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ACC504 MIDTERM EXAM 2017 (A++++ ANSWER)
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Question 1 Which of the following is properly reported as a liability of the General Fund?

Question 1 options:

Accounts payable

General obligation bonds payable

Tax anticipation notes payable

Both b and c are correct

Question 2 Debt
service funds are used to record:

Question 2 options:

Neither principal nor interest payments of debt issues.

Only interest payments on debt issues.

Both principal and interest payments of debt issues.

Only principal payments of debt issues.

Question 3 When a vehicle is ordered by a government, the purchase order should be recorded in
the General Fund as a debit to

Question 3 options:

Encumbrances

Appropriations

Equipment

Expenditures

Question 4 Internal service funds should be used only if

Question 4 options:

The reporting government provides services primarily to external participants.

The reporting government is the predominant participant in the activity.

Either A and B.

Neither A nor B.

Question 5 The following cash transactions were among those reported by Crawford County’s Water and Sewer Enterprise Fund for the year:

Proceeds from sale of revenue bonds for construction: $5,000,000

Cash received from customers: $3,000,000

Capital contributed by developers: $1,000,000.

In the Water and Sewer Enterprise Fund’s statement of cash flows for the year ended December 31, what amount should be reported as cash flows from capital and
related financing activities?

Question 5 options:

$6,000,000

$9,000,000

$8,000,000

$5,000,000

Question 6 What amount of the following items should be accounted for in an enterprise fund?

Warehouse equipment used to store supplies for delivery to all city departments and agencies on a cost-reimbursement basis. ————— $350,000

Equipment used for supplying electric power to residents. ————— $2,100,000

Receivables for completed sidewalks to be paid for in installments by affected property owners. Construction was financed by special assessment bonds for which the town has no liability. ————— $1,760,000

Cash received from federal government, dedicated to highway maintenance, that must be accounted for in a separate fund. ————— $1,640,000

Question 6 options:

$350,000

$1,760,000

$1,640,000

$2,100,000

Question 7 Which of the following funds is a governmental fund-type?

Question 7 options:

Internal service fund

Permanent fund

Enterprise fund

Private-purpose trust fund

Question 8 Which of the following resource inflows would be recorded as a revenue of a debt service fund?

Question 8 options:

Property taxes levied by the debt service fund for debt service purposes.

Receipt of the premium on a new bond issue.

Transfer of the residual equity of a capital project from a capital projects fund to the debt service fund.

Taxes collected by the General Fund and transferred to the debt service fund.

Question 9 The accrual basis of accounting applicable to proprietary fund types requires that exchange revenues be recognized when:

Question 9 options:

Collected in cash.

Earned.

Measurable and available.

Authorized by the budget ordinance.

Question 10 Which of the following is the most reliable means of distinguishing a trust relationship from an agency relationship for purposes of deciding which type of fiduciary fund should be used?

Question 10 options:

Examine the wording of any agreements to determine if the word “trust” or “agency” is used

Examine the amount of money involved; agency relationships generally involve smaller amounts

Examine the length of time assets will be held; trust relationships are generally in existence longer than agency relationships

Examine the aggregate of factors, such as the enactment that brought the relationship into existence, statutes, regulations, etc, that help define the nature of the relationship

Question 11 Using the information below, what amount should be accounted for in a special revenue fund or funds?

Warehouse equipment used to store supplies for delivery to
all city departments and agencies on a cost-reimbursement basis                              $ 300,000

Equipment used for supplying electric power to residents                                         1,750,000

Receivables for completed sidewalks to be paid for in
installments by affected property owners. Construction was

 financed by special assessment Bonds for which the town has no liability.             1,500,000

Cash received from federal government, dedicated to highway
maintenance, that must be accounted for in a separate fund                                      1,800,000

Question 11 options:

$5,350,000

$3,300,000

$2,100,000

$1,800,000

Question 12 Which of the following funds of a government uses the modified accrual basis of accounting?

Question 12 options:

Internal service

Private-purpose trust fund

Capital projects

Enterprise

Question 13 The County Commission of Benton County adopted its General Fund budget for the year ending June 30, comprising estimated revenues of $3,200,000 and appropriations of $2,900,000. Benton County utilizes the budgetary accounts required by GASB standards. The budgeted excess of estimated revenues over appropriations will be recorded as:

Question 13 options:

A credit to Surplus Revenues, $300,000.

A memorandum entry only.

A credit to Budgetary Fund Balance, $300,000.

A debit to Estimated Excess Revenues, $300,000.

Question 14 Which of the following steps in the acquisition of goods and services by an activity accounted for by the General Fund occurs first?

Question 14 options:

Disbursement.

Appropriation.

Encumbrance.

Expenditure.

Question 15 Which of the following transactions is classified as an exchange transaction rather than a nonexchange transaction?

Question 15 options:

Bequest left to the city by a wealthy citizen

State grant to conduct an after school program for children

Property taxes

Fees charged by a municipal airport

Question 16 The
Reserve for Encumbrances account is properly termed a:

Question 16 options:

Long-term liability.

Current liability if paid within a year; otherwise a long-term debt.

Budgetary account.

Reservation of fund balance.

Question 17 On May 1,
Yuca City was notified of approval of a $300,000 federal operating grant, payable on a reimbursement basis as the city expends resources for the intended purpose of the grant. As of May 1, no expenditures had been made for grant purposes. The journal entry to record approval of this grant will include

Question 17 options:

A debit to grants receivable in the amount of $300,000

No journal entry will be made until eligibility requirements are met by expending resources for the authorized purpose(s)

A credit to revenues in the amount of $300,000

A credit to deferred revenues in the amount of $300,000

Question 18 The
modified accrual basis of accounting applicable to governmental fund types requires that revenues be recognized when

Question 18 options:

Authorized by the budget ordinance

Earned

Collected in cash

Measurable and available

Question 19 In financial reporting for proprietary funds and at the government-wide level, the
employer’s pension expense for the period is equal to:

Question 19 options:

The change in net pension obligation.

Annual required contribution.

The employer’s contribution.

Annual pension cost.

Question 20 The Governmental Accounting Standards Board is assigned responsibility for setting accounting and financial reporting standards for:

Question 20 options:

State and local government and all not-for-profit organizations.

State and local government entities and governmentally-related units and agencies, such as utilities, authorities, hospitals, and colleges and universities.

Governments; such as federal agencies, states, cities, counties, villages, and townships.

Not-for-profit organizations.

Question 21 The account “Interfund Transfers In” would be classified in a General Fund statement of revenues, expenditures, and changes in fund balance as a (an)

Question 21 options:

Other financing source

Revenue

Current liability

Other financing use

Question 22 At the end of fiscal 2014, the city of Greenwood had outstanding encumbrances of $15,000. Although the city follows a policy of allowing outstanding encumbrances to lapse, it plans to honor the related purchase orders in fiscal 2015. At year end the city’s accountant should take which of these actions?

Question 22 options:

Credit budgetary fund balance

Credit nonspendable fund balance

Credit assigned fund balance

Credit appropriations

Question 23 The city of Superior’s fiscal year ends on December 31. On July 1, 2011 Superior issues $1,000,000 of 8%, 10-year term bonds with semi-annual interest payments due on July 1 and January 1 each year. The General Fund transferred $100,000 to the debt service fund on July 1, 2011 to pay for interest to bondholders for the year. The debt service fund invests the money at an annual rate of 10%. What is the amount of total assets in the debt service fund at the end of 2011?

Question 23 options:

$965,000

$65,000

$1,005,000

$105,000

Question 24 When a cash and investment pool of a certain city was established, the debt service fund transferred investments to the pool having a cost of $3,000,000 but a current fair market value of $3,100,000. To record this transaction, the journal entry made by the debt service fund will include:

Question 24 options:

A debit to Equity in Pooled Cash and Investments in the amount of $3,100,000

A credit to Investments in the amount of $3,000,000

A credit to Revenues–Change in Fair Value of Investments in the amount of $100,000

All of the above

Question 25 The Financial Accounting Standards Board has the responsibility for setting accounting and financial reporting standards for:

Question 25 options:

All not-for-profit organizations that are nongovernmental and business entities.

All special purpose governments.

All federal government agencies.

All not-for-profit organizations.

Question 26 Explain the difference between measurement focus and basis of accounting. Also, explain the difference between the economic resources measurement focus and the current financial resources measurement focus, as well as the difference between the accrual and modified accrual bases of accounting. Which funds and government-wide activities use each focus and each basis?

Question 27 What provision in a bond indenture or bond ordinance is necessary for long-term debt to be classified as a general obligation? Are all obligations properly reported as general long-term debt evidenced by bonds or notes? If not, give several examples of general long-term debt not evidenced by bonds or notes.

Question 28 Describe the difference between exchange and nonexchange transactions and discuss the rules for recognition of revenues and expenses/expenditures for each type of transaction.

Question 29 Under the GASB accounting and financial reporting standards for risk financing activities, how does an internal service fund used for risk financing determine the appropriate claims expense and liability to be recognized for a period?

Question 30 One argument advanced in favor of financing with term bonds secured by some sort of a sinking fund is that earnings on investments held by the debt service fund will reduce the amount of support required from other sources. What is your opinion of the validity of this
argument?

 

Available solutions
  • ACC504 MIDTERM EXAM 2017 (A++++ ANSWER)
    $40.00

    Question Question 1 Which of the following is properly reported as a liability of the General Fund? Question 1 options: Accounts payable General obligation bonds payable Tax anticipation notes payable Both b and c are correct Question 2 Debt service funds are used to record: Question 2 options: Neither principal nor interest payments of debt issues. Only interest payments on debt issues. Both principal and interest payments of debt issues. Only principal payments of debt issues. Question 3 When a vehicle is ordered by a government, the purchase order

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