,000 Rent 200,000 The
Certain balance sheet accounts of a foreign subsidiary of Rowan, Inc., at December 31, 2010, have been translated into US dollars as follows:Translated at Current rates Historical rates Note receivable, long-term $240,000 $200,000 Prepaid rent 85,000 80,000 Patent 150,000 170,000$475,000 $450,000
Jay & Kay partnership’s balance sheet at December 31, 2010, reported the following:Total assets $100,000 Total liabilities 20,000 Jay, capital 40,000 Kay, capital 40,000 On January 2, 2011, Jay and Kay dissolved their partnership and transferred all assets and liabilities to a newly formed
On January 1, 2010, the partners of Cobb, Davis, and Eddy, who share profits and losses in the ratio of 5:3:2, respectively, decided to liquidate their partnership. On this date the partnership condensed balance sheet was as follows:Assets Cash $ 50,000 Other assets 250,000$300,000 Liabilities and
The following condensed balance sheet is presented for the partnership of Smith and Jones, who share profits and losses in the ratio of 60:40, respectively:Other assets $450,000 Smith, loan 20,000$470,000 Accounts payable $120,000 Smith, capital 195,000 Jones, capital 155,000$470,000 The partners
When Mill retired from the partnership of Mill, Yale, and Lear, the final settlement of Mill’s interest exceeded Mill’s capital balance. Under the bonus method, the excessa. Was recorded as goodwill.b. Was recorded as an expense.c. Reduced the capital balances of Yale and Lear.d. Had no effect
Allen retired from the partnership of Allen, Beck, and Chale. Allen’s cash settlement from the partnership was based on new goodwill determined at the date of retirement plus the carrying amount of the other net assets. As a consequence of the settlement, the capital accounts of Beck and Chale
On June 30, 2010, the balance sheet for the partnership of Coll, Maduro, and Prieto, together with their respective profit and loss ratios, were as follows:682 Module 20: Miscellaneous: D. Partnership Accounting Multiple-Choice Questions Assets, at cost $180,000 Coll, loan $ 9,000 Coll, capital
Assume instead that Eddy remains in the partnership and that Hamm is admitted as a new partner with a 25%interest in the capital of the new partnership for a cash payment of $140,000. Total goodwill implicit in the transaction is to be recorded. Immediately after admission of Hamm, Eddy’s capital
Eddy decided to retire from the partnership and by mutual agreement is to be paid $180,000 out of partnership funds for his interest. Total goodwill implicit in the agreement is to be recorded. After Eddy’s retirement, what are the capital balances of the other partners?Fox Grimma. $ 84,000
In the Adel-Brick partnership, Adel and Brick had a capital ratio of 3:1 and a profit and loss ratio of 2:1, respectively.The bonus method was used to record Colter’s admittance as a new partner. What ratio would be used to allocate, to Adel and Brick, the excess of Colter’s contribution over
Instead of admitting a new partner, Alfa and Beda decide to liquidate the partnership. If the other assets are sold for $500,000, what amount of the available cash should be distributed to Alfa?a. $255,000b. $273,000c. $327,000d. $348,000 Items are based on the following:The following condensed
The assets and liabilities are fairly valued on the balance sheet. Alfa and Beda decide to admit Capp as a new partner with 20% interest. No goodwill or bonus is to be recorded. What amount should Capp contribute in cash or other assets?a. $110,000b. $116,000c. $140,000d. $145,000 Items are based
Dunn and Grey are partners with capital account balances of $60,000 and $90,000, respectively. They agree to admit Zorn as a partner with a one-third interest in capital and profits, for an investment of $100,000, after revaluing the assets of Dunn and Grey. Goodwill to the original partners should
Kern and Pate are partners with capital balances of$60,000 and $20,000, respectively. Profits and losses are divided in the ratio of 60:40. Kern and Pate decided to form a new partnership with Grant, who invested land valued at$15,000 for a 20% capital interest in the new partnership.Grant’s cost
Blau and Rubi are partners who share profits and losses in the ratio of 6:4, respectively. On May 1, 2010, their respective capital accounts were as follows:Blau $60,000 Rubi 50,000 On that date, Lind was admitted as a partner with a one-third interest in capital and profits for an investment of
The Flat and Iron partnership agreement provides for Flat to receive a 20% bonus on profits before the bonus.Remaining profits and losses are divided between Flat and Iron in the ratio of 2:3, respectively. Which partner has a Module 20: Miscellaneous: D. Partnership Accounting Multiple-Choice
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