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ACC431: EXAM1-ANSWERS_V1

1.

True/False: Governmental funds account for assets...


Points:2

Governmental funds account for assets but not the liabilities.


True
False

2.

True/False: Both the GASB and the FASB require en...


Points:2

Both the GASB and the FASB require entities to include a management discussion and analysis in the financial reports.
True
False

3.

True/False: "The governmental funds category incl...

Points:2
"The governmental funds category includes the General Fund, special revenue funds, debt service funds, capital projects funds,
and internal service funds. "
True
False

4.

True/False: "Governmental funds are identical to ...

Points:2
"Governmental funds are identical to governmental activities, proprietary funds are identical to business-type activities, and
fiduciary funds are identical to fiduciary activities of a government. "
True
False

5.

Multiple Choice: The body that has been established to...

Points:2
The body that has been established to recommend accounting and financial reporting standards for the federal government is the
Financial Accounting Standards Board (FASB).
Governmental Accounting Standards Board (GASB).
Federal Accounting Foundation (FAF).
Federal Accounting Standards Advisory Board (FASAB).

6.

True/False: Encumbrance accounting is required in...


Points:2

Encumbrance accounting is required in the accounting for payroll of governmental funds.


True
False

7.

True/False: Encumbrances Outstanding is shown on ...


Points:2

Encumbrances Outstanding is shown on the balance sheet as a restriction on fund balance.


True
False

8.

True/False: "On the government-wide statement of ...

Points:2
"On the government-wide statement of activities, depreciation expense for assets that essentially benefit all functions, such
as the city hall, may be reported as a separate line item or on the same line as the General Government or similar function. "
True
False

9.

True/False: "Budgetary accounts used in the Gener...

Points:2
"Budgetary accounts used in the General Fund include Estimated Revenues, Estimated Other Financing Sources, Appropriations,
Estimated Other Financing Uses, and Encumbrances. "
True
False

10.

True/False: Available means that a revenue or oth...

Points:2
Available means that a revenue or other financing source is expected to be collected during the current fiscal period or within one
month of the fiscal year end.
True
False

11.

Short Answer: The following are key terms in Chapte...

Question

Points:5
The following are key terms in Chapter 4 that relate to exchange and nonexchange transactions:
A. Derived tax revenues
B. Exchange transactions
C. Nonexchange transactions
D. Imposed nonexchange transactions
E. Voluntary nonexchange transactions
For each of the following definitions, indicate the key term from the list above that best matches by
placing the appropriate letter in the blank space next to the definition.
_____ 1. Transactions in which the donor derives no direct tangible benefits from the recipient agency
_____ 2. A classification of nonexchange transaction, such as income or sales taxes
_____ 3. A category of nonexchange transaction that includes certain grants and entitlements and
most donations
_____ 4. A category of nonexchange transactions, such as property taxes and most fines and forfeitures.

Answer

1. C, 2. A, 3. E, 4. D

12.

Short Answer: During fiscal year 2017, the Town of ...

Question

Points:10
During fiscal year 2017, the Town of Tonawanda issued purchase orders to various vendors in the amounts s
General Government
Public Safety
Public Works
Culture and Recreation
Health and Welfare
Miscellaneous
Total

$ 82,500
148,700
130,400
97,300
94,800
14,200
$567,900

All goods ordered during the year were received at the following actual costs:
General Government
Public Safety
Public Works
Culture and Recreation
Health and Welfare
Miscellaneous
Total

$ 83,720
147,940
131,140
98,780
93,970
14,300
$569,850

a. Prepare a summary journal entry in the General Fund general journal to record the issuance
of purchase orders during fiscal year 2017. (Subsidiary detail may be omitted.)
b. Prepare summary journal entries in the General Fund general journal to record the receipt of and
payment for goods during fiscal year 2017. (Subsidiary detail may be omitted.)

Answer

TOWN OF TONAWANDA
General Ledger
Debits
Credits
a.

b.

General Fund:
ENCUMBRANCES2017
ENCUMBRANCES
OUTSTANDING2017
General Fund:
ENCUMBRANCES
OUTSTANDING2017
ENCUMBRANCES2017
EXPENDITURES2017
VOUCHERS PAYABLE

567,900
567,900

567,900
567,900
569,850
569,850

13.

Short Answer: The following transactions occurred f...


Points:5

Question

The following transactions occurred for the City of Talbotss General Fund.
1. The budget prepared for the fiscal year included Total estimated revenues of $1,774,000 and
appropriations of $1,693,000.
2. Encumbrances issued against the appropriations during the year were $831,000.
3. The current years tax levy of $1,005,000 was recorded; uncollectibles were estimated as $65,000.

4. Collections of delinquent taxes from prior years levies totaled $132,000; collections of the current
years levy totaled $2,459,000.
5. Invoices were received and approved for payment for items ordered in documents recorded as
encumbrances in Transaction (2) of this problem. The estimated liability was $751,200.
Actual costs were $750,500.
6. Revenue other than taxes collected during the year consisted of licenses and permits,
$373,000; intergovernmental revenue, $300,000; and $66,000 of miscellaneous revenues.
7. Payments on Vouchers Payable totaled $2,505,000.
Prepare journal entries in the General Fund general journal to record the transactions.
(Subsidiary detail may be omitted.)
Answer

CITY OF TALBOTS-JOURNAL ENTRIES


GENERAL LEDGER
Debits

Credits

General Fund:
(1)

ESTIMATED REVENUES
APPROPRIATIONS

1,774,000
1,693,000

BUDGETARY FUND
BALANCE

81,000

General Fund:
(2)

ENCUMBRANCES

831,000

ENCUMBRANCES
OUTSTANDING

General Fund:
(3)

TAXES RECEIVABLE

831,000

CURRENT

1,005,000

ALLOWANCE FOR UNCOLLECTIBLE CURRENT TAXES

65,000

REVENUES

940,000

General Fund:
(4)

CASH

2,591,000

TAXES RECEIVABLE
DELINQUENT
TAXES RECEIVABLE

132,000

CURRENT

2,459,000

General Fund:
(5)

ENCUMBRANCES
OUTSTANDING

751,200

ENCUMBRANCES

EXPENDITURES
VOUCHERS PAYABLE

751,200

750,500
750,500

General Fund:
(6)

CASH

739,000

REVENUES

739,000

General Fund:
(7)

VOUCHERS PAYABLE
CASH

2,505,000
2,505,000

14.

Multiple Choice: Which of the following is not a progr...


Points:5

Which of the following is not a program revenues classification used in the governmental activities journal and reported in
the government-wide statement of activities?

User fees.
Operating grants and contributions.
Charges for services.
Capital grants and contributions.

15.

Short Answer: The following information is provided...

Points:5
The following information is provided about the Town of Truesdales General Fund operating statement and budgetary accounts
for the fiscal year ended June 30, 2017. (Note: The Town of Truesdale has no restricted, committed, or assigned fund balances.)
Estimated revenues
Revenues
Appropriations
Expenditures

$3,150,000
3,190,000
3,185,000
3,175,000

Fund BalanceUnassigned at the beginning of year had a $600,000 credit balance. The Budgetary Fund Balance
(after the FY 2017 budget was recorded) had a $35,000 debit balance.
Calculate the end-of-year balances for the Fund BalanceUnassigned and Budgetary Fund Balance accounts that would
be reported on the towns balance sheet prepared as of June 30, 2017.
Show all necessary work.
Beginning Fund Balance-Unassigned
Close Revenues
Close Expenditures

600,000
+ 3,190,000
- 3,185,000

Ending Fund Balance- Unassigned

605,000

16.

Essay: At the time items for which purchase ...

Points:5
At the time items for which purchase orders had previously been issued are received, indicate whether each of the following
accounts of the General Fund should be debited (D), credited (C), or is not affected (N).
_____ 1.Encumbrances
_____ 2.Encumbrances Outstanding
_____ 3.Expenditures
_____ 4.Vouchers payable
_____ 5.Appropriations
1. C, 2. D, 3. D, 4. C, 5. N

17.

Multiple Choice: When computers are ordered by the may...

Points:5
When computers are ordered by the mayor's office, the purchase order should be recorded in the General Fund as a debit to:
Encumbrances.
Equipment.
Expenditures.
Appropriations.

18.

Multiple Choice: Fund balance may be classified as all...


Points:5

Fund balance may be classified as all of the following except:


Restricted.
Committed.
Uncommitted.
Assigned.

19.

Multiple Choice: When supplies ordered for use in an a...


Points:5

When supplies ordered for use in an activity accounted for in the General Fund are received at an actual price that is
more than the estimated price on the purchase order, the Encumbrance account is:
Debited for the estimated price on the purchase order.
Credited for the estimated price on the purchase order.
Debited for the actual price for the supplies received.
Credited for the actual price for the supplies received.

20.

Multiple Choice: "The section of the comprehensive ann...

Points:4
"The section of the comprehensive annual financial report that presents tables and charts showing social and economic data
in addition to financial trends, fiscal capacity, and operating information of the government is the: "
Introductory section.
Management's discussion and analysis section.
Statistical section.
Financial section.

21.

Multiple Choice: You are trying to decide if an entity...


Points:4

You are trying to decide if an entity you are reviewing is a government or a not-for-profit. Which of the following would
indicate it is a government rather than a not-for-profit entity?
Absence of profit motive.
A primary source of revenues is taxes.
Resource providers do not expect benefits proportional to the resources provided.
"Absence of a defined ownership interest that can be sold, transferred, or redeemed. "

22.

Multiple Choice: Which of the following standard-setti...

Points:4
Which of the following standard-setting bodies requires a management's discussion and analysis as a part of the financial report?

GASB.
FASB.
FASAB.
Both GASB and FASAB.

23.

Multiple Choice: Which of the following is not an obje...


Points:4

Which of the following is not an objective of financial reporting by state and local governments?
To assist users in assessing the adequacy of systems and controls.
To assist users in assessing financial condition and results of operations.
To assist financial report users in comparing actual financial results with the legally adopted budget.
"To assist in determining compliance with finance-related laws, rules, and regulations. "

24.

Multiple Choice: Recognizing revenues when measurable ...


Points:4

Recognizing revenues when measurable and available for paying current obligations and expenditures when incurred
describes which basis of accounting?
Accrual.
Modified accrual.
Modified cash.
Budgetary.

25.

True/False: "Economic resources are cash or items...


Points:4

"Economic resources are cash or items expected to be converted into cash during the current period, or soon enough
thereafter to pay current period liabilities. "
True
False

26.

True/False: "When revenues are legally restricted...


Points:4

"When revenues are legally restricted by external resource providers or committed by enabling legislation for particular
operating purposes, a private purpose trust fund is created. "
True
False

27.

True/False: Assigned fund balances can be either ...


Points:4

Assigned fund balances can be either positive or negative.


True
False

28.

True/False: Only those governmental and proprieta...

Points:4
Only those governmental and proprietary funds that meet the GASB size criteria for major funds are reported in separate columns of the gov
proprietary fund financial statements.
True
False

29.

True/False: Proprietary funds primarily provide s...


Points:4

Proprietary funds primarily provide services to the general public for a fee.
True
False

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