Question 1

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 2

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

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) Unlike other capitalized assets, infrastructure assets should never be depreciated. 
B) The costs of general government infrastructure assets should be recognized as expenditures in governmental fund statements as the costs are incurred. 
C) Governments that choose to apply the modified approach to accounting for infrastructure need not capitalize infrastructure assets. 
D) Under the modified approach, governments should capitalize both the initial costs of infrastructure assets and subsequent outlays intended to preserve and extend the assets' useful lives. 
A) Unlike other capitalized assets, infrastructure assets should never be depreciated. 
B) The costs of general government infrastructure assets should be recognized as expenditures in governmental fund statements as the costs are incurred. 
C) Governments that choose to apply the modified approach to accounting for infrastructure need not capitalize infrastructure assets. 
D) Under the modified approach, governments should capitalize both the initial costs of infrastructure assets and subsequent outlays intended to preserve and extend the assets' useful lives.

Question 5

Which of the following is NOT a benefit to cities of participating in their state's investment pool?

Accepted Answer

A) Lower trading costs. 
B) Concentration on the latest innovative investment instruments. 
C) Shared costs of receiving expert investment advice. 
D) Greater opportunity to diversify. 
A) Lower trading costs. 
B) Concentration on the latest innovative investment instruments. 
C) Shared costs of receiving expert investment advice. 
D) Greater opportunity to diversify.

Question 6

The risk that the issuer or other party to an investment will not fulfill its obligation is

Accepted Answer

A) Interest rate risk. 
B) Credit risk. 
C) Concentration of credit risk. 
D) Foreign currency risk. 
A) Interest rate risk. 
B) Credit risk. 
C) Concentration of credit risk. 
D) Foreign currency risk.

Question 7

At the government-wide level, governments must depreciate inexhaustible assets, such as land, works of art, or historical treasures.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following can be referred to as a derivative?

Accepted Answer

A) A reference rate, such as a prevailing interest rate. 
B) A security whose value depends on (is derived from)that of some underlying asset, such as a share of stock. 
C) An index, such as the Standard & Poor's index of stock prices. 
D) All of the above. 
A) A reference rate, such as a prevailing interest rate. 
B) A security whose value depends on (is derived from)that of some underlying asset, such as a share of stock. 
C) An index, such as the Standard & Poor's index of stock prices. 
D) All of the above.

Question 9

Governments should depreciate general capital assets, such as police cars and snow plows, in governmental funds.

Accepted Answer

A) True 
 B)False

Question 10

Governments are prohibited from entering into reverse repurchase agreements.

Accepted Answer

A) True 
 B)False

Question 11

The risk that changes in interest rates will adversely affect the fair value of an investment is

Accepted Answer

A) Interest rate risk. 
B) Credit risk. 
C) Concentration of credit risk. 
D) Foreign currency risk. 
A) Interest rate risk. 
B) Credit risk. 
C) Concentration of credit risk. 
D) Foreign currency risk.

Question 12

Disclosures about investment risks apply

Accepted Answer

A) To investments only. 
B) To deposits, investments, and derivatives. 
C) To deposits and investments. 
D) Only to investments held by governmental and proprietary funds. 
A) To investments only. 
B) To deposits, investments, and derivatives. 
C) To deposits and investments. 
D) Only to investments held by governmental and proprietary funds.

Question 13

The objectives of financial reporting for capital 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

What is infrastructure? Give some examples.Why should governments capitalize infrastructure assets? What are some of the objections raised by critics of the GASB's standards for general government infrastructure? What is the GASB's position on those criticisms?

Accepted Answer

A government's infrastructure is its cap

Question 15

If a government receives donations of works 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 16

Which of the following costs will NOT be included in the cost of capital 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 17

Mariano County traded in a used pickup for a new pickup truck with a sticker price of $44,000.The old pickup had a fair value of $26,000, historical cost of $45,000, and accumulated depreciation of $18,000.The dealer took the old truck and $15,000 for the new truck.The new truck should be reported on the government-wide financial statements at

Accepted Answer

A) $15,000. 
B) $42,000. 
C) $44,000. 
D) $41,000. 
A) $15,000. 
B) $42,000. 
C) $44,000. 
D) $41,000.

Question 18

General capital assets are not reported in governmental funds because of the funds' measurement focus (current financial resources).

Accepted Answer

A) True 
 B)False

Question 19

GASB standards allow a major exception for reporting depreciation expense on certain capital assets.What is this exception? What is the notion behind the exception?

Accepted Answer

The major exception applies to infrastru

Question 20

Surfer City 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.

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

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

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

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

Which of the following is NOT a benefit to cities of participating in their state's investment pool?

The risk that the issuer or other party to an investment will not fulfill its obligation is

At the government-wide level, governments must depreciate inexhaustible assets, such as land, works of art, or historical treasures.

Which of the following can be referred to as a derivative?

Governments should depreciate general capital assets, such as police cars and snow plows, in governmental funds.

Governments are prohibited from entering into reverse repurchase agreements.

The risk that changes in interest rates will adversely affect the fair value of an investment is

Disclosures about investment risks apply

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

What is infrastructure? Give some examples.Why should governments capitalize infrastructure assets? What are some of the objections raised by critics of the GASB's standards for general government infrastructure? What is the GASB's position on those criticisms?

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

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

General capital assets are not reported in governmental funds because of the funds' measurement focus (current financial resources).

GASB standards allow a major exception for reporting depreciation expense on certain capital assets.What is this exception? What is the notion behind the exception?

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

Pensions and Other Fiduciary Activities

Issues of Reporting, Disclosure, and Financial Analysis

Not-For-Profit Organizations

Colleges and Universities

Health Care Providers

Managing for Results

Auditing Governments and Notforprofit Organizations

Federal Government Accounting

Filters

Exam 7: Capital Assets and Investments in Marketable Securities

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

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

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

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

Which of the following is NOT a benefit to cities of participating in their state's investment pool?

The risk that the issuer or other party to an investment will not fulfill its obligation is

At the government-wide level, governments must depreciate inexhaustible assets, such as land, works of art, or historical treasures.

Which of the following can be referred to as a derivative?

Governments should depreciate general capital assets, such as police cars and snow plows, in governmental funds.

Governments are prohibited from entering into reverse repurchase agreements.

The risk that changes in interest rates will adversely affect the fair value of an investment is

Disclosures about investment risks apply

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

What is infrastructure? Give some examples.Why should governments capitalize infrastructure assets? What are some of the objections raised by critics of the GASB's standards for general government infrastructure? What is the GASB's position on those criticisms?

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

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

General capital assets are not reported in governmental funds because of the funds' measurement focus (current financial resources).

GASB standards allow a major exception for reporting depreciation expense on certain capital assets.What is this exception? What is the notion behind the exception?

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

Pensions and Other Fiduciary Activities

Issues of Reporting, Disclosure, and Financial Analysis

Not-For-Profit Organizations

Colleges and Universities

Health Care Providers

Managing for Results

Auditing Governments and Notforprofit Organizations

Federal Government Accounting

Filters