Question 1

When accounting for inventory items in a governmental fund,GASB standards permit the use of the consumption method only.

Accepted Answer

A) True 
 B)False

Question 2

State employees earn $10 million in vacation leave.$7 million is paid in the current year and the remaining amount is deferred to future years.Which of the following the accounts will be credited in the general fund entry and the government-wide entry? $\begin{array}{lll}
&  \underline {\text { General Fund }} &  \underline {\text { Government-wide }} \
a) & \text { Cash }  &\text { Cash \& accrued vacation pay }   \
b) &\text { Cash \& accrued vacation pay }   & \text { Cash }     \
c) & \text { Cash } &  \text { Cash }  \
d) & \text { Cash } &  \text { No entry }  \
e) & \text { No entry }  &  \text { Cash }   \
\end{array}$

Accepted Answer

The answer of State employees earn $10 million in vacation...

Question 3

On July 1,Gilbert County bought computer equipment for use in the administrative offices of the county.The equipment has an estimated useful life of three years and salvage of $10,000.The county has a 6/30 fiscal year-end.Assuming that the county maintains its books and records in a manner that facilitates the preparation of fund financial statements,the $85,000 cost of this equipment would require which of the following entries?

Accepted Answer

A) Debit Expenditures $85,000;Credit Cash $85,000. 
B) Debit Equipment $85,000;Credit Cash $85,000. 
C) Debit Expenses $85,000;Credit Cash $85,000. 
D) No entry in the city's governmental funds. 
A) Debit Expenditures $85,000;Credit Cash $85,000. 
B) Debit Equipment $85,000;Credit Cash $85,000. 
C) Debit Expenses $85,000;Credit Cash $85,000. 
D) No entry in the city's governmental funds.

Question 4

Assume that the City of Juneau maintains its books and records to facilitate the preparation of its government-wide financial statements.The city pays its employees bi-weekly on Friday.The fiscal year ended on Wednesday,June 30.Employees had been paid on Friday,June 25.The employees paid from the general fund had earned $90,000 on Monday,Tuesday,and Wednesday June 28,29,and 30).They will earn $60,000 on Thursday and Friday July 1 and 2).What entry,if any,should be made on June 30?

Accepted Answer

A) Debit Expenditures $90,000;credit Wages and salaries payable $90,000. 
B) Debit Expenditures $150,000;credit Wages and salaries payable $150,000. 
C) Debit Expenses $90,000;credit Wages and salaries payable $90,000. 
D) No entry is required. 
A) Debit Expenditures $90,000;credit Wages and salaries payable $90,000. 
B) Debit Expenditures $150,000;credit Wages and salaries payable $150,000. 
C) Debit Expenses $90,000;credit Wages and salaries payable $90,000. 
D) No entry is required.

Question 5

State University,a public university,has a policy of granting faculty members a one-year paid sabbatical leave after a period of seven years continuous employment.The leave is for further study,research,or public service.A particular faculty member earns $90,000 per year.Assuming that the college maintains its books and records in a manner that facilitates the preparation of fund financial statements and assuming that any appropriate accruals have been made,what is the appropriate entry to record the employee's salary paid while on sabbatical leave?

Accepted Answer

A) Debit Expenditures $90,000;Credit Cash $90,000. 
B) Debit Expenses $90,000;Credit Cash $90,000. 
C) Debit Sabbatical leave payable $90,000;Credit Cash $90,000. 
D) No entry required. 
A) Debit Expenditures $90,000;Credit Cash $90,000. 
B) Debit Expenses $90,000;Credit Cash $90,000. 
C) Debit Sabbatical leave payable $90,000;Credit Cash $90,000. 
D) No entry required.

Question 6

Shoshone County uses the consumption method to account for supplies.At the beginning of the year the city had no supplies on hand.During the year the city purchased $450,000 of supplies for use by activities accounted for in the general fund.The city used $300,000 of those supplies during the year.At fiscal year-end,the appropriate account balances on the general fund financial statements would be

Accepted Answer

A) Expenditures $450,000;Supplies inventory $150,000. 
B) Expenditures $450,000;Supplies inventory $0. 
C) Expenditures $300,000;Supplies inventory $150,000. 
D) Expenditures $300,000;Supplies inventory $0. 
A) Expenditures $450,000;Supplies inventory $150,000. 
B) Expenditures $450,000;Supplies inventory $0. 
C) Expenditures $300,000;Supplies inventory $150,000. 
D) Expenditures $300,000;Supplies inventory $0.

Question 7

The amount of pension expenditures that a government should recognize in its general fund financial statements during the current year is

Accepted Answer

A) The amount paid. 
B) The amount paid plus the amount that will be paid with available expendable financial resources. 
C) The amount paid so long as it does not exceed the contractually agreed amount. 
D) The contractually agreed amount. 
A) The amount paid. 
B) The amount paid plus the amount that will be paid with available expendable financial resources. 
C) The amount paid so long as it does not exceed the contractually agreed amount. 
D) The contractually agreed amount.

Question 8

The City of Holbrook transferred $100,000 from the general fund to a debt service fund for payment of interest.The appropriate entry in the general fund to record this transfer would be

Accepted Answer

A) Debit Expenditures $100,000;Credit Cash $100,000. 
B) Debit Nonreciprocal transfer-out $100,000;Credit Cash $100,000. 
C) Debit Fund balance$100,000;Credit Cash $100,000. 
D) Debit Reciprocal transfer-out $100,000;Credit Cash $100,000. 
A) Debit Expenditures $100,000;Credit Cash $100,000. 
B) Debit Nonreciprocal transfer-out $100,000;Credit Cash $100,000. 
C) Debit Fund balance$100,000;Credit Cash $100,000. 
D) Debit Reciprocal transfer-out $100,000;Credit Cash $100,000.

Question 9

Assume that the City of Juneau maintains its books and records to facilitate the preparation of its fund financial statements.The city pays its employees bi-weekly on Friday.The fiscal year ended on Wednesday,June 30.Employees had been paid on Friday,June 25.The employees paid from the general fund had earned $90,000 on Monday,Tuesday,and Wednesday June 28,29,and 30).What entry,if any,should be made in the city's general fund on June 30?

Accepted Answer

A) Debit Expenditures $90,000;credit Wages and salaries payable $90,000. 
B) Debit Expenses $90,000;credit Wages and salaries payable $90,000. 
C) Debit Expenditures $90,000;credit Encumbrances $90,000. 
D) No entry is required. 
A) Debit Expenditures $90,000;credit Wages and salaries payable $90,000. 
B) Debit Expenses $90,000;credit Wages and salaries payable $90,000. 
C) Debit Expenditures $90,000;credit Encumbrances $90,000. 
D) No entry is required.

Question 10

A transfer of cash from the general fund to a debt service fund to pay interest on debt should be recorded in the general fund as a nonreciprocal transfer-out.

Accepted Answer

A) True 
 B)False

Question 11

If recording a general long-term liability in a governmental fund upon issuing a bond,the credit should be to a bonds payable account.

Accepted Answer

A) True 
 B)False

Question 12

Use of the consumption method of accounting for inventory is not acceptable for the fund financial statements.

Accepted Answer

A) True 
 B)False

Question 13

The amount of sick leave expense that should appear on the government-wide financial statements for the fiscal year ended 6/30/15 is

Accepted Answer

A) $2.8 million. 
B) $2.6 million. 
C) $1.2 million. 
D) $1.4 million. 
A) $2.8 million. 
B) $2.6 million. 
C) $1.2 million. 
D) $1.4 million.

Question 14

Star City leased a bulldozer for use in activities accounted for in the general fund.The city paid $40,000 and agreed to pay $40,000 per year for 3 years.The bulldozer has a useful life of six years.The lease qualified as a capital lease.Assuming that the city maintains is books and records in a manner that facilitates the preparation of the fund financial statements,the appropriate entry in the general fund at the date of acquisition would be

Accepted Answer

A) Debit Expenditures $160,000;Credit Cash $40,000 and Other financing sources $120,000. 
B) Debit Expenditures $40,000 and Prepaid lease $120,000;Credit Cash $40,000 and Other financing sources $120,000. 
C) Debit Equipment $160,000;Credit Cash $40,000 and Other financing sources $120,000. 
D) Debit Expenditures $160,000;Credit Cash $40,000 and Lease payable $120,000. 
A) Debit Expenditures $160,000;Credit Cash $40,000 and Other financing sources $120,000. 
B) Debit Expenditures $40,000 and Prepaid lease $120,000;Credit Cash $40,000 and Other financing sources $120,000. 
C) Debit Equipment $160,000;Credit Cash $40,000 and Other financing sources $120,000. 
D) Debit Expenditures $160,000;Credit Cash $40,000 and Lease payable $120,000.

Question 15

As used in government accounting,expenditures are decreases in

Accepted Answer

A) Net assets. 
B) Net current financial resources. 
C) Net cash. 
D) Net economic resources. 
A) Net assets. 
B) Net current financial resources. 
C) Net cash. 
D) Net economic resources.

Question 16

On July 1,Gilbert County bought computer equipment for use in the administrative offices of the county.The equipment has an estimated useful life of three years and salvage of $10,000.The county has a 6/30 fiscal year-end.Assuming that the county maintains its books and records in a manner that facilitates the preparation of government-wide financial statements,the $85,000 cost of this equipment would require which of the following entries?

Accepted Answer

A) Debit Expenditures $85,000;Credit Cash $85,000. 
B) Debit Equipment $85,000;Credit Cash $85,000. 
C) Debit Expenses $85,000;Credit Cash $85,000. 
D) No entry is required. 
A) Debit Expenditures $85,000;Credit Cash $85,000. 
B) Debit Equipment $85,000;Credit Cash $85,000. 
C) Debit Expenses $85,000;Credit Cash $85,000. 
D) No entry is required.

Question 17

This year,Port City was sued for injuries sustained when a citizen slipped and broke her hip on the icy City Hall steps.The city attorney estimates the city will be held liable by the courts and a judgment of $300,000 will result.Because of the nature of the case it will likely be four years before the city makes any payment related to the accident.The present value of the likely future payment is $251,000.In the general fund,at the end of the current fiscal year,Port City should recognize a liability of

Accepted Answer

A) $300,000. 
B) $251,000. 
C) $0. 
D) $75,000. 
A) $300,000. 
B) $251,000. 
C) $0. 
D) $75,000.

Question 18

Several years ago,Durham City issued $1 million in zero coupon bonds due and payable in 2023.The bonds were sold at an amount to yield investors 6 percent over the life of the bonds.During the current year,how much in interest expenditures should Durham City recognize related to these bonds?

Accepted Answer

A) Difference between the present value of the bonds at the beginning of the period and the present value of the bonds at the end of the period. 
B) Face amounts of bonds times 6 percent. 
C) Book value of bonds times 6 percent. 
D) None. 
A) Difference between the present value of the bonds at the beginning of the period and the present value of the bonds at the end of the period. 
B) Face amounts of bonds times 6 percent. 
C) Book value of bonds times 6 percent. 
D) None.

Question 19

Most governments budget appropriate)resources for principal and interest only for the period in which a payment is due-not for future payments.

Accepted Answer

A) True 
 B)False

Question 20

The construction of a bike path in Bay City was accounted for in a capital projects fund. $$\begin{array}{l}
\text { Financing for the project came from the following sources: }\
\begin{array} { l l } 
\text { Transfer from Bay City's general fund } & \$ 10,000 \
\text { Proceeds from general obligation bond issue } & \$ 100,000 \
\text { Grant from state government } & \$ 50,000
\end{array}
\end{array}$$ Which of the following amounts should appear in this year's governmental funds statement of revenues,expenditures,and changes in fund balances for other financing sources?

Accepted Answer

A) $160,000 
B) $110,000 
C) $100,000 
D) $10,000 
E) $60,000 
A) $160,000 
B) $110,000 
C) $100,000 
D) $10,000 
E) $60,000

When accounting for inventory items in a governmental fund,GASB standards permit the use of the consumption method only.

The amount of pension expenditures that a government should recognize in its general fund financial statements during the current year is

The City of Holbrook transferred $100,000 from the general fund to a debt service fund for payment of interest.The appropriate entry in the general fund to record this transfer would be

A transfer of cash from the general fund to a debt service fund to pay interest on debt should be recorded in the general fund as a nonreciprocal transfer-out.

If recording a general long-term liability in a governmental fund upon issuing a bond,the credit should be to a bonds payable account.

Use of the consumption method of accounting for inventory is not acceptable for the fund financial statements.

The amount of sick leave expense that should appear on the government-wide financial statements for the fiscal year ended 6/30/15 is

As used in government accounting,expenditures are decreases in

Several years ago,Durham City issued $1 million in zero coupon bonds due and payable in 2023.The bonds were sold at an amount to yield investors 6 percent over the life of the bonds.During the current year,how much in interest expenditures should Durham City recognize related to these bonds?

Most governments budget appropriate)resources for principal and interest only for the period in which a payment is due-not for future payments.

The Government and Not-For-Profit Environment

Fund Accounting

Issues of Budgeting and Control

Recognizing Revenues in Governmental Funds

Accounting for Capital Projects and Debt Service

Capital Assets and Investments in Marketable Securities

Long-Term Obligations

Business-Type Activities

Fiduciary Funds and Permanent Funds

Issues of Reporting, Disclosure, and Financial Analysis

Not-For-Profit Organizations

Colleges and Universities

Health Care Providers

Managing for Results

Auditing Governments and Not-For-Profit Organizations

Federal Government Accounting

Filters

Exam 5: Recognizing Expenditures in Governmental Funds

When accounting for inventory items in a governmental fund,GASB standards permit the use of the consumption method only.

The amount of pension expenditures that a government should recognize in its general fund financial statements during the current year is

The City of Holbrook transferred $100,000 from the general fund to a debt service fund for payment of interest.The appropriate entry in the general fund to record this transfer would be

A transfer of cash from the general fund to a debt service fund to pay interest on debt should be recorded in the general fund as a nonreciprocal transfer-out.

If recording a general long-term liability in a governmental fund upon issuing a bond,the credit should be to a bonds payable account.

Use of the consumption method of accounting for inventory is not acceptable for the fund financial statements.

The amount of sick leave expense that should appear on the government-wide financial statements for the fiscal year ended 6/30/15 is

As used in government accounting,expenditures are decreases in

Several years ago,Durham City issued $1 million in zero coupon bonds due and payable in 2023.The bonds were sold at an amount to yield investors 6 percent over the life of the bonds.During the current year,how much in interest expenditures should Durham City recognize related to these bonds?

Most governments budget appropriate)resources for principal and interest only for the period in which a payment is due-not for future payments.

The Government and Not-For-Profit Environment

Fund Accounting

Issues of Budgeting and Control

Recognizing Revenues in Governmental Funds

Accounting for Capital Projects and Debt Service

Capital Assets and Investments in Marketable Securities

Long-Term Obligations

Business-Type Activities

Fiduciary Funds and Permanent Funds

Issues of Reporting, Disclosure, and Financial Analysis

Not-For-Profit Organizations

Colleges and Universities

Health Care Providers

Managing for Results

Auditing Governments and Not-For-Profit Organizations

Federal Government Accounting

Filters