Question 1

Merchants remit $800,000 to a county government in calendar year 2013 for sales taxes collected in 2013.In January,2014,they send the county an additional $25,000 applicable to the year 2014.Based on past experience,the county expects to receive an additional $15,000 later in 2014,but applicable to 2013.How much should the county recognize as sales tax revenues when it prepares its fund and government-wide financial statements? $\begin{array}{lll}&\text { Fund } & \text { Government-wide } \
&\text { Statements } & \text { Statement }\
\text { a. } & \$ 800,000 & \$ 800,000 \
\text { b. } & \$ 800,000 & \$ 840,000 \
\text { c. } & \$ 825,000 & \$ 825,000 \
\text { d. } & \$ 825,000 & \$ 840,000
\end{array}$

Accepted Answer

The answer of Merchants remit $800,000 to a county government...

Question 2

A city health department charges fees for copies of birth certificates provided to its citizens.How should those fees be reported in the government-wide statement of activities?

Accepted Answer

A) as a separate item of revenue in the revenue section 
B) as a direct reduction of the expenses of the health department 
C) as an element of program revenues,which reduce gross expenses of the health department 
D) as a special item

Question 3

A county,that did not previously have a property tax levies a property tax for $900,000 in December 2012.The tax is for the budget year January 1 - December 31,2013.Because it sends out the bills on December 1,it actually collects $500,000 in cash before December 31,2012.It collects an additional $375,000 of 2013 property taxes during calendar year 2013,$20,000 during January 1 - February 28,2014,and the remaining $5,000 in June 2014.How much property tax revenue should the county report in its 2013 fund and government-wide financial statements? $\begin{array}{lll}&\text { Fund } & \text { Government-wide } \
&\text { Statements } & \text { Statement }\
\text { a. } & \$ 375,000 & \$ 100,000 \
\text { b. } & \$ 875,000 & \$ 900,000 \
\text { c. } & \$ 875,000 & \$ 895,000 \
\text { d. } & \$ 895,000 & \$ 900,000
\end{array}$

Accepted Answer

The answer of A county,that did not previously have a...

Question 4

(Entries to prepare government-wide financial statements - revenue and expense accruals)
For the following situations,make adjusting entries necessary to prepare government-wide financial statements.Where appropriate,take account of the amounts reported in the fund-level financial statements.
a.To prepare its government-wide financial statements for the year ended December 31,2012,the city reported a $900,000 long-term liability for estimated judgments and claims.At December 31,2013,the city estimated that the long-term liability would be $935,000.(Hint: Carry forward the starting liability and adjust for the increase. )
b.For the calendar year 2013,the city reported sales taxes of $800,000 in its fund-level financial statements.This amount includes all taxes collected in 2013 (applicable to 2013 and 2012),as well as the accrual for larger merchant remittances in January,2014.The accrual does not include estimated remittances of $35,000 from smaller merchants in April,2014.
b.A city instituted a new sales tax starting January 1,2012.It collected $600,000 of sales taxes during 2012.When the city prepared its fund-level statements,it accrued an additional $200,000 for sales taxes remitted by larger businesses in January,2013,for taxes collected in the fourth quarter of 2012.However,smaller businesses are not required to remit fourth quarter collections until April,2013.No accrual was made for those taxes,which were estimated to be $28,000.
c.See facts in situation

Accepted Answer

The answer of (Entries to prepare government-wide financial statements -...

Question 5

Jace Township's General Fund reports a balance due from another fund.This item and the corresponding interfund liability will appear in Jace Township's government-wide statement of net position only if the debtor fund is

Accepted Answer

A) an enterprise fund 
B) a capital projects fund 
C) an internal service fund 
D) a permanent fund

Question 6

(Preparation of Government-Wide Financial Statements)
On the following page is the government-wide adjusted trial balance for the Town of Catlettville as of June 30,2013,the end of the fiscal year.The adjustments needed to convert accounting information from the current financial resources measurement focus and modified accrual basis of accounting to the economic resources measurement focus and accrual basis of accounting have been made.
The Town government performs three functions,general government,public safety and roads and bridges.The Town has no business-type activities nor any component units.Program revenues include charges for services (related to the general government and public safety functions),operating grants (for public safety)and capital grants (for roads and bridges).General revenue sources are property taxes,other taxes,investment revenues,and miscellaneous revenues.
Using this information,prepare in good form (a)the government-wide statement of net position (using a classified format),and (b)the government-wide statement of activities as of,and for the year ended,June 30,2013.There are no restricted assets or liabilities;the long-term debt (both portions)is the only debt related to the Town's capital assets.

Accepted Answer

The answer of (Preparation of Government-Wide Financial Statements)
On the following...

Question 7

Identify the adjustment entries,if any,necessary to prepare government-wide financial statements from the city's calendar year 2012 fund-level statements

Accepted Answer

The answer of Identify the adjustment entries,if any,necessary to prepare...

Question 8

A city government levies property taxes that are recorded directly into a Debt Service Fund,rather than the General Fund.How should those property taxes be reported in the government-wide statement of activities?

Accepted Answer

A) as property tax revenue in the general revenues section 
B) as a direct reduction of interest expenses in the functional expense section 
C) as an element of program revenue,which reduce gross interest expenses 
D) as a negative expense,which is then allocated to all functions or programs

Question 9

An Internal Service Fund (ISF)provided services to two agencies financed by the General Fund -- the Tax Department (which it billed $200,000)and the Comptroller's Office (which it billed $100,000).In the fund financial statements,the ISF reported a loss of $30,000.How should this information be reported in the government-wide statement of activities?

Accepted Answer

A) Under "business-type activities," in a separate line captioned ISF,revenues of $300,000,expenses of $330,000,and net expenses of ($30,000)should be reported 
B) Under "governmental-type activities," in a separate line captioned ISF,revenues of$300,000,expenses of $330,000,and net expenses of ($30,000)should be reported 
C) ISF activities should not be reported,but expenses reported for the Tax Department and the Comptroller's Office should be increased by $20,000 and $10,000,respectively 
D) ISF activities should not be reported,but expenses reported for the Tax Department and the Comptroller's Office should be reduced by $20,000 and $10,000,respectively

Question 10

Tinsel Town has only two funds,the General Fund (GF),and a Capital Projects Fund (CPF).Summarized operating statements for each of the funds for fiscal 2013 are as follows: $\begin{array}{lrrr}&\text { GF } &\text { CPF }&\text { Total }\
\text { Revenues } & \$ 100 & \$- & \$ 100 \
\text { Expenditures } & 89 & 62 & 151 \
\text { Bond proceeds } & -- & 70 & 70\
\text { Increase in fund balance } & 11 & 8 & 19 \
\text { Beginning fund balance } & 52 & 0 & 52 \
\text { Ending fund balance } & 63 & 8 & 71
\end{array}$
The total net position balance for Tinsel Town's governmental activities at the end of fiscal 2013 is

Accepted Answer

A) 63 
B) 43 
C) 68 
D) 75

Question 11

In accordance with a bond agreement,assets are being accumulated in a sinking fund to pay bonds due in 20 years.The assets are reported as Investments.What other information should be reported about that item on the face of the government-wide financial statements?

Accepted Answer

A) It should be reported as part of net position invested in capital assets,net of related debt 
B) It should be reported as part of net position restricted for debt service 
C) It should be reported as part of net position reserved for debt service 
D) It should be reported as part of fund balance reserved for debt service

Question 12

Just before the close of its fiscal year,a city government issues $2 million of bonds to finance the acquisition of capital assets.However,no part of the debt is repaid by year-end and no part of the debt is used to purchase capital assets.What adjusting entry is needed to prepare the city's government-wide financial statements from its fund-level financial statements?

Accepted Answer

The answer of Just before the close of its fiscal...

Question 13

Which of the following elements properly will not be displayed as a specific item in a government-wide statement of activities prepared by a city or county government?

Accepted Answer

A) program revenues 
B) interfund reimbursements 
C) interest expense on long-term debt 
D) the beginning net position balance(s)

Question 14

How should Internal Service Fund (ISF)activities be reported in the government-wide statement of activities?

Accepted Answer

A) ISF activities should be reported in a separate column 
B) ISF activities should be included in the column headed "business-type activities." 
C) ISF activities should be included in the column headed "governmental-type activities." 
D) ISF activities (revenues and expenses)should be eliminated and interfund profits or losses should be eliminated by decreasing or increasing the costs of the activities that were billed

Question 15

Westenhover City is a municipality that has governmental activities,business-type activities,a discrete component unit,and a blended component unit.Which of the following would not properly appear as a specific line item in Westenhover City's government-wide statement of net position?

Accepted Answer

A) revenues of the blended component unit 
B) revenues of the discrete component unit 
C) revenues of the governmental activities 
D) revenues of the business-type activities

Question 16

A government issued $4 million of bonds on November 1,2012,to build a fire house.The first debt service payment ($200,000 principal plus 6 percent interest per annum on outstanding debt)was due November 1,2013.To prepare government-wide financial statements at December 31,2012,what journal entry is needed regarding the debt service due on November 1,2013? a. no journal entry is needed
b. Interest expense$\quad$$\quad$$\quad$40,000
Interest payable$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$40,000
c. Interest expense$\quad$$\quad$$\quad$40,000
Bond principal expense$\quad$33,333
Debt service payable$\quad$$\quad$$\quad$$\quad$$\quad$73,333
d. Interest expense$\quad$$\quad$$\quad$240,000
Interest pavable$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$240,000

Accepted Answer

The answer of A government issued $4 million of bonds...

Question 17

How should the difference between assets,deferred outflows,deferred inflows,and liabilities be characterized in government-wide financial statements?

Accepted Answer

A) as fund balances 
B) as net position 
C) as fund equity 
D) as available for spending

Question 18

How should bonds payable be reported on government-wide financial statements?

Accepted Answer

A) Bonds payable should be reported as an offset to capital assets in the assets section of the statement of net position 
B) Bonds payable should not be reported on the government-wide financial statements 
C) Bonds payable should be separated between amounts due to be paid in one year and amounts due to be paid in more than one year 
D) Bonds payable should be reported in the net position section of the statement of net position

Question 19

What must a government do to avoid depreciating its infrastructure assets and still meet the GASB's financial reporting standards?

Accepted Answer

A) have an asset management system and document that its assets are being preserved at a condition level that it establishes and discloses 
B) estimate the dollar amount of its infrastructure assets and report that amount in the government-wide statement of net position 
C) leave the dollar value of its infrastructure assets off both the government-wide statement of net position and the governmental fund balance sheet 
D) take a compete inventory of its infrastructure assets every year

Question 20

On the government-wide statement of net position,assets and liabilities may be reported:

Accepted Answer

A) in a classified format 
B) in order of relative liquidity 
C) in either order of relative liquidity or a classified format 
D) in separate columns

Exam 10: Government-Wide Financial Statements