Multiple Choice. Choose the best answer.
1. Under GASB standards, which of the following would be considered an example of an intangible asset?
a. A lake located on city property.
b. Water rights associated with the springs that supply the water to the lake.
c. The city€™s irrigation system, which uses water from the lake.
d. None of the above would be considered an intangible asset.
2. Four new desktop computers, for which the cost exceeded the city€™ capitalization threshold, wore purchased for use in the city clerk€™s office using General Fund resources. Which of the following entries would be required to completely record this transaction?

3. Which of the following capital assets would not be depreciated?
a. The city€™s street lights.
b. Purchased computer software.
c. The partially completed city hall.
d. The art work owned and displayed in the city parks.
4 A capital projects fund would probably not be used for which of the following assets?
a. Construction and installation of new shelving in the mayor€™s office.
b. Financing and construction of three new fire substations.
c. Purchase and installation of an entity-wide integrated computer system (such as SAP or Oracle).
d. Replacing a bridge.
5. Machinery and equipment depreciation expense for general capital assets totaled $163,000 for the reporting period. Which of the following correctly defines the recording of depreciation for general capital assets?

c. Depreciation is allocated, and recorded at the government-wide level with a debit to the functions or programs of government and a credit to accumulated depreciation.
d. Since depreciation does not involve the use of financial resources it is not necessary for the government to record it at the fund level or government-wide level.
6. Which of the following is a correct statement regarding the use of the modified approach for accounting for eligible infrastructure assets?
a. Depreciation on eligible infrastructure assets need not be recorded if the assets are being maintained at or above the established condition level.
b. Depreciation on eligible infrastructure assets must still be recorded for informational purposes only.
c. The government must document that it is maintaining eligible infrastructure assets at the condition level prescribed by the GASB.
d. All of the above are correct statements.
7. A government experienced significant loss of certain roadways and bridges as a result of major flooding. Which of the following estimation approaches would be most useful in estimating the amount of asset impairment that has occurred?
a. Deflated depreciated replacement cost approach.
b. Service units approach.
c. Restorative cost approach.
d. None of the above; each of these three approaches would be equally useful.
8. Callaway County issued $10,000,000 in bonds at 101 for the purpose of constructing a new County Recreation Center. State law requires that any premium on bond issues be deposited directly in a debt service fund for eventual repayment of bond principal. The journal entry to record issuance of the bonds will require a (an):
a. Credit to Bonds Payable in the capital projects fund.
b. Credit to Other Financing Sources Proceeds of Bonds in the capital projects fund.
c. Credit to Other Financing Sources€”Premium on Bonds in the debt service fund.
d. Both b and c are correct.
9. The primary reason for reestablishing the Encumbrance account balance at the beginning of the second and subsequent years of a multiple-year capital project is that:
a. The project continues beyond a single year; thus it is important that the Encumbrances account show the amount of contractual commitment remaining on the project.
b. This procedure allows the accountant to record a normal reversal of encumbrances when the next project billing is received.
c. This procedure corrects for an erroneous closure of the Encumbrances account at the end of the preceding year.
d. Failure to reestablish the Encumbrances account balance is a violation of GASB standards.
10. In 2011 the city started and completed installation of curbs and sidewalks in a new subdivision. The project was funded through special assessments.
The first $500,000 installment on $2,500,000 in special assessments was received and recorded in the capital projects fund in 2011. Over the next four years the remaining special assessments are due. How would the receipt of the special assessment funds be recorded in the capital projects fund in2011?

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Debits Credits a. General Fund: Expenditures Vouchers Payable b. Governmental Activities: 8,000 8,000 Expenses Vouchers Payable C General Fund: Expenditures Vouchers Payable 8,000 8,000 8,000 8,000 Governmental Activities: Expenses Vouchers Payable d. General Fund: Expenditures Vouchers Payable 8,000 8,000 8,000 8,000 Governmental Activities: 8,000 Equipment Vouchers Payable 8,000