Exam 2: Fund Accounting

For what purposes do governmental entities use agency funds? What are the distinguishing characteristics of agency funds?

A city receives a donation from a citizen who specifies that the principal must be invested, and the earnings must be used to support operations of a city-owned recreational facility. The principal of this gift should be accounted for in which of the following funds?

General funds are established to account for resources legally restricted for specified purposes.

Fund accounting promotes control and accountability over restricted resources.

In accounting for costs incurred on a major construction project in a capital projects fund, the construction outlays are reported as expenditures, not capital assets.

The activities of an internal service fund are presented on the statement of revenues, expenses, and changes in fund net assets in the fund financial statements. Why?

The basic financial statements of a city do NOT include which of the following?

Funds divide a government into functional departments.

A government may report some of its funds on a full accrual basis.

Compare a restricted fund balance with a committed fund balance. Give an example of when a government might use each classification.

Lakeside Art Center, a nongovernmental not-for-profit entity, receives a contribution of $5 million. The donor stipulates that the contribution must be used to acquire paintings by local artists. Lakeside should classify the contribution as

Which of the following statements is NOT required in the financial reports of a not-for-profit entity?

The Chessie Foundation, a newly established governmental entity, engaged in the following transactions: -A donor made a $1,000,000 pledge, giving the foundation a legally enforceable 90-day note for the full amount. -The same donor paid $500,000 of the amount pledged. -The foundation purchased a building for $900,000, paying $90,000 in cash and giving a ten-year mortgage for the balance. The building has a 25-year useful life. The foundation charges a half-year's depreciation for all assets in the year they are acquired. -The foundation hired five employees. By year-end, these employees have earned $10,000 in salaries and wages for which they have not been paid. The foundation accounts for its activities in a single fund. a. Prepare journal entries to record the transactions, making the following alternative assumptions as to the fund's measurement focus: -Cash only -Cash plus other current financial resources (cash plus short-term receivables less short-term payables) -All economic resources b. Based on your entries, prepare appropriate operating statements and balance sheets for the organization.

What are fiduciary funds? Why don't governments incorporate (consolidate) these funds into their government-wide financial statements?

Which of the following assets would NOT be found in the general fund balance sheet of the City of Harrison?

To fulfill the printing needs of its various departments and agencies, the City has established a Central Print Shop, which bills the various departments and agencies of the city for printing services rendered. The Central Print Shop should be accounted for in which of the following funds.

Deferred inflow of resources is

What are the three categories of restrictions that must be used to report the resources of not-for-profit organizations? Who must impose the restrictions in order for them to be reported?

At first glance, the government-wide statement of activities bears little resemblance to the income statement of a business.

When a governmental entity adopts a basis of accounting other than full accrual and a measurement focus that excludes long-lived assets and liabilities in its governmental fund types: