Exam 2: Fund Accounting

Governments use the modified accrual basis of accounting and a current financial resources measurement focus when presenting the governmental fund financial statements but they use the accrual basis of accounting and the flow of economic resources for the government-wide financial statements. What is a basis of accounting? What is measurement focus? How does the selection of one affect the selection of the other?

The state collects a gasoline tax that must be used to support highway construction and maintenance. The gasoline tax revenue should be accounted for in which of the following funds?

Which of the following is NOT included in the financial section of a comprehensive annual financial report?

The basic financial statements for Ammon City contain the following statements. For each statement identify the appropriate measurement focus and basis of accounting. a.) Government-wide statement of position b.) Government-wide statement of activities c.) Balance sheet-governmental funds d.) Statement of revenues, expenditures, and changes in fund balance-governmental funds e.) Statement of net assets-proprietary funds f.) Statement of revenues, expenses, and changes in fund net assets-proprietary funds

Which of the following sections is NOT required in the comprehensive annual financial report of a city?

If an entity adopts a full accrual basis of accounting, its measurement focus will automatically be on cash.

During the current fiscal year, Mountain View City's water utility, an enterprise fund, rendered billings for water supplied to the general fund. Which of the following accounts should be debited by the general fund?

The City of Orlando maintains funds for debt service, capital projects, and special revenues. It does not, however, maintain funds for police, recreation, and general administration. Why do you suppose it does not maintain a separate fund for each of its functional areas?

Assume that the City of Amber maintains its books and records in a manner that facilitates the preparation of fund financial statements. Amber City maintains a general fund, a capital projects fund, and a special revenue fund. During the current fiscal year, the city engaged in the following transactions. Record all transactions. Be sure to indicate clearly the fund in which the entry is made. a. The city sold bonds, face value $26 million, at par to finance the construction of a new city hall. b. The city purchased two new police cars at a total cost of $50,000. c. The city collected $8,000 in taxes dedicated for the eradication of noxious weeds. d. The city spent $6,000 on pesticides for noxious weeds. e. The city acquired a new tractor for $80,000. The city paid $20,000 in cash and signed a note that is due in three years.

What are the elements of the financial statements of state and local governments? Which elements relate to statements of net position? How do these elements differ from those reported by businesses?

Which of the following funds is accounted for on the modified accrual basis of accounting?

Under the GASB Statement No. 34 reporting model, the focus of the government-wide statement of activities is on which of the following?

Which of the following funds is a proprietary fund? i. Internal service fund. ii. Enterprise fund. iii. Capital projects fund.

Wigmore City receives a donation of $10 million from a wealthy citizen who stipulates that the funds be used to acquire and install park benches in the city's Veterans Park. The city should report the donation as an increase in

When a fax machine purchased by a governmental entity is received, it should be recorded in the general fund as a(n)

The basis of accounting determines when transactions and events are recognized.

The Geneva Housing Authority, a governmental entity, accounts for its activities on a modified accrual basis of accounting. In the current period, it reports the following transactions: -The Authority issued $2.5 million in long-term bonds. -The Authority purchased 4 acres of land for $500,000 in cash. -It sold one of the 4 acres of land for $125,000 in cash. -It made a $325,000 payment on the debt, consisting of $75,000 of interest and $250,000 of principal. -It lost a lawsuit filed by one of its renters and was ordered to pay $1 million in damages over 5 years. It made its first cash payment of $200,000. a. Prepare journal entries to record each of these transactions in the general fund. b. Based on your entries, prepare a balance sheet and statement of revenues, expenditures, and changes in fund balance for the general fund. c. Comment on how these statements capture the Authority's economic resources and obligations. d. Comment on the extent to which the statement of revenues, expenditures, and changes in fund balances captures the Authority's costs of services. e. When the Authority prepares GAAP financial statements based on GASB Statement No. 34, what assets and liabilities would be added in the Authority's government-wide Statement of Net Assets? What gains and losses would be added in its government-wide Statement of Activities?

The focus of the government-wide statement of activities of the City of West Hills is on which of the following?

Which of the following liabilities would NOT be found in the general fund balance sheet of the City of Marmaduke?

Which of the following accounts would you least expect to see in a debt service fund?