Exam 6: The Governmental Fund Accounting Cycle

A Debt Service Fund accumulates resources to retire debt that is due in a lump sum in the year 2014.The Fund held marketable securities that cost $900,000 when purchased during 2006 and 2007.The securities had fair market values of $875,000 on January 1,2013,and $930,000 on December 31,2013.The average fair market value during the year was $895,000.At what amount should the Fund report the securities in its balance sheet on December 31,2013?

Which of the following groups of accounts best describes the types of assets and liabilities likely to be found in Capital Projects Funds?

A city accounts for its capital acquisitions using encumbrances.When the city enters into a contract to acquire equipment,what journal entry should it make?

Accrued interest on the following type of debt is reported in a governmental fund:

Retainage payable will most likely appear in which financial statement?

The operations of a debt service fund generally are controlled by which of the following mechanisms?

A city acquires equipment on January 1,2013 by means of a capital lease agreement.The agreement calls for paying the leasing company $300,000 in three $100,000 annual payments,starting December 31,2013.The present value of the three lease payments,using a 6% interest rate,is $267,300.The city will make the lease payments from the General Fund.What journal entry should the city make on January 1,2013 in the Fund?

What does the account,retainage payable,represent in the financial statements of a Capital Projects Fund?

Capital assets that were financed through governmental fund activities will appear in which financial statement?

A city sells $5 million of 20-year general obligation bonds on October 1,2013.Interest on the debt is payable at the rate of 5% a year on the unpaid balance of the debt,every six months commencing March 31,2014.How much should the city report as an interest expenditure in the Debt Service Fund for the calendar year ending December 31,2013?

In what circumstances are Debt Service Funds required to be used in governmental accounting?

Which of the following is a characteristic of a Permanent Fund?

A city issues $5 million of long-term general obligation bonds to construct a new fire house.How and where should that transaction be recorded?

In what circumstance is a Capital Projects Fund required to be used in governmental accounting?

A capital project is completed,but $500,000 remains in a capital projects fund.How should the government use the $500,000 remaining in the capital projects fund?

What kinds of expenditures are accounted for in Debt Service Funds?

A city constructs a new building by issuing debt in the amount of $3 million.How should the city report the debt proceeds in its Capital Projects Fund statement of revenues,expenditures,and changes in fund balance?

How should marketable securities be valued when reported in a Permanent Fund's balance sheet?

Depending on the restrictions placed on resources used to acquire a police car,the acquisition of the car could be reported in which of the following funds?

(Preparing entries to close a Capital Projects Fund)[see p.195… uses "close" not "abolish"] You are the Finance Director of the Town of Blue Mountain.Presented below is the trial balance for a Capital Projects Fund of the Town at October 31,2013.The Town Engineer has advised you that the project accounted for within this fund,a new system of bicycle trails,is complete and formal acceptance by the Town is pending.The Town Council has directed you to abolish this fund and transfer any remaining net assets to the Town's Debt Service Fund.Prepare the entries necessary to settle the remaining liabilities of the fund,close the accounts,and transfer the remaining net assets to the Debt Service Fund. .