Questions and Answers of Government And Not For Profit Accounting

Name two types of derived tax revenues. When are these revenues recognized? Is a year-end adjusting entry necessary in order to recognize some of these revenues?
When should the expenditures and liabilities related to landfill closure and postclosure costs be recognized?
When is a Permanent Fund used?
When reviewing the financial statements of Crescent City, Councilwoman Peggy Doubleton noticed that the city uses an Allowance for uncollectible property taxes. This seemed odd to her because the
The City of Khatt recently received a $\$ 500,000$ grant from the federal government to operate a daycare center for 2 years. This grant was to be the only source of funding for the daycare center.
Joe Babitt, a former executive of T-Mart, just started a term as mayor of Saulk Center. For the past several days he has been looking for a way to keep his campaign promise to increase services
An accounting professor purchased residential property in a certain city for $\$ 72,000$, the amount for which the property was assessed. Three years later, the professor received a notice from the
(Uncollectible accounts-allowance method)The City of Chalmette levied property taxes of $\$ 150,000$ in FY 2004. Prior experience shows that 10 percent of these taxes will not be
(Prior-year encumbrances that remain open)The City of Eleanor follows a policy of allowing encumbrances to remain in force until the goods are delivered or the purchase orders are canceled. At the
In July 2004, Crescent City received a federal grant of $\$ 100,000$, to be used to purchase food for horses used by that city's mounted police. By year-end, hay and oats costing $\$ 70,000$ had been
(Interfund transactions)Identify four types of interfund transactions and briefly explain the purpose of each type.
(Treatment of inventories-purchases method)At the end of FY 2003, the City of Kensington has a balance of $\$ 6,000$ in its Reserve for supplies account. An inventory, taken at the end of 2004
(Multiple choice-General and Special Revenue Funds)1. The budget of Laxey County shows estimated revenues in excess of appropriations. When preparing budgetary entries at the beginning of the fiscal
(Tax discounts and deferred property taxes)The City of Snape allows taxpayers who pay their property taxes by the end of the fiscal year to take a 3 percent discount for prompt payment. The city
(Using the Internet in governmental accounting)The Internet is a great source of information on governmental accounting. To acquaint yourself with what is available on the Internet, select a topic
(Theory problem on the basis of accounting)The accounting system of the municipality of Kemp is organized and operated on a fund basis. Among the types of funds used are a General Fund, a Special
(Preparation of financial statements)The commissioners of the Regents Park Commission approved the following budget. Assume that the Unreserved fund balance at the beginning of the year was $\$
(Allowance for uncollectible property taxes-allowance method)The City of Aldwich uses the allowance method of handling uncollectible property taxes. In FY 2004, the following transactions took
The City of Picadilly divides its appropriations into allotments, which are expended during the allotment period. In this city, allotments are made at the beginning of each quarter. In FY 2004,
The Sherwood Park Commissioners approved the following budget for FY 2004 for that governmental unit's General Fund:The park uses the allowance method of handling past-due accounts. An allowance
(Journal entries and financial statement presentation-interfund transactions) Following are several transactions for the City of Cricklewood:1. The Water Purification Fund billed its customers for
(Errors in recording interfund transfers)Recently, the General Fund of the City of Cats received monies from the following sources:1. $\$ 10,000$ from a Debt Service Fund when that fund was closed
(Complete accounting cycle of a Permanent Fund)In FY 2004, Henry Comstock made a gift to the City of Gold Hill. Under the terms of the gift, the City was to purchase securities and to use the
(Preparing financial statements from a trial balance)Following is the preclosing trial balance of Ocean City at the end of FY 2004. Assume that at the beginning of the year no encumbrances were
(CPA Examination question on activities of a General Fund)The General Fund trial balance of the City of Solna at December 31, 2004, was as follows:Collectible delinquent taxes are expected to be
The City Council of Bacchus City approved the following budget for FY 2004 for that city's General Fund:The city's accounting policies include the following:1. All purchases of supplies and materials
Are budgets usually used for Debt Service Funds?
When is the principal of general long-term debt recorded in Debt Service Funds?
How are investments valued on governmental balance sheets?
When are Capital Projects Funds used?
Are fixed assets recorded in Capital Projects Funds? Why or why not?
Bonds that finance capital projects are sometimes issued at a premium or a discount. What is the effect on the accounting records of the premium or discount?
Explain the relationship among Debt Service Funds and Capital Projects Funds.
(Fill in the blanks-general terminology)1. Payment of principal and interest on debt is referred to as $\qquad$ .2. A periodic transfer of resources from the General Fund to a Debt Service Fund is
(Multiple choice)1. Several years ago a city established a sinking fund to retire an issue of general obligation bonds. This year the city made a $\$ 50,000$ contribution to the sinking fund from
(Discussion of control in the General Fund and in Debt Service Funds)Compare and contrast the method used to control expenditures in the General Fund and in Debt Service Funds. Be sure to explain the
(Journal entries for long-term debt)Green Valley issued $\$ 20$ million of general obligation bonds to construct a multipurpose arena. These bonds will be serviced by a tax on the revenue from events
(Fill in the blanks-general terminology)1. Encumbrance accounting usually (is or is not) $\qquad$ used in Capital Projects Funds.2. The entry to record the budget of a Capital Projects Fund would
(Use of Capital Projects Funds)The City of New Falls is planning to acquire furniture and fixtures for the mayor's office and the council chambers. One of the council members, Council Member Dunn,
(Multiple choice)1. The resources used to finance Capital Projects Funds may come from which of the following sources?a. Private donationsb. General obligation debtc. Intergovernmental revenuesd. All
(Use of a Capital Projects Fund)Tutorville recently hired a new bookkeeper, Pete Pencil, from "Accountants R Us." Pencil was preparing to record some expenditures on a new bridge over False Creek, a
(Closing journal entries)The following are selected accounts from the trial balance of the Walker Tunnel Fund, a Capital Projects Fund, as of June 30, 2004 (the end of the fiscal year):.Required: 1.
(Leases)}Plymouthville leased equipment with a fair market value of $\$ 905,863$. The life of the noncancelable lease is 10 years and the economic life of the property is 10 years. Using an 8 percent
(Journal entries, financial statements, and closing entries for a Debt Service Fund)The following are a trial balance and several transactions that relate to Napoleonville's Concert Hall Bond
(Journal entries, financial statements, and closing entries for a Debt Service Fund)Following is a trial balance for the City of Dolby and the transactions that relate to the Debt Service Fund:1. The
(Journal entries for several funds)Following are several transactions that relate to Crestview for the fiscal year 2004 (assume a voucher system is noṭ used):1. The general operating budget was
(Journal entries for several funds and a trial balance for a Debt Service Fund) Following are several transactions that relate to Irontown in 2004.1. The general operating budget was approved. It
(Journal entries for several funds)Prepare journal entries for each of the following transactions. In addition, identify the fund in which each entry would be recorded.1. The General Fund made its
(Journal entries and financial statements-Capital Projects Fund) The following transactions occurred during 2004:1. The City of Watersville approved the construction of an enclosed concert arena for
(Journal entries, financial statements, and closing entries for a Capital Projects Fund)The following transactions occurred during the fiscal year July 1, 2004, to June 30, 2005:1. The City of Red
(Journal entries regarding a bond issue and accounting for a premium)The City of Lands-A-Lot authorized a bond issue for a parking garage. The estimated cost was $\$ 4$ million. The garage would be
(Journal entries for several funds and financial statements for a Capital Projects Fund)Following is a trial balance for the Old York Marina Capital Projects Fund and the transactions that relate to
(Prepare a budget for a capital project and the related bond issue)Dellville plans to build an auditorium. The plans were drawn by an architect for $\$ 100,000$. The city accepted a bid from Cracks R
(Journal entries for several funds)The following transactions were incurred by East Minster Township.1. The township paid cash for four new police cruisers. Each car cost $\$ 18,000$. They were
On January 1, 2004, the chief operating officer of New Innport signed a noncancelable lease for street equipment. The lease was for 10 years, the economic life of the property. The fair market value
(Journal entries for several funds)The following transactions took place during 2005:1. The city sold some of its street repair equipment. The equipment originally cost $\$ 50,000$, but it was sold
The police department of Titusville signed a noncancelable lease for computer equipment. The lease was for 5 years, the economic life of the property. The fair market value of the equipment (and
(Journal entries and correcting entries for several funds)The Proteus City Levee Board recently hired an inexperienced bookkeeper. Accounting records prior to January 1, 2004, were maintained by the
What is the cause-and-effect relationship between the revenues and expenses of a proprietary fund?
How does the fund balance (net assets) section of a balance sheet of an Internal Service Fund differ from that of a governmental-type fund?
Why is depreciation recorded as an expense in Internal Service Funds, but not as an expenditure in governmental-type funds?
Is there a cause-and-effect relationship between the revenues and expenses of an Enterprise Fund? Explain your answer.
Why is depreciation considered to be an expense for Enterprise Funds?
What are revenue bonds?
(Interpreting the operating statement for an Internal Service Fund)Angusville maintains a policy that its Internal Service Funds operate on a break-even basis, that is, revenues must equal expenses.
(Journal entries for an Internal Service Fund)The following transactions were incurred in establishing a central purchasing fund (an Internal Service Fund):1. The General Fund made a permanent
(Relationship of a fixed asset to depreciation)Considering that the Motor Pool Fund illustrated in this chapter records the acquisition of an automobile by debiting an asset account, does the cost of
(Fill in the blanks)1. An Internal Service Fund is used when goods and/or services are furnished to $\qquad$ .2. A budget that is based on the level of activity attained in a fund is called a 3. The
(True or false)Indicate whether the following statements are true or false. For any false statements, indicate why it is false.1. A direct cause-and-effect relationship exists between the revenues
Indicate whether the following statements are true or false. For any false statements, indicate why it is false.1. Enterprise Funds are not used to account for the construction of major highways.2.
(Billings and collections between an Enterprise Fund and the General Fund) A city used an Enterprise Fund to provide services to the General Fund and its citizens. A total of $\$ 50,000$ was billed
(Closing entries for an Enterprise Fund) \\ The Municipal Park Fund for Valley View Township had the following preclosing trial balance:}Required: 1. Prepare the closing entry or entries necessary at
(Fill in the blanks)1. A $\qquad$ is used to account for goods and /or services provided only to other governmental units.2. The activities of a government-owned utility usually are accounted for in
(Comparison of accounting for long-term debt and acquisition of fixed assets, using governmental-type funds and proprietary-type funds)The Village of d'East acquired a computer for $\$ 300,000$. The
(Journal entries and financial statements for an Internal Service Fund) The following entries and financial statements relate to Thomasville. (Assume a voucher system is used.)1. The General Fund
(Journal entries for several funds)The following transactions were incurred by the City of Mountain View. Record the journal entry (entries) necessary for each and identify the fund(s) used. If no
(Journal entries for several funds and statements for an Internal Service Fund) The following transactions relate to Sunset Village for the fiscal year ended June 30,2004 :1. The city established a
(Journal entries and financial statements for an Enterprise Fund)The following transactions relate to Walton City's Municipal Airport Fund for the fiscal year ended June 30, 2004:1. The General Fund
(Journal entries for several funds)1. The city council of Bellview approved its General Fund budget for the year July 1, 2003-June 30, 2004. The budget contained the following: revenues, $\$
(Explanation of basis of accounting and fixed assets for different funds) The accounting system of the municipality of Kemp is organized and operated on a fund basis. Among the types of funds used
(Budget for an internal service fund)}The City of Black Plains uses an Internal Service Fund to provide printing services to its various departments. It bills departments on the basis of an estimated
Assume the information presented in P7-7, except that the city did not contribute the equipment. Instead, the manager of the Internal Service Fund arranged to buy the equipment, paying for it over a
When are Pension Trust Funds used?
How are the operations of a Pension Trust Fund controlled?
Assume a freshman approached you and asked you to define an agency relationship. How would you respond?
If the activities of an Agency Fund produce revenues, where are these revenues usually accounted for?
The bookkeeper of the City of New Sherman recently made the following statement: "A Capital Projects Fund should be used for all special assessment projects." Do you agree or disagree? Why?
Lakefront Township recently assessed property holders for the cost of removing snow from the streets in each subdivision. What type of accounting would you recommend for this activity?
Has the GASB eliminated the Special Assessment Fund as an accounting entity?
Explain how the financing of capital projects with special assessments differs from the use of general obligation bonds.
(True or false)}Indicate whether the following statements are true or false. For any false statements, indicate why it is false.1. If GASB Statement No. 25 is used to account for a Pension Trust
(Financial reporting for a PERS)Obtain a copy of a set of financial statements for a PERS and a governmental unit that reports the PERS as part of its Comprehensive Annual Financial Report. Compare
(Financial reporting for a PERS)Is the present value (actuarially computed) status of a pension plan disclosed in the required financial reporting prescribed by GASB? If so, describe how it is
(Journal entries for a PERS)The Pension Trust Fund maintained by the city of Greensville incurred the following transactions during 2004. Record each transaction in the Pension Trust Fund. Ignore any
(Terminology)Define the following terms as they apply to pension plans and postretirement benefit plans:1. Defined benefit plan 2. Defined contribution plan 3. Postretirement benefits 4. Net assets
(Journal entries for an Investment Trust Fund)Prepare the journal entries to record the following transactions in an Investment Trust Fund.1. Turtle Creek and Pineview contributed $\$ 50,000$ and $\$
(Financial statements for an Investment Trust Fund)Based on the information in E8-6, prepare a statement of changes in fiduciary fund net assets and a statement of fiduciary fund net assets.
(Discussion)Why would one entity permit another entity to invest its resources?
(Journal entries for a Private Purpose Trust Fund)Record the following journal entries in the Children's Book Fund, a Private Purpose Trust Fund that supplies books for children in privately owned
(Multiple choice)1. Which of the following types of funds use the modified accrual basis of accounting?a. Capital Projects Fundsb. Debt Service Fundsc. General Fundd. Special Revenue Fundse. All of

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