Question 1

The risk that the transaction will be determined to be prohibited by law, regulation or contract is

Accepted Answer

A) Market risk. 
B) Credit risk. 
C) Collaterized risk. 
D) Legal risk. 
A) Market risk. 
B) Credit risk. 
C) Collaterized risk. 
D) Legal risk. D

Question 2

For a government that elects NOT to capitalize its works of art and similar assets, the appropriate entry when receiving a contribution of a work of art in the government-wide financial statements is

Accepted Answer

A) No entry is required for contributed assets. 
B) Debit Asset; Credit Revenues. 
C) Debit Asset; Credit Equity. 
D) Debit Expense, Credit Revenue. 
A) No entry is required for contributed assets. 
B) Debit Asset; Credit Revenues. 
C) Debit Asset; Credit Equity. 
D) Debit Expense, Credit Revenue. D

Question 3

Which of the following is NOT an infrastructure asset?

Accepted Answer

A) Roads. 
B) Sidewalks. 
C) Buildings. 
D) Bridges. 
A) Roads. 
B) Sidewalks. 
C) Buildings. 
D) Bridges. C

Question 4

Which of the following is true with regard to deferred maintenance?

Accepted Answer

A) Deferred maintenance costs are delayed repair, or upkeep, measured by the outlay required to restore a plant or individual asset to full operating characteristics. 
B) Deferred maintenance costs should be measured as the amount necessary to bring the assets up to their expected operating condition. 
C) Deferred maintenance costs may be interpreted as a potential call upon government resources-an obligation that is being passed on to taxpayers of the future. 
D) Deferred maintenance costs are not useful information to readers of financial statements because they are not objective and verifiable and thus violate one of the basic qualitative characteristics of accounting information. 
A) Deferred maintenance costs are delayed repair, or upkeep, measured by the outlay required to restore a plant or individual asset to full operating characteristics. 
B) Deferred maintenance costs should be measured as the amount necessary to bring the assets up to their expected operating condition. 
C) Deferred maintenance costs may be interpreted as a potential call upon government resources-an obligation that is being passed on to taxpayers of the future. 
D) Deferred maintenance costs are not useful information to readers of financial statements because they are not objective and verifiable and thus violate one of the basic qualitative characteristics of accounting information.

Question 5

Donated assets are reported in the government-wide financial statements at

Accepted Answer

A) Historical cost to the donor. 
B) Book value in the hands of the donor. 
C) Fair value on date of donation. 
D) Zero value because they were not purchased.
[NOTE: Guidance on the calculation of gain or loss in the next two series of questions is not covered in this chapter but is from APB Opinion 29.Students should be familiar with this pronouncement from their intermediate accounting classes.] 
A) Historical cost to the donor. 
B) Book value in the hands of the donor. 
C) Fair value on date of donation. 
D) Zero value because they were not purchased.
[NOTE: Guidance on the calculation of gain or loss in the next two series of questions is not covered in this chapter but is from APB Opinion 29.Students should be familiar with this pronouncement from their intermediate accounting classes.]

Question 6

If a government receives a donation of a work of art, the government must recognize revenue in its government-wide financial statements

Accepted Answer

A) Only if it elects to capitalize its collection. 
B) Only if it elects NOT to capitalize its collection. 
C) On all donations of works of art. 
D) It is not permitted to recognize revenue from donations. 
A) Only if it elects to capitalize its collection. 
B) Only if it elects NOT to capitalize its collection. 
C) On all donations of works of art. 
D) It is not permitted to recognize revenue from donations.

Question 7

For a government that elects to capitalize its works of art and similar assets, the appropriate entry when receiving a contribution of a work of art in the government-wide financial statements is

Accepted Answer

A) No entry is required for contributed assets. 
B) Debit Asset; Credit Revenues. 
C) Debit Asset; Credit Equity. 
D) Debit Expenditures; Credit Revenues. 
A) No entry is required for contributed assets. 
B) Debit Asset; Credit Revenues. 
C) Debit Asset; Credit Equity. 
D) Debit Expenditures; Credit Revenues.

Question 8

The government-wide financial statements report capital assets:

Accepted Answer

A) At estimated fair value 
B) At historical cost, including ancillary charges 
C) In the general fixed assets account group 
D) Only in the notes if they are donated 
A) At estimated fair value 
B) At historical cost, including ancillary charges 
C) In the general fixed assets account group 
D) Only in the notes if they are donated

Question 9

Which of the following costs will NOT be included in the cost of fixed assets on the government-wide financial statements?

Accepted Answer

A) Purchase price invoice amount. 
B) Cost of demolishing existing structures that cannot be used. 
C) Interest on self-constructed items. 
D) Engineering costs. 
A) Purchase price invoice amount. 
B) Cost of demolishing existing structures that cannot be used. 
C) Interest on self-constructed items. 
D) Engineering costs.

Question 10

If a government elects the modified approach with regard to capitalization of infrastructure

Accepted Answer

A) Costs to preserve infrastructure assets are expensed as incurred with no additional disclosure required. 
B) Costs to preserve infrastructure assets are expensed as incurred and disclosure of assessed condition is required. 
C) Costs to preserve infrastructure assets are capitalized as incurred and depreciated over the estimated useful with no additional disclosure required. 
D) Costs to preserve infrastructure assets are capitalized as incurred and NOT depreciated over the estimated useful life with additional disclosure required. 
A) Costs to preserve infrastructure assets are expensed as incurred with no additional disclosure required. 
B) Costs to preserve infrastructure assets are expensed as incurred and disclosure of assessed condition is required. 
C) Costs to preserve infrastructure assets are capitalized as incurred and depreciated over the estimated useful with no additional disclosure required. 
D) Costs to preserve infrastructure assets are capitalized as incurred and NOT depreciated over the estimated useful life with additional disclosure required.

Question 11

Unlike businesses, governments should not capitalize interest on general capital assets that they construct themselves.

Accepted Answer

A) True 
 B)False

Question 12

With regard to capitalization of infrastructure, which of the following is true?

Accepted Answer

A) All infrastructure assets must be capitalized on the financial statements before GASB Statement 34 can be implemented. 
B) Only large governments must capitalize infrastructure assets on the date they implement GASB Statement 34. 
C) Only small- and medium-size government may elect to delay capitalization of infrastructure assets. 
D) Small governments may omit capitalizing infrastructure assets acquired or that received significant improvements before June 15, 2003. 
A) All infrastructure assets must be capitalized on the financial statements before GASB Statement 34 can be implemented. 
B) Only large governments must capitalize infrastructure assets on the date they implement GASB Statement 34. 
C) Only small- and medium-size government may elect to delay capitalization of infrastructure assets. 
D) Small governments may omit capitalizing infrastructure assets acquired or that received significant improvements before June 15, 2003.

Question 13

The objectives of financial reporting for fixed assets should be to provide information

Accepted Answer

A) About a governmental entity's physical resources. 
B) That can be used to assess the service potential of a governmental entity's physical resources. 
C) To help users assess a government's long- and short-term capital needs. 
D) All of the above. 
A) About a governmental entity's physical resources. 
B) That can be used to assess the service potential of a governmental entity's physical resources. 
C) To help users assess a government's long- and short-term capital needs. 
D) All of the above.

Question 14

Use the following information to answer questions 
Rapid City traded in a used pickup for a new pickup with a sticker price of $44,000.The old truck had a historical cost of $40,000, accumulated depreciation of $16,000, and a fair value of $27,000.The dealer took the old truck and $13,000 cash for the new truck.
-What is the amount of gain/loss that should be reported in the government-wide financial statements?

Accepted Answer

A) $0. 
B) $3,000 gain. 
C) $3,000 loss. 
D) $7,000 gain. 
A) $0. 
B) $3,000 gain. 
C) $3,000 loss. 
D) $7,000 gain.

Question 15

Governments invest in marketable securities for much the same reason that businesses do-to earn a return on cash that would otherwise be unproductive.

Accepted Answer

A) True 
 B)False

Question 16

For governmental entities, a capital asset is considered impaired

Accepted Answer

A) When its service capacity has declined significantly and unexpectedly. 
B) When it is reported in a governmental fund. 
C) When it no longer generates cash flows. 
D) When it no longer generates the cash flows expected of it. 
A) When its service capacity has declined significantly and unexpectedly. 
B) When it is reported in a governmental fund. 
C) When it no longer generates cash flows. 
D) When it no longer generates the cash flows expected of it.

Question 17

The "restoration cost" approach to determining the extent of an impairment

Accepted Answer

A) First calculates the percentage decline in the number of service units caused by the impairment. 
B) First determines the current cost of an asset that would provide the current impaired level of service. 
C) Estimates the cost to restore the utility of an impaired asset. 
D) Estimates the change in future cash flows generated by the impaired asset. 
A) First calculates the percentage decline in the number of service units caused by the impairment. 
B) First determines the current cost of an asset that would provide the current impaired level of service. 
C) Estimates the cost to restore the utility of an impaired asset. 
D) Estimates the change in future cash flows generated by the impaired asset.

Question 18

The City of Shiloh sold a used police car.The police car had a historical cost of $25,000, a fair value of $18,000, and was sold for $10,000.Assuming that the City maintains its books and records in a manner to facilitate the preparation of the fund financial statements, what is the appropriate entry in the General Fund to record this sale?

Accepted Answer

A) Debit Cash $10,000; Credit Revenue $10,000. 
B) Debit Cash $10,000 and Loss on sale $8,000; Credit Automotive equipment $18,000. 
C) Debit Cash $10,000; Credit Other financing sources-sale of asset $10,000. 
D) Debit Cash $10,000; Credit Automotive equipment $10,000. 
A) Debit Cash $10,000; Credit Revenue $10,000. 
B) Debit Cash $10,000 and Loss on sale $8,000; Credit Automotive equipment $18,000. 
C) Debit Cash $10,000; Credit Other financing sources-sale of asset $10,000. 
D) Debit Cash $10,000; Credit Automotive equipment $10,000.

Question 19

A broker-dealer or other financial institution transfers cash to a government in exchange for securities and the government agrees to repay the cash plus interest in exchange for return of the same securities.From the government's point of view, this transaction is a

Accepted Answer

A) Repurchase agreement. 
B) Reverse repurchase agreement. 
C) Derivative. 
D) Option. 
A) Repurchase agreement. 
B) Reverse repurchase agreement. 
C) Derivative. 
D) Option.

Question 20

The risk that there will a change in interest or market prices is

Accepted Answer

A) Market risk. 
B) Credit risk. 
C) Collaterized risk. 
D) Legal risk. 
A) Market risk. 
B) Credit risk. 
C) Collaterized risk. 
D) Legal risk.

The risk that the transaction will be determined to be prohibited by law, regulation or contract is

For a government that elects NOT to capitalize its works of art and similar assets, the appropriate entry when receiving a contribution of a work of art in the government-wide financial statements is

Which of the following is NOT an infrastructure asset?

Which of the following is true with regard to deferred maintenance?

Donated assets are reported in the government-wide financial statements at

If a government receives a donation of a work of art, the government must recognize revenue in its government-wide financial statements

For a government that elects to capitalize its works of art and similar assets, the appropriate entry when receiving a contribution of a work of art in the government-wide financial statements is

The government-wide financial statements report capital assets:

Which of the following costs will NOT be included in the cost of fixed assets on the government-wide financial statements?

If a government elects the modified approach with regard to capitalization of infrastructure

Unlike businesses, governments should not capitalize interest on general capital assets that they construct themselves.

With regard to capitalization of infrastructure, which of the following is true?

The objectives of financial reporting for fixed assets should be to provide information

Governments invest in marketable securities for much the same reason that businesses do-to earn a return on cash that would otherwise be unproductive.

For governmental entities, a capital asset is considered impaired

The "restoration cost" approach to determining the extent of an impairment

A broker-dealer or other financial institution transfers cash to a government in exchange for securities and the government agrees to repay the cash plus interest in exchange for return of the same securities.From the government's point of view, this transaction is a

The risk that there will a change in interest or market prices is

The Government and Not-For-Profit Environment

Fund Accounting

Issues of Budgeting and Control

Recognizing Revenues in Governmental Funds

Recognizing Expenditures in Governmental Funds

Accounting for Capital Projects and Debt Service

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 7: Capital Assets and Investments in Marketable Securities

The risk that the transaction will be determined to be prohibited by law, regulation or contract is

For a government that elects NOT to capitalize its works of art and similar assets, the appropriate entry when receiving a contribution of a work of art in the government-wide financial statements is

Which of the following is NOT an infrastructure asset?

Which of the following is true with regard to deferred maintenance?

Donated assets are reported in the government-wide financial statements at

If a government receives a donation of a work of art, the government must recognize revenue in its government-wide financial statements

For a government that elects to capitalize its works of art and similar assets, the appropriate entry when receiving a contribution of a work of art in the government-wide financial statements is

The government-wide financial statements report capital assets:

Which of the following costs will NOT be included in the cost of fixed assets on the government-wide financial statements?

If a government elects the modified approach with regard to capitalization of infrastructure

Unlike businesses, governments should not capitalize interest on general capital assets that they construct themselves.

With regard to capitalization of infrastructure, which of the following is true?

The objectives of financial reporting for fixed assets should be to provide information

Governments invest in marketable securities for much the same reason that businesses do-to earn a return on cash that would otherwise be unproductive.

For governmental entities, a capital asset is considered impaired

The "restoration cost" approach to determining the extent of an impairment

A broker-dealer or other financial institution transfers cash to a government in exchange for securities and the government agrees to repay the cash plus interest in exchange for return of the same securities.From the government's point of view, this transaction is a

The risk that there will a change in interest or market prices is

The Government and Not-For-Profit Environment

Fund Accounting

Issues of Budgeting and Control

Recognizing Revenues in Governmental Funds

Recognizing Expenditures in Governmental Funds

Accounting for Capital Projects and Debt Service

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