Question 1

When a snowplow is purchased by a government, it should be recorded in the governmental activities general journal as a(an):

Accepted Answer

A)  Expenditure. 
B)  Capital asset. 
C)  Appropriation. 
D)  Expense. 
A)  Expenditure. 
B)  Capital asset. 
C)  Appropriation. 
D)  Expense. B

Question 2

A government experienced significant loss of certain roadways and bridges as a result of major flooding. Which of the following estimation approaches would be most useful in estimating the amount of asset impairment that has occurred?

Accepted Answer

A)  Deflated depreciated replacement cost approach. 
B)  Service units approach. 
C)  Restorative cost approach. 
D)  Each of these three approaches would be equally useful. 
A)  Deflated depreciated replacement cost approach. 
B)  Service units approach. 
C)  Restorative cost approach. 
D)  Each of these three approaches would be equally useful. C

Question 3

Under a service concession arrangement:

Accepted Answer

A)  The transferring government continues to report the transferred asset as a capital asset and any related contractual obligations as liabilities. 
B)  The operating government will record the transferring government's payment or receivable, a liability for the present value of significant contractual obligations and a corresponding deferred inflow of resources for the difference between the two. 
C)  Any deferred inflow of resources is recognized as revenue at the time the arrangement takes place. 
D)  All of the given statements are True. 
A)  The transferring government continues to report the transferred asset as a capital asset and any related contractual obligations as liabilities. 
B)  The operating government will record the transferring government's payment or receivable, a liability for the present value of significant contractual obligations and a corresponding deferred inflow of resources for the difference between the two. 
C)  Any deferred inflow of resources is recognized as revenue at the time the arrangement takes place. 
D)  All of the given statements are True. A

Question 4

The Town of Golden purchased a squad car for the police department. If the operations of the police department are financed by general revenues, which of the following is correct concerning where the capital asset would be recorded?

Accepted Answer

A)  General Fund: No; Governmental Activities: Yes 
B)  General Fund: No; Governmental Activities: No 
C)  General Fund: Yes; Governmental Activities: No 
D)  General Fund: Yes; Governmental Activities: Yes 
A)  General Fund: No; Governmental Activities: Yes 
B)  General Fund: No; Governmental Activities: No 
C)  General Fund: Yes; Governmental Activities: No 
D)  General Fund: Yes; Governmental Activities: Yes

Question 5

Which of the following statements is correct concerning interest expenditures incurred during the period of construction of capital projects?

Accepted Answer

A)  Interest expenditures may not be capitalized as part of the cost of general capital assets reported in governmental activities. 
B)  Interest expenditures may be capitalized as part of the cost of general capital assets reported in the governmental activities accounts at the government-wide level. 
C)  Interest expenditures must be capitalized as part of the cost of general capital assets reported in the capital projects fund. 
D)  The capitalization of interest expenditures as part of the cost of general capital assets reported in the capital projects fund is optional. 
A)  Interest expenditures may not be capitalized as part of the cost of general capital assets reported in governmental activities. 
B)  Interest expenditures may be capitalized as part of the cost of general capital assets reported in the governmental activities accounts at the government-wide level. 
C)  Interest expenditures must be capitalized as part of the cost of general capital assets reported in the capital projects fund. 
D)  The capitalization of interest expenditures as part of the cost of general capital assets reported in the capital projects fund is optional.

Question 6

GASB allows governments with a population below 100,000 to choose the modified approach, whereby they are not required to record depreciation on general capital assets.

Accepted Answer

A) True 
 B)False

Question 7

Capital projects funds should use the accrual basis of accounting.

Accepted Answer

A) True 
 B)False

Question 8

At the inception of a lease for equipment the journal entry required in the capital projects fund will include which of the following?

Accepted Answer

A)  A debit to Equipment. 
B)  A debit to Lease Expense. 
C)  A credit to Obligations under Leases. 
D)  A credit to Other Financing Sources-Lease Agreement. 
A)  A debit to Equipment. 
B)  A debit to Lease Expense. 
C)  A credit to Obligations under Leases. 
D)  A credit to Other Financing Sources-Lease Agreement.

Question 9

Which expenditures of a capital projects fund should be capitalized to Construction Work in Progress? Is Construction Work in Progress included in the chart of accounts of a capital projects fund? If not, where would it be found?

Accepted Answer

All ordinary and necessary costs to cons

Question 10

Depreciation of general capital assets for the period should be reported in the statement of activities at the government-wide level.

Accepted Answer

A) True 
 B)False

Question 11

If general capital assets are donated, revenue related to the donation is recognized in the governmental fund statement of revenue, expenditures and changes in fund balance.

Accepted Answer

A) True 
 B)False

Question 12

In which of the following would it not be appropriate to record depreciation of capital assets?

Accepted Answer

A)  Capital projects fund. 
B)  Internal service fund. 
C)  Business-type activities. 
D)  Governmental activities. 
A)  Capital projects fund. 
B)  Internal service fund. 
C)  Business-type activities. 
D)  Governmental activities.

Question 13

Governments can opt not to capitalize collections or individual works of art or historical treasures if the collection is:

Accepted Answer

A)  Held for public exhibition, education, or research in furtherance of public service rather than for financial gain. 
B)  Protected, kept unencumbered, cared for, and preserved. 
C)  Subject to an organizational policy that requires the proceeds from sales of collection items to be used to acquire other items for collections. 
D)  All of the options are correct. 
A)  Held for public exhibition, education, or research in furtherance of public service rather than for financial gain. 
B)  Protected, kept unencumbered, cared for, and preserved. 
C)  Subject to an organizational policy that requires the proceeds from sales of collection items to be used to acquire other items for collections. 
D)  All of the options are correct.

Question 14

The following items were included in Castle City's General Fund expenditures for the year ended June  
How much should be classified as capital assets in Castle City's government-wide statement of net position at June 30?

Accepted Answer

A)  $0. 
B)  $6,000. 
C)  $20,000. 
D)  $26,000. 
A)  $0. 
B)  $6,000. 
C)  $20,000. 
D)  $26,000.

Question 15

In the capital projects fund general journal, Construction Work in Progress is the account used to capitalize the accumulated cost of partially-completed general capital assets.

Accepted Answer

A) True 
 B)False

Question 16

A city recorded an asset impairment to a public works facility. Which of the following is correct concerning the recording of the amount of the asset impairment?

Accepted Answer

A)  The General Fund would record a debit to Expenditures. 
B)  The General Fund would record a debit to Other Financing Uses-Loss due to Impairment. 
C)  The governmental activities accounts would record a debit to Loss due to Impairment. 
D)  The governmental activities accounts would record a debit to Expenses-Public Works. 
A)  The General Fund would record a debit to Expenditures. 
B)  The General Fund would record a debit to Other Financing Uses-Loss due to Impairment. 
C)  The governmental activities accounts would record a debit to Loss due to Impairment. 
D)  The governmental activities accounts would record a debit to Expenses-Public Works.

Question 17

During the year, a wealthy local merchant donated a building to the City of Rosewood. The original cost of the building was $300,000. Accumulated depreciation at the date of the gift amounted to $250,000. The appraised fair market value of the donation at the date of the gift was $600,000. At what amount should this contribution be recorded in the governmental activities accounts at the government-wide level?

Accepted Answer

A)  $50,000. 
B)  $300,000. 
C)  $600,000. 
D)  $0. 
A)  $50,000. 
B)  $300,000. 
C)  $600,000. 
D)  $0.

Question 18

Equipment that had been acquired several years ago by a special revenue fund at a cost of $40,000 was sold for $15,000 cash. Accumulated depreciation of $30,000 existed at the time of the sale. The journal entry to be made in the special revenue fund will include:

Accepted Answer

A)  A debit to Cash for $15,000. 
B)  A debit to Accumulated Depreciation for $30,000. 
C)  A credit to Equipment for $40,000. 
D)  A credit to Other Financing Sources for $5,000. 
A)  A debit to Cash for $15,000. 
B)  A debit to Accumulated Depreciation for $30,000. 
C)  A credit to Equipment for $40,000. 
D)  A credit to Other Financing Sources for $5,000.

Question 19

The City of Oak Park constructed a new storage facility using the city's own public works employees. Construction costs were incurred in the amount of $900,000, plus $25,000 in interest on short-term notes used to finance construction. What amount should be capitalized in the government-wide statements?

Accepted Answer

A)  $900,000. 
B)  $925,000. 
C)  $875,000. 
D)  $0. 
A)  $900,000. 
B)  $925,000. 
C)  $875,000. 
D)  $0.

Question 20

Which of the following statements is correct regarding depreciation?

Accepted Answer

A)  Depreciation expense should be recorded in the appropriate governmental funds, and recorded in the governmental activities accounts. 
B)  Depreciation expense must be recorded in the governmental fund, but no depreciation expense is recorded in the governmental activities accounts. 
C)  No depreciation can be recorded in any governmental fund, but depreciation expense must be recorded in the governmental activities accounts. 
D)  No depreciation can be recorded in any governmental fund, nor is it permissible to record depreciation expense in the governmental activities accounts. 
A)  Depreciation expense should be recorded in the appropriate governmental funds, and recorded in the governmental activities accounts. 
B)  Depreciation expense must be recorded in the governmental fund, but no depreciation expense is recorded in the governmental activities accounts. 
C)  No depreciation can be recorded in any governmental fund, but depreciation expense must be recorded in the governmental activities accounts. 
D)  No depreciation can be recorded in any governmental fund, nor is it permissible to record depreciation expense in the governmental activities accounts.

When a snowplow is purchased by a government, it should be recorded in the governmental activities general journal as a(an):

A government experienced significant loss of certain roadways and bridges as a result of major flooding. Which of the following estimation approaches would be most useful in estimating the amount of asset impairment that has occurred?

Under a service concession arrangement:

The Town of Golden purchased a squad car for the police department. If the operations of the police department are financed by general revenues, which of the following is correct concerning where the capital asset would be recorded?

Which of the following statements is correct concerning interest expenditures incurred during the period of construction of capital projects?

GASB allows governments with a population below 100,000 to choose the modified approach, whereby they are not required to record depreciation on general capital assets.

Capital projects funds should use the accrual basis of accounting.

At the inception of a lease for equipment the journal entry required in the capital projects fund will include which of the following?

Which expenditures of a capital projects fund should be capitalized to Construction Work in Progress? Is Construction Work in Progress included in the chart of accounts of a capital projects fund? If not, where would it be found?

Depreciation of general capital assets for the period should be reported in the statement of activities at the government-wide level.

If general capital assets are donated, revenue related to the donation is recognized in the governmental fund statement of revenue, expenditures and changes in fund balance.

In which of the following would it not be appropriate to record depreciation of capital assets?

Governments can opt not to capitalize collections or individual works of art or historical treasures if the collection is:

The following items were included in Castle City's General Fund expenditures for the year ended June How much should be classified as capital assets in Castle City's government-wide statement of net position at June 30?

In the capital projects fund general journal, Construction Work in Progress is the account used to capitalize the accumulated cost of partially-completed general capital assets.

A city recorded an asset impairment to a public works facility. Which of the following is correct concerning the recording of the amount of the asset impairment?

Equipment that had been acquired several years ago by a special revenue fund at a cost of $40,000 was sold for $15,000 cash. Accumulated depreciation of $30,000 existed at the time of the sale. The journal entry to be made in the special revenue fund will include:

Which of the following statements is correct regarding depreciation?

Introduction to Accounting and Financial Reporting for Government and Not-for-Profit Entities

Principles of Accounting and Financial Reporting for State and Local Governments

Governmental Operating Statement Accounts; Budgetary Accounting

Accounting for Governmental Operating Activities–Illustrative Transactions and Financial Statements

Accounting for General Long-Term Liabilities and Debt Service

Accounting for the Business-type Activities of State and Local Governments

Accounting for Fiduciary Activities—Custodial and Trust Funds

Financial Reporting of State and Local Governments

Analysis of Government Financial Performance

Auditing of Government and Not-for-Profit Organizations

Budgeting and Performance Measurement

Not-for-Profit Organizations—Regulatory, Taxation, and Performance Issues

Accounting for Not-for-Profit Organizations

Accounting for Colleges and Universities

Accounting for Health Care Organizations

Accounting and Reporting for the Federal Government

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Exam 5: Accounting for General Capital Assets and Capital Projects

When a snowplow is purchased by a government, it should be recorded in the governmental activities general journal as a(an):

A government experienced significant loss of certain roadways and bridges as a result of major flooding. Which of the following estimation approaches would be most useful in estimating the amount of asset impairment that has occurred?

Under a service concession arrangement:

The Town of Golden purchased a squad car for the police department. If the operations of the police department are financed by general revenues, which of the following is correct concerning where the capital asset would be recorded?

Which of the following statements is correct concerning interest expenditures incurred during the period of construction of capital projects?

GASB allows governments with a population below 100,000 to choose the modified approach, whereby they are not required to record depreciation on general capital assets.

Capital projects funds should use the accrual basis of accounting.

At the inception of a lease for equipment the journal entry required in the capital projects fund will include which of the following?

Which expenditures of a capital projects fund should be capitalized to Construction Work in Progress? Is Construction Work in Progress included in the chart of accounts of a capital projects fund? If not, where would it be found?

Depreciation of general capital assets for the period should be reported in the statement of activities at the government-wide level.

If general capital assets are donated, revenue related to the donation is recognized in the governmental fund statement of revenue, expenditures and changes in fund balance.

In which of the following would it not be appropriate to record depreciation of capital assets?

Governments can opt not to capitalize collections or individual works of art or historical treasures if the collection is:

The following items were included in Castle City's General Fund expenditures for the year ended June How much should be classified as capital assets in Castle City's government-wide statement of net position at June 30?

In the capital projects fund general journal, Construction Work in Progress is the account used to capitalize the accumulated cost of partially-completed general capital assets.

A city recorded an asset impairment to a public works facility. Which of the following is correct concerning the recording of the amount of the asset impairment?

Equipment that had been acquired several years ago by a special revenue fund at a cost of $40,000 was sold for $15,000 cash. Accumulated depreciation of $30,000 existed at the time of the sale. The journal entry to be made in the special revenue fund will include:

Which of the following statements is correct regarding depreciation?

Introduction to Accounting and Financial Reporting for Government and Not-for-Profit Entities

Principles of Accounting and Financial Reporting for State and Local Governments

Governmental Operating Statement Accounts; Budgetary Accounting

Accounting for Governmental Operating Activities–Illustrative Transactions and Financial Statements

Accounting for General Long-Term Liabilities and Debt Service

Accounting for the Business-type Activities of State and Local Governments

Accounting for Fiduciary Activities—Custodial and Trust Funds

Financial Reporting of State and Local Governments

Analysis of Government Financial Performance

Auditing of Government and Not-for-Profit Organizations

Budgeting and Performance Measurement

Not-for-Profit Organizations—Regulatory, Taxation, and Performance Issues

Accounting for Not-for-Profit Organizations

Accounting for Colleges and Universities

Accounting for Health Care Organizations

Accounting and Reporting for the Federal Government

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