Question 1

A county has $3,650,000 of outstanding encumbrances related to unassigned resources at year-end,December 31,2013.It expects to accept delivery on all orders in 2014.How should the county handle the outstanding encumbrances in its General Fund balance sheet at December 31,2013?

Accepted Answer

A) it should report encumbrances as if they were expenditures and liabilities of the year 2013 
B) it should close the open encumbrances and show them as part of unassigned fund balance 
C) it should close the open encumbrances and show them as part of assigned fund balance 
D) it should close the open encumbrances and make no adjustments to fund balance

Question 2

A city levies property taxes of $1,050,000,but believes that it will not be able to collect $50,000 of those taxes.What entry should it make when the taxes are levied?

Accepted Answer

The answer of A city levies property taxes of $1,050,000,but...

Question 3

The City of Maysville's General Fund balance sheet for its December 31,2013 year end shows inventory of $28,000 and prepaid rent of $10,000.The city also had $60,000 of outstanding encumbrances related to unassigned resources in its General Fund at year-end.In December 2013,a grantor provided the City with $42,000 that must be used to pay musicians who perform in the city's series of summer concerts in the park during 2014.How much should the city report as assigned fund balance in its General Fund on December 31,2013?

Accepted Answer

A) $28,000 
B) $38,000 
C) $42,000 
D) $60,000 
E) $98,000

Question 4

The General Fund lends cash at the beginning of the year to an Enterprise Fund,expecting to be repaid before the end of the year.What account should be debited in the General Fund?

Accepted Answer

A) transfer out to enterprise fund 
B) due from enterprise fund 
C) other financing uses - enterprise fund 
D) expenditures - enterprise fund loans

Question 5

The city's governing body gives the city's finance director the authority to set aside "excess" amounts in the General Fund to provide funds to build a new fire station.The finance director sets aside $200,000 for that purpose during the current fiscal year.This should be reported as part of:

Accepted Answer

A) unassigned fund balance 
B) assigned fund balance 
C) committed fund balance 
D) restricted fund balance 
E) nonspendable fund balance

Question 6

The City of Maysville's General Fund balance sheet for its December 31,2013 year end shows inventory of $28,000 and prepaid rent of $10,000.The city also had $60,000 of outstanding encumbrances in its General Fund at year-end.In December 2013,a grantor provided the City with $42,000 that must be used to pay musicians who perform in the city's series of summer concerts in the park during 2014.How much should the city report as nonspendable fund balance in its General Fund on December 31,2013?

Accepted Answer

A) $10,000 
B) $28,000 
C) $38,000 
D) $42,000 
E) $60,000

Question 7

The City of Maysville's General Fund balance sheet for its December 31,2013 year end shows inventory of $28,000 and prepaid rent of $10,000.The city also had $60,000 of outstanding encumbrances in its General Fund at year-end.In December 2013,a grantor provided the City with $42,000 that must be used to buy musical instruments for the city's youth orchestra.No instruments had been purchased at year-end.How much should the city report as restricted fund balance in its General Fund on December 31,2013?

Accepted Answer

A) $28,000 
B) $38,000 
C) $42,000 
D) $60,000 
E) $102,000

Question 8

The city council decides to close the Library Special Revenue fund and send its remaining resources ($45,000 cash)to the General Fund.What account should the Library Special Revenue Fund debit when it sends the cash to the General Fund?

Accepted Answer

A) advance to general fund 
B) transfer out to general fund 
C) due from general fund 
D) expenditures - fund closeout

Question 9

Which of the following describes the proper accounting procedure for supplies in the General Fund?

Accepted Answer

A) Supplies may be accounted for as expenditures either when purchased or when consumed.In either case,material amounts of inventory are shown on the balance sheet 
B) Supplies must be accounted for as expenditures when purchased.Therefore,inventories are not shown on the balance sheet 
C) Supplies must be initially recorded as assets,and then charged off as expenditures as the supplies are consumed 
D) Supplies may be accounted for as expenditures either when purchased or when consumed.If the purchases method is used,inventories are not shown on the balance sheet.

Question 10

A government would refer to its property tax calendar to determine whether property taxes receivable at any given time are

Accepted Answer

A) collectible in part or in full 
B) delinquent or current 
C) sufficient to finance planned expenditures 
D) larger or smaller than those of the prior year

Question 11

On January 1,2013,a city recorded General Fund property tax revenues of $750,000,but made no provision for uncollectible receivables or tax refunds.During the year,it collected property taxes of $720,000,wrote off $4,000 as uncollectible,and made tax refunds of $3,000.At year-end,the city finance director concluded that $10,000 of the delinquent taxes would be collected in January and February of 2014,$12,000 would be collected later in 2014,and $1,000 would need to be written off as uncollectible.How much should the city report as property tax revenue in its General Fund financial statements for the year 2013?

Accepted Answer

A) $720,000 
B) $730,000 
C) $742,000 
D) $713,000

Question 12

At the beginning of the year 2013,a town recorded General Fund property tax receivables of $600,000.By year-end (December 31),taxpayers had paid a total $575,000.Based on previous experience,the town expected to collect the $25,000 of delinquent taxes as follows: $10,000 in January and February of 2014 and $15,000 between March and August of 2014.How much should the town report as property tax revenue in its General Fund statements for the year 2013?

Accepted Answer

A) $585,000 
B) $600,000 
C) $590,000 
D) $575,000

Question 13

If a taxpayer fails to pay his property taxes on time and the city decides to foreclose the property,what accounting entry should the city make?

Accepted Answer

A) write off the property tax receivable as uncollectible 
B) reduce property tax revenues by the amount of the receivable 
C) reclassify the property tax receivable account to a delinquent receivable account 
D) reclassify the property tax receivable account to a tax lien receivable account

Question 14

A state government receives a grant from the federal government that it disburses to local governments within the state.To meet federal grant requirements,the state government monitors the local governments to make sure that they comply with federal grant requirements.When the state government disburses the grant monies to the local governments,it should debit:

Accepted Answer

A) due to local governments 
B) deferred revenues - grants 
C) expenditures - federal grant 
D) no entry is required

Question 15

The General Fund of a city pays all utility bills received from private companies for services provided to city agencies.It then bills other funds for their shares of the bills.On May 10,the General Fund pays an electric bill for $230,000.It then sends a bill to the Library Special Revenue Fund for $4,000,representing the library's share of the bill.Which account should the General Fund credit when it sends the bill to the Library Special Revenue Fund?

Accepted Answer

A) expenditures - utilities 
B) due from library special revenue fund 
C) transfer out to library special revenue fund 
D) due to library special revenue fund

Question 16

The General Fund provides a recurring annual subsidy to the Mass Transit Enterprise Fund to keep bus fares at a reasonable level.How should the General Fund report the subsidy in its financial statements?

Accepted Answer

A) as an expenditure 
B) as a long-term advance 
C) as a transfer out 
D) as a reimbursement

Question 17

When reporting on the General Fund in the fund financial statements,what is the general principle regarding the accrual of sales taxes collected by merchants but not yet remitted to the taxing government?

Accepted Answer

A) sales taxes should be recognized only if received by the state by year end 
B) sales taxes should be recognized when the merchant makes the sale provided taxes are received early enough in the following year to finance expenditures of the period covered by the statements 
C) sales taxes should be accrued provided they are received within 15 days after the end of the accounting period 
D) sales taxes should be accrued based on an estimate of amounts received by merchants but not yet remitted to the state,regardless of when the taxes are remitted

Question 18

A General Fund receives an invoice from the Electric Utility Fund (an Enterprise Fund)for electricity provided by the Utility Fund.When it receives the invoice,what account should be debited in the General Fund?

Accepted Answer

A) due from electric utility fund 
B) transfer in from electric utility fund 
C) expenditures - utility services 
D) due to electric utility fund

Question 19

Which of the following liabilities normally would not be reported in governmental funds?

Accepted Answer

A) accrued salaries payable 
B) bonds payable 
C) vouchers payable 
D) all of the above are commonly reported in governmental funds 
E) none of the above are commonly reported in governmental funds

Question 20

The attorneys for the City of Hensley believe that a lawsuit filed against the city will be settled late in the next fiscal year.The attorneys believe that it is probable that the city will have to pay the claimants $30,000 to settle the lawsuit,but it is possible that it could be settled for as little as $15,000 or as much as $40,000.How much should the city accrue as a liability in the General Fund for its current fiscal year?

Accepted Answer

A) $0 
B) $15,000 
C) $30,000 
D) $40,000

Exam 5: The Governmental Fund Accounting Cycle