1. Depending on the restrictions placed on resources used to acquire a police car, the acquisition of the car could be reported in which of the following funds?

a. general fund

b. special revenue fund

c. capital projects fund

d. all of the above

e. none of the above

2. How should marketable securities be valued when reported in a Permanent Funds balance sheet?

a. at the cost to the donor of the investments

b. at the fair value of the investments on the date received by the government

c. at the fair value of the investments as of the balance sheet date

d. at the amount paid to acquire the securities

3. Which of the following best describes the general principle for recognizing property tax revenues in the General Fund?

a. They should be recognized in the current period to the extent that cash is collected

b. They should be recognized for the entire amount levied for the current period, regardless of when they are collected in cash

c. They should be recognized in the current period, less appropriate allowances for uncollectible accounts, tax refunds, and discounts

d. They should be recognized in the current period to the extent collected and also if collected early in the following year

4. When reporting on the General Fund in the fund financial statements, what is the general principle regarding the accrual of sales taxes collected by merchants but not yet remitted to the taxing government?

a. sales taxes should be recognized only if received by the state by year end

b. sales taxes should be recognized when the merchant makes the sale provided taxes are received early enough in the following year to finance expenditures of the period covered by the statements

c. sales taxes should be accrued provided they are received within 15 days after the end of the accounting period

d. sales taxes should be accrued based on an estimate of amounts received by merchants but not yet remitted to the state, regardless of when the taxes are remitted

5. A state government receives a grant from the federal government that it disburses to local governments within the state. To meet federal grant requirements, the state government monitors the local governments to make sure that they comply with federal grant requirements. When the state government disburses the grant monies to the local governments, it should debit:

a. due to local governments

b. deferred revenues - grants

c. expenditures - federal grant

d. no entry is required

6.

A state government receives a grant from the federal government that it disburses to local governments within the state. The state government disburses the cash received from the federal government to the local government, but the state government has no other administrative responsibilities regarding the grant. The state government should report the grant in:

a. an agency fund

b. a special revenue fund

c. internal service fund

d. the general fund

6. Governmental fund liabilities are:

a. claims against current financial resources

b. obligations not currently payable

c. both a and b

d. none of the above

7. Which of the following interfund transactions will be reported as a separate line item in the operating statement of a General Fund?

a. short-term interfund loan received

b. transfer out to a debt service fund

c. reimbursement received from a special revenue fund

d. long-term interfund loan received

Please provide an explanation as to the why the chosen answer is correct. Thanks.