Question 1

Which of the following statements is true?

Accepted Answer

A)  Fund balances of debt service funds are classified as Restricted and Unrestricted. 
B)  The fund balance of permanent funds should be classified as Nonspendable, Spendable and Committed. 
C)  The principal of permanent funds are classified as Nonspendable Fund Balance. 
D)  Any governmental fund may have an Unassigned Fund Balance 
A)  Fund balances of debt service funds are classified as Restricted and Unrestricted. 
B)  The fund balance of permanent funds should be classified as Nonspendable, Spendable and Committed. 
C)  The principal of permanent funds are classified as Nonspendable Fund Balance. 
D)  Any governmental fund may have an Unassigned Fund Balance

Question 2

An encumbrance in a capital project fund is created when the contract for the work is signed or issued.

Accepted Answer

A) True 
 B)False

Question 3

Funds whose earnings benefit individuals,private organizations,or other governments are reported in permanent funds.

Accepted Answer

A) True 
 B)False

Question 4

Debt service funds should accrue interest and report principle payments due within the next12 months following year end.

Accepted Answer

A) True 
 B)False

Question 5

The following description provides the best definition for which fund: Accounts for resources that are legally restricted and both earnings and principal may be used to support government programs.

Accepted Answer

A)  Capital projects. 
B)  Special Revenue. 
C)  General Fund. 
D)  Permanent. 
A)  Capital projects. 
B)  Special Revenue. 
C)  General Fund. 
D)  Permanent.

Question 6

Which of the following fund(s)should be used if resources are provided by a donor with the stipulation that they be used for the benefit of the citizenry?

Accepted Answer

A)  Special revenue fund. 
B)  Permanent fund. 
C)  Private purpose fund. 
D)  Either A or B, depending upon whether the principal must be maintained. 
A)  Special revenue fund. 
B)  Permanent fund. 
C)  Private purpose fund. 
D)  Either A or B, depending upon whether the principal must be maintained.

Question 7

Use the following to answer the next four questions:
On April 1, 2014, the City of Southern Ponds issued $4,000,000 in 4% general obligation, tax supported bonds at 101 for the purpose of constructing a new police station. The premium was transferred to a debt service fund. A total of $3,990,000 was used to construct the police station, which was completed before December 31, 2014, the end of the fiscal year. The remaining funds were transferred to the debt service fund. The bonds were dated April 1, 2014, and paid interest on October 1 and April 1. The first of 20 equal annual principal payments of $200,000 is due April 1, 2015.
-A government signed a five-year capital lease on January 1,2014 to obtain some equipment.The lease provided that the government would make a down payment of $10,000 and four $10,000 payments each year after that,beginning January 1,2014.The government has a fiscal year ending December 31.Upon inception of the lease,the government,in its governmental fund accounting records would:

Accepted Answer

A)  Debit expenditures for $10,000 and credit cash for $10,000. 
B)  Debit expenditures for $50,000, credit cash for $10,000, and credit accounts payable for $40,000. 
C)  Debit expenditures for the present value of the payments (including the $10,000), credit cash for $10,000, and credit accounts payable for the difference between the $10,000 and the present value of the future payments. 
D)  Debit expenditures for the present value of the payments (including the $10,000), credit cash for $10,000, and credit other financing sources for the difference between the $10,000 and the present value of the future payments. 
A)  Debit expenditures for $10,000 and credit cash for $10,000. 
B)  Debit expenditures for $50,000, credit cash for $10,000, and credit accounts payable for $40,000. 
C)  Debit expenditures for the present value of the payments (including the $10,000), credit cash for $10,000, and credit accounts payable for the difference between the $10,000 and the present value of the future payments. 
D)  Debit expenditures for the present value of the payments (including the $10,000), credit cash for $10,000, and credit other financing sources for the difference between the $10,000 and the present value of the future payments.

Question 8

If a government issues new debt,and places the proceeds in an escrow account pending the maturity date of existing debt,the existing debt is said to be defeased.

Accepted Answer

A) True 
 B)False

Question 9

A construction contract was issued for an addition to the county jail in the amount of $2,100,000.When the project was approximately half finished,the contractor submitted an invoice for payment of $1,050,000.Which partial entry below is not required to record this transaction?

Accepted Answer

A)  Credit Contracts Payable $1,050,000. 
B)  Debit Construction Expenditures $1,050,000. 
C)  Credit Encumbrances Control $2,100,000. 
D)  Credit Encumbrances Control $1,050,000. 
A)  Credit Contracts Payable $1,050,000. 
B)  Debit Construction Expenditures $1,050,000. 
C)  Credit Encumbrances Control $2,100,000. 
D)  Credit Encumbrances Control $1,050,000.

Question 10

A government entered into a capital lease agreement to acquire equipment for the general government on January 1, 2014. Five payments of $8,000 each are to be made, beginning on December 31, 2014. Discounting is at 6%, computed annually. The present value of the five payments is $33,699.
-Premiums generated from the issuance of bonds for a capital projects fund are generally:

Accepted Answer

A)  Transferred to the General Fund. 
B)  Transferred to the debt service fund. 
C)  Retained in the capital projects fund. 
D)  None of the above. 
A)  Transferred to the General Fund. 
B)  Transferred to the debt service fund. 
C)  Retained in the capital projects fund. 
D)  None of the above.

Question 11

Unmatured principal installments and accrued interest which is due shortly after year end are required to be reported as liabilities in the debt service fund at year end.

Accepted Answer

A) True 
 B)False

Question 12

If a bond sinking fund is required by creditors or law,the unexpended resources would be classified as Assigned.

Accepted Answer

A) True 
 B)False

Question 13

Fixed assets of completed projects are recorded in the accounts of capital projects funds.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following bond types has a payment schedule in which the amount of annual principal repayment is scheduled to increase each year by approximately the same amount that interest payments decrease?

Accepted Answer

A)  Regular. 
B)  Deferred. 
C)  Annuity. 
D)  Irregular. 
A)  Regular. 
B)  Deferred. 
C)  Annuity. 
D)  Irregular.

Question 15

When bonds are sold to construct a capital asset through a capital projects fund,an entry would be made to debit Cash and credit Bonds Payable in the capital projects fund.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is true with respect to long-term debt?

Accepted Answer

A)  Term bonds mature in equal installments over the term of the bond. 
B)  If a sinking fund is required by creditor or law, the unexpended resources of its debt service fund would be classified as assigned. 
C)  Resources transferred to the debt service fund from the General Fund would typically be classified as Other Financing Sources by the debt service fund. 
D)  If bonds supporting a capital project are issued at a premium, typically the premium may be used on capital expenditures. 
A)  Term bonds mature in equal installments over the term of the bond. 
B)  If a sinking fund is required by creditor or law, the unexpended resources of its debt service fund would be classified as assigned. 
C)  Resources transferred to the debt service fund from the General Fund would typically be classified as Other Financing Sources by the debt service fund. 
D)  If bonds supporting a capital project are issued at a premium, typically the premium may be used on capital expenditures.

Question 17

Fund balances of debt service funds are classified among the categories identified in GASB Statement 54 as Restricted and Unrestricted.

Accepted Answer

A) True 
 B)False

Question 18

All of the governmental funds use the modified accrual basis of accounting

Accepted Answer

A) True 
 B)False

Question 19

Debt service funds are used to account for the payment of principal and interest of both general and enterprise related long-term debt of a state or local governmental unit.

Accepted Answer

A) True 
 B)False

Question 20

Cash provided by the General Fund for a capital project would be recorded in a capital projects fund as a (an):

Accepted Answer

A)  Revenue. 
B)  Other Financing Source. 
C)  Direct addition to Fund Balance. 
D)  Other Financing Use. 
A)  Revenue. 
B)  Other Financing Source. 
C)  Direct addition to Fund Balance. 
D)  Other Financing Use.

Which of the following statements is true?

An encumbrance in a capital project fund is created when the contract for the work is signed or issued.

Funds whose earnings benefit individuals,private organizations,or other governments are reported in permanent funds.

Debt service funds should accrue interest and report principle payments due within the next12 months following year end.

The following description provides the best definition for which fund: Accounts for resources that are legally restricted and both earnings and principal may be used to support government programs.

Which of the following fund(s)should be used if resources are provided by a donor with the stipulation that they be used for the benefit of the citizenry?

If a government issues new debt,and places the proceeds in an escrow account pending the maturity date of existing debt,the existing debt is said to be defeased.

A construction contract was issued for an addition to the county jail in the amount of $2,100,000.When the project was approximately half finished,the contractor submitted an invoice for payment of $1,050,000.Which partial entry below is not required to record this transaction?

Unmatured principal installments and accrued interest which is due shortly after year end are required to be reported as liabilities in the debt service fund at year end.

If a bond sinking fund is required by creditors or law,the unexpended resources would be classified as Assigned.

Fixed assets of completed projects are recorded in the accounts of capital projects funds.

Which of the following bond types has a payment schedule in which the amount of annual principal repayment is scheduled to increase each year by approximately the same amount that interest payments decrease?

When bonds are sold to construct a capital asset through a capital projects fund,an entry would be made to debit Cash and credit Bonds Payable in the capital projects fund.

Which of the following is true with respect to long-term debt?

Fund balances of debt service funds are classified among the categories identified in GASB Statement 54 as Restricted and Unrestricted.

All of the governmental funds use the modified accrual basis of accounting

Debt service funds are used to account for the payment of principal and interest of both general and enterprise related long-term debt of a state or local governmental unit.

Cash provided by the General Fund for a capital project would be recorded in a capital projects fund as a (an):

Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Organizations

Overview of Financial Reporting for State and Local Governments

Modified Accrual Accounting: Including the Role of Fund Balances and Budgetary Authority

Accounting for the General and Special Revenue Funds

Proprietary Funds

Fiduciary Trustfunds

Government-Wide Statements, Capital Assets, Long-Term Debt

Accounting for Special-Purpose Entities, Including Public Colleges and Universities

Accounting for Private Not-For-Profit Organizations

College and University Accounting Private Institutions

Accounting for Hospitals and Other Health Care Providers

Auditing, Tax-Exempt Organizations, and Evaluating Performance

Financial Reporting by the Federal Government

Filters

Exam 5: Accounting for Other Governmental Fund Types: Capital Projects, Debt Service, and Permanent

Which of the following statements is true?

An encumbrance in a capital project fund is created when the contract for the work is signed or issued.

Funds whose earnings benefit individuals,private organizations,or other governments are reported in permanent funds.

Debt service funds should accrue interest and report principle payments due within the next12 months following year end.

The following description provides the best definition for which fund: Accounts for resources that are legally restricted and both earnings and principal may be used to support government programs.

Which of the following fund(s)should be used if resources are provided by a donor with the stipulation that they be used for the benefit of the citizenry?

If a government issues new debt,and places the proceeds in an escrow account pending the maturity date of existing debt,the existing debt is said to be defeased.

A construction contract was issued for an addition to the county jail in the amount of $2,100,000.When the project was approximately half finished,the contractor submitted an invoice for payment of $1,050,000.Which partial entry below is not required to record this transaction?

Unmatured principal installments and accrued interest which is due shortly after year end are required to be reported as liabilities in the debt service fund at year end.

If a bond sinking fund is required by creditors or law,the unexpended resources would be classified as Assigned.

Fixed assets of completed projects are recorded in the accounts of capital projects funds.

Which of the following bond types has a payment schedule in which the amount of annual principal repayment is scheduled to increase each year by approximately the same amount that interest payments decrease?

When bonds are sold to construct a capital asset through a capital projects fund,an entry would be made to debit Cash and credit Bonds Payable in the capital projects fund.

Which of the following is true with respect to long-term debt?

Fund balances of debt service funds are classified among the categories identified in GASB Statement 54 as Restricted and Unrestricted.

All of the governmental funds use the modified accrual basis of accounting

Debt service funds are used to account for the payment of principal and interest of both general and enterprise related long-term debt of a state or local governmental unit.

Cash provided by the General Fund for a capital project would be recorded in a capital projects fund as a (an):

Introduction to Accounting and Financial Reporting for Governmental and Not-For-Profit Organizations

Overview of Financial Reporting for State and Local Governments

Modified Accrual Accounting: Including the Role of Fund Balances and Budgetary Authority

Accounting for the General and Special Revenue Funds

Proprietary Funds

Fiduciary Trustfunds

Government-Wide Statements, Capital Assets, Long-Term Debt

Accounting for Special-Purpose Entities, Including Public Colleges and Universities

Accounting for Private Not-For-Profit Organizations

College and University Accounting Private Institutions

Accounting for Hospitals and Other Health Care Providers

Auditing, Tax-Exempt Organizations, and Evaluating Performance

Financial Reporting by the Federal Government

Filters