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

An encumbrance in a capital project fund is created

Which two governmental funds are commonly used to acquire capital assets?

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.

Governmental funds, other than the General Fund, are considered major if: I. Total Assets, Liabilities, Revenues or Expenditures of that individual governmental fund are at least 10% of the corresponding total (assets, liabilities and so forth) for all governmental funds. II) Total Assets, Liabilities, Revenues or Expenditures of the individual governmental fund are at least 5% of the corresponding total for all governmental and enterprise funds combined.

If taxes and/or special assessments are levied specifically for payment of interest and principal on long-term debt, those taxes are recognized as revenues of the debt service fund.

When a governmental unit is primarily or secondarily liable for the debt, debt proceeds for special assessments levied for the construction phase of a capital improvement project should be reported in which of the following fund types?

How would the government account for the unused bond proceeds?

In addition to a $3,000,000 liability in the government-wide Statement of Net Assets, how would the bond sale be reported?

The City of St. Michael received a gift of $1,700,000 from a local resident on April 1, 2009 and signed an agreement that the funds would be invested permanently and that the income would be used to maintain the city cemetery. The following transactions took place during the year ended December 31, 2009. (a). The gift was recorded on April 1. (b). On April 1, 2009, XYZ Company bonds were purchased in the amount of $1,700,000, at par. The bonds carry an annual interest rate of 5 percent, payable semiannually on October 1 and April 1. (c). On October 1, the semiannual interest was received. (d). From October 1 through December 1, payments were made totaling $33,200 to a lawn service. (e). On December 31, an accrual was made for interest. (f). Also, on December 31, a reading of the financial press indicated that XYZ bonds had a fair value of $1,680,000, exclusive of accrued interest. (g). The books were closed. Required: Record the transactions on the books of the Cemetery Perpetual Care Fund. Prepare a separate Statement of Revenues, Expenditures and Changes in Fund Balances for the Cemetery Perpetual Care Fund for the Year Ended December 31, 2009.

Capital projects funds use the financial resources measurement focus and accrual basis of accounting.

Premiums generated from the issuance of bonds for a capital projects fund are generally transferred to the general fund.

What amount would be reported as debt service expenditures in the year ended June 30, 2009?

A government signed a five-year capital lease on January 1, 2009 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, 2009. The government has a fiscal year ending December 31. Upon inception of the lease, the government, in its governmental fund accounting records would:

When accounting for interest expenditures through debt service funds, interest is normally recorded as an expenditure when due and payable; it is not accrued at year-end.

The amount of capital outlay expenditures reported by the capital projects fund would be:

Write yes or no in each box to indicate whether each property applies to the following funds:

When governments construct projects that are financed with special assessment debt, to be paid back by affected property owners, those projects would never be accounted for in capital projects funds.

Special Projects Fund is a fund type that is used to account for revenues and other financing sources that are intended to service debt.

What would be the amount of expenditures recorded by the debt service fund for the fiscal year ended December 31, 2010?

In which fund type is interest on Long Term Debt typically not accrued, yet is recognized as an expenditure in the year in which interest is legally due?