Question 1

A non-expendable trust which benefits a government or its citizenry and which stipulates that earnings only (not principal)may be used for its provided purpose is an example of a:

Accepted Answer

A)  Special Revenue Fund. 
B)  Permanent Fund. 
C)  Private-purpose Trust Fund. 
D)  None of the Above

Question 2

The City of Presho had the following transactions related to the construction of a new courthouse.
(a)1/2/09:
 20 year 6% General Obligation Serial Bonds with a face value of $5,000,000 are issued at 99.Interest and principle payments are made on Jan.1 and July 1 of each year.The premium was transferred into the Debt Service Fund.The General Fund will fully fund each payment as they become due.
(b)3/1/09:
 Land is purchased for a new courthouse at a cost of $300,000.
(c)3/1/09:
 A contract is signed for construction of the new courthouse in the amount of $2,800,000.
(d)6/15/09:
 Cash sufficient to cover interest and principal payments for the year less the premium is transferred from the General Fund.
(e)7/1/09:
 Interest ($150,000)and principal ($125,000)are paid on the courthouse fund serial bonds.
(f)12/1/09:
 Receive an invoice for progress completed to date on the courthouse construction project in the amount of $2,100,000.
(g)12/27/09:
 $146,250 is transferred from the General Fund for the 1/1/10 interest payment due on the courthouse fund serial bonds.Interest is accrued as of 12/31/09,following the exception permitted by GASB.
Required:
 Prepare a Statement of Revenues,Expenditures and Changes in Fund Balance for the Capital Projects and Debt Service Funds.Assume this is the first year for each fund (beginning fund balances are zero)and the City has no other long-term debt than that described above.Use separate columns for the two funds

Accepted Answer

The answer of The City of Presho had the following...

Question 3

How would the government account for the unused bond proceeds?

Accepted Answer

A)  As a revenue in the debt service fund and as an expenditure in the capital projects fund. 
B)  As an other financing source in the capital projects fund and as an other financing use in the debt service fund. 
C)  As an other financing source in the government-wide Statement of Activities. 
D)  As an other financing source in the debt service fund and as an other financing use in the capital projects fund.

Question 4

Which of the following statements is false?

Accepted Answer

A)  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 5

With respect to Capital Projects Funds which of the following is correct?

Accepted Answer

A)  These funds commonly account for resources provided by long-term debt issues or dedicated taxes. 
B)  Acquired capital assets appear in the government-wide but not the fund basis financial statements. 
C)  A and B are both correct. 
D)  Neither A or B is correct.

Question 6

If a sinking fund is required by creditors or law,the unexpended resources would be classified as Assigned Fund Balance.

Accepted Answer

A) True 
 B)False

Question 7

When a payment is due to a contractor from capital projects fund resources,the debit would be to:

Accepted Answer

A)  A capital asset account. 
B)  Capital expenditures. 
C)  Capital Expense. 
D)  Encumbrances Control.

Question 8

Which of the following is/are true regarding Capital Projects Funds?

Accepted Answer

A)  A major source of funding for capital projects funds is the issuance of long-term debt. 
B)  Capital project funds only exist for the duration of the project for which it is created. 
C)  Capital Project funds use the Modified Accrual Basis of Accounting. 
D)  All of the above are true

Question 9

What is the correct debit or credit for the following scenario: A contract was issued for the major part of work to be done by a private contractor for the amount of $1,200,000?

Accepted Answer

A)  Debit: Budgetary Fund Balance -- Reserve for Encumbrances. 
B)  Debit: Construction expenditures. 
C)  Credit: Cash. 
D)  Debit: Encumbrances.

Question 10

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 11

The following are sources of revenue for the debt service fund except:

Accepted Answer

A)  Tax levies specifically designed for debt service. 
B)  General taxes levied by the General Fund and transferred to the debt service fund. 
C)  Special assessments levied against property. 
D)  All of the above are sources of revenue for the debt service fund.

Question 12

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 13

Unexpended intergovernmental grants and taxes dedicated to capital improvements in a capital projects fund are likely to be classified as Assigned Fund Balance.

Accepted Answer

A) True 
 B)False

Question 14

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?

Accepted Answer

A)  Debt service fund. 
B)  Internal Service Fund. 
C)  Enterprise Fund. 
D)  Pension Fund.

Question 15

Under governmental accounting principles for capital and operating leases; expenditures are recorded each period for the amount of the annual lease payment for all leases,but the expenditures are classified differently for capital and operating leases.

Accepted Answer

A) True 
 B)False

Question 16

What amount would be reported as debt service expenditures in the year ended June 30,2012?

Accepted Answer

A)  $350,000. 
B)  $175,000. 
C)  $87,500. 
D)  $-0-.

Question 17

If a bond sinking fund is required by creditors or law,the unexpended resources would be classified as Restricted.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following funds typically record budgets?

Accepted Answer

A)  General Funds, special revenue funds, capital projects, debt service, and permanent. 
B)  Only General Funds. 
C)  General Funds and permanent funds. 
D)  General Funds and special revenue funds.

Question 19

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 20

What is a bond refunding and why do governments refund bonds?
What is the difference between a current refunding and advance refunding?

Accepted Answer

The answer of What is a bond refunding and why...

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

A non-expendable trust which benefits a government or its citizenry and which stipulates that earnings only (not principal) may be used for its provided purpose is an example of a:

How would the government account for the unused bond proceeds?

Which of the following statements is false?

With respect to Capital Projects Funds which of the following is correct?

If a sinking fund is required by creditors or law,the unexpended resources would be classified as Assigned Fund Balance.

When a payment is due to a contractor from capital projects fund resources,the debit would be to:

Which of the following is/are true regarding Capital Projects Funds?

What is the correct debit or credit for the following scenario: A contract was issued for the major part of work to be done by a private contractor for the amount of $1,200,000?

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

The following are sources of revenue for the debt service fund except:

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?

Unexpended intergovernmental grants and taxes dedicated to capital improvements in a capital projects fund are likely to be classified as Assigned Fund Balance.

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?

Under governmental accounting principles for capital and operating leases; expenditures are recorded each period for the amount of the annual lease payment for all leases,but the expenditures are classified differently for capital and operating leases.

What amount would be reported as debt service expenditures in the year ended June 30,2012?

If a bond sinking fund is required by creditors or law,the unexpended resources would be classified as Restricted.

Which of the following funds typically record budgets?

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.

What is a bond refunding and why do governments refund bonds? What is the difference between a current refunding and advance refunding?