Question 1

The residual classification for governmental funds other than the General Fund is Assigned.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is false?

Accepted Answer

A)  Unexpended intergovernmental grants and taxes dedicated to capital improvements in a capital projects fund are likely to be classified as Assigned Fund Balance 
B)  The corpus (principal) from a permanent fund should be classified as Nonspendable. 
C)  The residual classification for funds other than the General Fund is Assigned. 
D)  If a bond sinking fund is required by creditors or law, the unexpended resources would be classified as Restricted.

Question 3

A gift of $1,000,000 to a city,to be invested permanently,with the proceeds to be used to maintain the city war memorials should be accounted for in a special projects fund.

Accepted Answer

A) True 
 B)False

Question 4

Capital assets are not reported in governmental funds.

Accepted Answer

A) True 
 B)False

Question 5

The City of St.Michael received a gift of $800,000 from a local resident on April 1,2014 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 31,2014.
(a)The gift was recorded on April 1.
(b)On April 1,2014,XYZ Company bonds were purchased in the amount of $750,000,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 $17,200 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 $745,500,exclusive of accrued interest.
(g)The books were closed.
Required:
A.Record the transactions on the books of the Cemetery Perpetual Care Fund.
B.Prepare a separate Statement of Revenues,Expenditures,and Changes in Fund Balances for the Cemetery Perpetual Care Fund for the Year Ended December 31,2014.
C.Prepare the Balance Sheet for the Cemetery Perpetual Care Fund for the year ended December 31,2014

Accepted Answer

The answer of The City of St.Michael received a gift...

Question 6

Use the following to answer the next six questions:
During the fiscal year ended December 31, 2014, the City of Johnstown issued 6% general obligation serial bonds in the amount of $3,000,000 at 102 ($3,060,000) and used $2,970,000 of the proceeds to construct a fire station. The $60,000 premium was transferred to a debt service fund. The $30,000 left in the capital projects fund at the end of the project was later 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 10 equal annual principal payments was due on April 1, 2015.
-How would the $60,000 premium be accounted for?

Accepted Answer

A)  As an other financing source in the debt service fund. 
B)  Amortized to interest expenditure in the debt service fund. 
C)  Both (a) and (b) above. 
D)  None of the above.

Question 7

Which of the following would be accounted for as a permanent fund?

Accepted Answer

A)  A gift of $75,000 to a school district, to be invested permanently, with the proceeds to be awarded as college scholarships to graduating seniors. 
B)  A gift of $75,000 to a school district, to be used for landscaping improvements. 
C)  A gift of $75,000 to a city to be invested permanently, with the proceeds to be used to buy books for the city library. 
D)  Both A and C

Question 8

An annuity serial bond is one where the amount of the principal increases each year by the same amount that the interest payments decrease.

Accepted Answer

A) True 
 B)False

Question 9

Proceeds of tax supported bonds are recognized in a capital projects fund as a(an):

Accepted Answer

A)  Revenue. 
B)  Liability. 
C)  Other Financing Use. 
D)  Other Financing Source.

Question 10

With respect to Debt Service Funds,which of the following is not correct?

Accepted Answer

A)  Typically, resources are provided through transfers from the General or other funds. 
B)  There are two types of debt service expenditures: interest and principal 
C)  In most cases, interest and principal payments are not recorded until payment is due. 
D)  Encumbrances are recorded to reflect principal payments that are expected to come due within the current accounting period.

Question 11

Permanent funds account for resources that are donor restricted to the extent earnings (but not principal)may be used to support government programs.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is a common source of funding for capital projects?

Accepted Answer

A)  Issuance of long term debt 
B)  Proceeds of dedicated taxes 
C)  Grants from other governments 
D)  All of the above are sources of funding for capital projects

Question 13

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.
-How would the $3,990,000 be accounted for?

Accepted Answer

A)  As a capital asset in the government-wide Statement of Net Assets. 
B)  As an expenditure in the capital projects fund. 
C)  Both (a) and (b). 
D)  As an expenditure in the capital projects fund and as an expense in the government-wide Statement of Activities.

Question 14

Use the following to answer the next five questions:
On October 1, 2013, the City of Mizner issued $3,500,000 in 4%, general obligation bonds at 101 for the purpose of constructing an addition to City Hall. The premium was transferred to a debt service fund. A total of $3,475,000 was used to construct the addition, which was completed prior to June 30, 2014. The remaining funds were transferred to the debt service fund. The bonds were dated October 1, 2013, and paid interest on April 1 and October 1. The first of 20 annual principal payments of $175,000 is due October 1, 2014. The fiscal year for Mizner is July 1- June 30.
-What amount would be reported as debt service expenditures in the year ended June 30,2014?

Accepted Answer

A)  $315,000. 
B)  $140,000. 
C)  $105,000. 
D)  $ -0-.

Question 15

Special assessments may be levied to finance construction projects or to provide current services.

Accepted Answer

A) True 
 B)False

Question 16

General fixed assets that are acquired with governmental fund resources are reported as assets in the:

Accepted Answer

A)  General Fund. 
B)  Capital Projects Fund. 
C)  General Fund or Capital Projects Fund, depending upon which fund provided the resources. 
D)  None of the above.

Question 17

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

Accepted Answer

A)  General. 
B)  Capital projects. 
C)  Agency. 
D)  Debt service.

Question 18

When a purchase order is issued under a Capital Projects fund,how should the transaction be recorded?

Accepted Answer

A)  Debit Encumbrances and credit Budgetary Fund Balance -- Reserve for Encumbrances. 
B)  Debit Expenditures and credit Budgetary Fund Balance -- Reserve for Encumbrances. 
C)  Debit Expenditures and credit Vouchers payable. 
D)  Debit Encumbrances Control and credit Vouchers payable.

Question 19

Capital projects funds are not normally included in the Budgetary Comparison Schedule.

Accepted Answer

A) True 
 B)False

Question 20

When a capital project has been constructed entirely with bond proceeds and funds are left over at the end of the project,which of the following would normally take place?

Accepted Answer

A)  The funds would be transferred to a debt service fund; the capital projects fund would debit Other Financing Uses-Transfers Out and the debt service fund would credit Other Financing Sources-Transfers In. 
B)  The funds would be transferred to a debt service fund; the capital projects fund would debit Expenditures and the debt service fund would credit Other Financing Sources-Transfers In. 
C)  The funds would be transferred to the General Fund and expended for any purpose desired by the management of the government. 
D)  The funds would be returned to the bondholders.

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

The residual classification for governmental funds other than the General Fund is Assigned.

Which of the following statements is false?

A gift of $1,000,000 to a city,to be invested permanently,with the proceeds to be used to maintain the city war memorials should be accounted for in a special projects fund.

Capital assets are not reported in governmental funds.

Which of the following would be accounted for as a permanent fund?

An annuity serial bond is one where the amount of the principal increases each year by the same amount that the interest payments decrease.

Proceeds of tax supported bonds are recognized in a capital projects fund as a(an) :

With respect to Debt Service Funds,which of the following is not correct?

Permanent funds account for resources that are donor restricted to the extent earnings (but not principal)may be used to support government programs.

Which of the following is a common source of funding for capital projects?

Special assessments may be levied to finance construction projects or to provide current services.

General fixed assets that are acquired with governmental fund resources are reported as assets in the:

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

When a purchase order is issued under a Capital Projects fund,how should the transaction be recorded?

Capital projects funds are not normally included in the Budgetary Comparison Schedule.

When a capital project has been constructed entirely with bond proceeds and funds are left over at the end of the project,which of the following would normally take place?