Question 1

Encumbrance accounting is typically used for Permanent Funds.

Accepted Answer

A) True 
 B)False

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

Siler City receives a trust donation for the purpose of maintaining flower beds in city parks, but the donor does not specify that the principal must be maintained. This type of trust would be most appropriately accounted for in a:

Accepted Answer

A)  Permanent Fund 
B)  Special Revenue Fund 
C)  Private Purpose Trust Fund 
D)  General Fund

Question 4

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 Revenues. 
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.

Question 5

Which of the following is true regarding the governmental fund financial statements?

Accepted Answer

A)  The General Fund is always a major fund and other governmental funds are considered major if total assets, liabilities, revenues or expenditures are at least 10 percent of the corresponding totals of governmental funds and 5 percent of the corresponding totals for governmental and enterprise funds combined 
B)  Nonmajor funds are reported in aggregate in a discrete column 
C)  Both of the above are true 
D)  Neither of the above is true

Question 6

Which of the following is true regarding capital projects funds?

Accepted Answer

A)  Capital projects funds are considered to be governmental funds 
B)  Capital projects funds use the economic resources measurement focus and accrual basis of accounting 
C)  Encumbrance accounting is not used 
D)  Fixed assets are depreciated in capital projects funds

Question 7

If taxes and/or special assessments are levied by the General Fund and then are subsequently transferred to the debt service fund, they are:

Accepted Answer

A)  Recorded as revenues of the debt service fund 
B)  Included in the revenues budget of the general fund and are also budgeted by that fund as transfers out to the debt service fund 
C)  Included as transfers out in the General Fund but are not budgeted as revenue in that fund 
D)  Recorded as an expense and voucher payable by the general fund and are recorded as a revenue and receivable by the debt service fund

Question 8

What would be the amount of expenditures recorded by the debt service fund for the fiscal year ended December 31, 2009?

Accepted Answer

A)  $480,000 
B)  $180,000 
C)  $120,000 
D)  $ 90,000

Question 9

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

Question 10

A construction contract was issued for the addition of a local county jail in the amount of $2,100,000. When the project was almost half finished, the contractor submitted a billing 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

Question 11

If taxes are levied specifically for payment of interest and principal on long-term debt, those taxes are:

Accepted Answer

A)  Included as a liability of the general fund 
B)  Recorded as operating transfers to the debt service fund 
C)  Included as revenues of the debt service fund 
D)  Both A and B are correct

Question 12

A transfer from the General Fund to a debt service fund to make annual payments on principal and interest would be recorded in the debt service fund as a (an):

Accepted Answer

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

Question 13

In 2009, the Town of Alfred issued $ 2,000,000 of 8% tax supported bonds. The bonds are dated January 1, 2009 with interest payment dates of June 30 and December 31. The first of 10 annual principal payments is due on December 31, 2009. The bonds were sold at a $16,000 discount. Cash sufficient to fully fund interest and principal payments for the year is transferred from the General Fund on June 1st.
Required: Record any and all entries to be made by the Debt Service Fund for the bond issued for the year 2009 (including closing entries)

Accepted Answer

The answer of In 2009, the Town of Alfred issued...

Question 14

How would the $30,000 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 15

What amount would be reported as debt service expenditures for 2009?

Accepted Answer

A)  $0 
B)  $160,000 
C)  $320,000 
D)  $520,000

Question 16

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 permanent fund.

Accepted Answer

A) True 
 B)False

Question 17

Budgets are typically not recorded for Capital Projects Funds.

Accepted Answer

A) True 
 B)False

Question 18

Which is one of the criteria that needs to exist in order for "other governmental funds" to be considered major?

Accepted Answer

A)  Total assets and liabilities of that individual government fund are at least 10% of the corresponding total for all governmental funds 
B)  Total assets, liabilities, revenues or expenditures of the individual governmental fund are at least 10% of the corresponding total for all governmental and enterprise funds combined 
C)  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 
D)  Total assets, liabilities, revenues and expenditures of that individual government fund are at least 10% of the corresponding total for all governmental funds

Question 19

Capital project funds

Accepted Answer

A)  Receive all of their money from tax revenues 
B)  Exist only for the duration of the project for which they are created 
C)  Record debt issuances as revenues 
D)  All of the above

Question 20

How should the acquisition of general fixed assets acquired by capital leases be accounted for?

Accepted Answer

The answer of How should the acquisition of general fixed...

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

Encumbrance accounting is typically used for Permanent Funds.

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

Siler City receives a trust donation for the purpose of maintaining flower beds in city parks, but the donor does not specify that the principal must be maintained. This type of trust would be most appropriately accounted for in a:

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?

Which of the following is true regarding the governmental fund financial statements?

Which of the following is true regarding capital projects funds?

If taxes and/or special assessments are levied by the General Fund and then are subsequently transferred to the debt service fund, they are:

What would be the amount of expenditures recorded by the debt service fund for the fiscal year ended December 31, 2009?

Premiums generated from the issuance of bonds for a capital projects fund are generally:

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

If taxes are levied specifically for payment of interest and principal on long-term debt, those taxes are:

A transfer from the General Fund to a debt service fund to make annual payments on principal and interest would be recorded in the debt service fund as a (an) :

How would the $30,000 premium be accounted for?

What amount would be reported as debt service expenditures for 2009?

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 permanent fund.

Budgets are typically not recorded for Capital Projects Funds.

Which is one of the criteria that needs to exist in order for "other governmental funds" to be considered major?

Capital project funds

How should the acquisition of general fixed assets acquired by capital leases be accounted for?