1. What is the rule that says whether government-wide statements are prepared using a current financial resources measurement basis, or an all economic resources measurement basis?. (5 points)

2. What is the difference between an enterprise fund and an internal service fund? How are these defined in the GASB Codification? (5 points) Journal entry questions: (12 points) - Give the entry needed, or explain why no entry is needed.

3. On the first day of the fiscal year, the town council passes a budget that expects $10 million in property tax revenues, and authorizes the spending of $7 million for salaries, and $2 million in other general expenditures. (3 points)

4. On November 1, the town fire department orders a new truck for $200,000. The town uses encumbrance accounting. No payment is made at this point. (3 points)

5. On December 1, the town fire department receives the new truck. No payment is made at this point. What entry or entries need to be made in the government fund accounts (assume general fund) (3 points)

6. On the first day of the fiscal year, the town sends out property tax bills totaling $10,500,000. It expects to collect 10 million either during the fiscal year, or within the following two months, it expects to collect another $300,000 after that time, and expects $200,000 to never be collected (3 points) Questions requiring explanation:

7. What are the five types of governmental funds?(6 points)

8. What is the difference between the current financial assets measurement focus and the all economic resources focus? Name at least one asset and one liability that would not be recognized under one basis and would be recognized under the other?(6 points)

9. What is the point of using encumbrance accounting? What purpose does it serve? (6 points)

10. Based on my notes, what are two major legal differences between state governments, and businesses, that would affect the financial reporting needs of governments? (6 points)

11. The book says budgets are much more important in government accounting than in business reporting. Why do you think this is true? Why would citizens care so much about budgets in the government environment? (6 points) Terms/rules true/false or multiple choice (48 points 16 questions)

12. True/False: There are three government-wide statements A statement of net position, a statement of activities, and a statement of functional expenses. .

13. True/False: The primary accounting standard-setter for state and local governments is the FASB.

14. True/False: There are two types of fiduciary funds

15. Which of the following funds does NOT use modified accrual accounting in its fund financial statements? a. Special revenue b. Internal service c. Capital Projects d. Debt service funds

16. Which of the following categories of fund balances for a governmental fund are LEAST restricted: a. Nonspendable b. Assigned c. Committed d. Restricted

17. What combination of accounting method and measurement basis is typically used by the general fund in its fund statements? a. Full accrual/all economic resources b. Full accrual / current financial resources c. Modified accrual/ all economic resources d. Modified accrual/ current financial resources

18. Under modified accrual, what property tax receipts related to a particular fiscal year should be counted as revenue for that year? a. Only receipts received in cash during the year b. All receipts related to that year received either before the year starts, or during the year, but nothing received afterwards. c. All receipts related to that year received at any time up until 60 days after the end of the year d. All receipts related to that year received at any time up until 120 days after the end of the year

19. True or false: Governments must always use the consumption method of accounting for supplies

20. An expenditure by a city to pay principal on a long-term bond would probably be shown in which fund? a. General b. Special revenue c. Debt service d. Permanent e. Capital projects

21. An expenditure by a city to pay salaries to firefighters would probably be shown in which fund? a. General b. Special revenue c. Debt service d. Permanent e. Capital projects

22. The city has levied a special tax, where the proceeds must be used to pay for expenses related to hosting the Olympic Games. The tax receipts would probably be shown in which fund? a. General b. Special revenue c. Debt service d. Permanent e. Capital projects

23. The city has a debt service fund. In Year 10, that fund makes a payment of $400,000 in principal on an outstanding bond. The appropriate journal entry, using modified accrual, in the fund accounts would be: a. Debit bonds payable, credit cash b. Debit Expenditure for bond principal repayment, credit cash c. Debit cash, credit bonds payable d. Debit cash, credit expenditure for bond principal repayment

24. The city issues $20 million of long-term bonds for cash. It debits cash. What should be the credit side of the entry in the government-wide statements, and the fund statements: a. Bonds payable in both b. Bonds payable in government-wide, other financing sources in the fund statements c. Bonds payable in government-wide, Revenues in the fund statements d. Other financing sources in both

25. A city spends $4 million to build a new building. It credits cash. What should be the debit side of the entry in the government-wide statements, and the fund statements? a. Building (an asset) in both b. Expenditure for building in both c. Building (an asset) in government-wide, expenditure for building in fund accounts d. Expenditure for building in government-wide, Building asset in fund accounts

26. The measurement focus and method of accounting used by enterprise funds are: a. Full accrual and all economic resources b. Full accrual and current financial resources c. Modified accrual and all economic resources d. Modified accrual and current financial resources

27. City employees get paid every Friday for the week. In Year 1, the fiscal year ended on Wednesday, so at the end of Year 1 the city owed the employees 3 days pay, which did not get paid until the second day of Year 2. Under which accounting method will these three days pay be included in the Year 1 expenses (or expendures)? a. Both full accrual and modified accrual b. Neither full accrual nor modified accrual c. Full accrual, but not modified accrual d. Modified accrual, but not full accrual.