Exam 16: Accounting for State and Local Governments

On August 21, 2011, Fred City transferred $100,000 to the School System to cover repairs to a school building. Required: Prepare all the required journal entries and identify the fund in which each entry was recorded for the Fund Financial Statements.

Shell City transfers $100,000 from the General Fund to the Debt Service fund. Required: Prepare the required journal entries and identify the funds in which they are recorded.

Under modified accrual accounting, when should an expenditure be recorded to recognize interest on long-term debt?

What are the five types of governmental funds?

What is the primary difference between monies accounted for in the general fund and monies accounted for in the special revenue fund?

Which of the following is a governmental fund?

Prepare the journal entry and identify the fund to record the purchase order of two trucks owned by Simple City for $100,000. Identify the fund in which the entry is recorded.

What account is debited in the general fund when equipment is received by a governmental entity?

Under modified accrual accounting, revenues should be recognized when they are

Bay City received a federal grant to provide health care services to low income mothers and children. When should the revenues be recognized?

A city received a grant of $5,000,000 from a private agency. The money was to be used to build a new city library. In which fund should the money be recorded for the Fund Financial Statements?

According to GASB Concepts Statement No. 1, what are the three groups of primary users of external state and local governmental financial reports?

Which type of fund is not included in the Government-Wide Financial Statements?

For governmental entities, the accrual basis of accounting is used for:

Which standard issued by the Governmental Accounting Standards Board in 1999 required two distinct sets of financial statements for state and local governments?

How do the balance sheet and statement of revenues, expenditures, and changes in fund balances of governmental funds differ from the financial statement presentation for the governmental activities in the government-wide statement of net assets and statement of activities? (1) Internal service funds are not included in the fund financial statements of governmental funds but could be reported in the governmental activities of government-wide financial statements. (2) The economic resources measurement basis is used for fund financial statements of governmental funds and the current financial resources measurement basis is used for governmental activities in the government-wide financial statements. (3) Modified accrual accounting is used for fund financial statements of governmental funds to time revenues and expenditures and accrual accounting is used for governmental activities of government-wide financial statements. (4) The financial statements of governmental funds for fund financial statements are the same as governmental activities in government-wide financial statements but with different titles of the financial statements.

For each of the following transactions, select the area of accounting records in which an entry will be recorded. (A) General Fund only. (B) Governmental Activities only. (C) General Fund and Governmental Activities. (D) General Fund and Debt Service Fund. (E) Capital Projects Fund and Governmental Activities. (F) Debt Service Fund and Governmental Activities. (G) Special Revenue Fund and Governmental Activities. ___ (1.) The city council adopts an annual budget for the General Fund. ___ (2.) Property taxes are levied. ___ (3.) Computers are ordered for the fire department. ___ (4.) A transfer of funds is made from the General Fund to the Debt Service Fund. ___ (5.) The principal and interest of a bond are paid. ___ (6.) A building is acquired for the police department, and renovations begin immediately. ___ (7.) Depreciation on fire trucks is recorded. ___ (8.) Citizens are assessed for a street lighting project that has been legally restricted for those citizens. ___ (9.) A grant is received to landscape tree-lined areas beside city-owned streets. ___ (10.) The city spends grant money received in (9.) above and landscapes the tree-lined areas beside the streets for which the grant money was received.

What organization is responsible for establishing accounting principles for governmental entities? By whom was this organization established?

Under modified accrual accounting, when are expenditures recorded?

What are the broad types or classifications of funds for a governmental entity such as a city?