Multiple Choice. Choose the best answer.
1. When equipment was purchased with General Fund resources, which of the following accounts would have been debited in the General Fund?
a. Expenditures.
b. Equipment.
c. Encumbrances.
d. No entry should be made in the General Fund.
2. The City of Marshall uses the purchases method for recording its inventory of supplies in the General Fund. Rather than using a perpetual inventory system, inventories are updated at year-end based on a physical count. Physical inventories were $85,000 and $75,000 at December 31, 2010 and 2011, respectively. The adjusting journal entry on December 31, 2011, will include a:
a. Debit to Inventory of Supplies for $75,000.
b. Debit to Expenditures for $10,000.
c. Credit to Inventory of Supplies for $10,000.
d. Credit to Expenditures for $10,000.
3. Goods for which a purchase order had been placed at an estimated cost of $1,000 were received at an actual cost of $985. The journal entry in the General Fund to record the receipt of the goods will include a:
a. Debit to Reserve for Encumbrances for $1,000.
b. Credit to Vouchers Payable for $985.
c. Debit to Expenditures for $985.
d. All of the above are correct.
4. The City of Fenton levied $3,000,000 of General Fund property taxes for the fiscal year ending December 31, 201 1, with an estimated uncollectible amount of $200,000. During 2011 and January and February of 2012, $2,500,000 of the levy is expected to be collected; however. $300,000 of the levy is not expected to be collected until after February 2012. The amount of property tax revenues to be recognized in FY 2011 is:
a. $3,000,000 in governmental activities at the government-wide level and $2,800,000 in the General Fund.
b. $2,800,000 in governmental activities at the government-wide level and $2,500,000 in governmental activities at in the General Fund.
c. $2,500,000 in governmental activities at the government-wide level and $2,800,000 in governmental activities at in the General Fund.
d. $2,500,000 in governmental activities at the government-wide level and $2,500,000 in governmental activities at in the General Fund.
5. Which of the following items would be reported as a program revenue on the government-wide statement of activities?
a. Sales taxes.
b. Interest and penalties on taxes.
c. Unrestricted federal grants.
d. Fines and forfeits.
6. Internal exchange transactions in which a governmental fund receives goods or services from an enterprise fund are:
a. Reported as expenditures by the governmental fund and as revenues by the enterprise fund.
b. Reported as interfund transfers out by the governmental fund and as inter- fund transfers in by the internal service fund.
c. Reported as expenses by governmental funds and as revenues by the enterprise fund.
d. Either a or b, depending on local policy.
7. Which of the following revenues would be classified as an imposed nonexchange revenue?
a. Sales taxes.
b. Federal and state grants.
c. Property taxes.
d. Income taxes.
8. Which of the following transactions is reported on the government-wide financial statements?
a. An interfund loan from the General Fund to a special revenue fund.
b. Equipment used by the General Fund is transferred to an internal service fund that predominantly serves departments that are engaged in governmental activities.
c. The City Airport Fund, an enterprise fund, transfers a portion of boarding fees charged to passengers to the General Fund.
d. An interfund transfer is made between the General Fund and the Debt Service Fund.
9. A special revenue fund that administers a program funded by a reimbursement- type (expenditure-driven) federal grant should recognize revenue:
a. When notified of grant approval.
b. When qualifying expenditures have been made.
c. When cash is received.
d. When the special revenue fund has paid for all of the services it has provided.
10. A city received a $1,000,000 cash contribution under a trust agreement in which investment earnings (but not the principal amount) can be used to maintain the city cemetery. This contribution should be recorded in a (an):
a. Fiduciary fund.
b. Permanent fund.
c. Special revenue fund.
d. Internal service fund.