5) Assume that Kelly County issues $3,000,000 in general obligation bonds to build a new fire station and $7,000,000 in revenue bonds to finance the upgrade of their water treatment facility. How will these transactions affect the funds of the county? A) Financial assets and related fund liabilities of the Capital Projects Fund will increase by $3,000,000; current assets and long-term liabilities will increase by $7,000,000 in the Water Enterprise Fund. B) Financial assets, but not the related fund liabilities, will increase in the Capital Projects Fund by $3,000,000; current assets and the long-term liabilities will increase by $7,000,000 in the Water Enterprise Fund. C) Financial assets, but not the related fund liabilities, will increase in the General Fund by $10,000,000. D) Financial assets of the Capital Projects Fund will increase by $10,000,000, as will the related fund liabilities. E) Financial assets and related fund liabilities will increase in the Debt Service Fund by $10,000,000. 1 6) The police department of the city of Newport purchased 10 new patrol cars at the beginning of the new budget year at a total cash price of $250,000. This purchase will A) Increase capital assets reported in the General Fund by $250,000, as well as decrease fund balance in the General Fund by the same amount. B) Have no effect on capital assets or fund balance. C) Have no effect on capital assets in the General Fund, but will decrease fund balance in the General Fund by $250,000. D) Increase capital assets reported in the General Fund by $250,000. E) Increase both capital assets and fund balance in the General Fund by $250,000. 7) Which of the following would not be classified as an expenditure? A) Debt service principal and interest B) Salaries and wages C) Depreciation D) Capital outlay E) Departmental supplies F) All of the above would be classified as expenditures. 8) A city adds a new entry to its downtown fire station. This is considered a relatively minor addition. Which fund could be used to account for the construction costs associated with the addition? A) Enterprise Fund B) General Fund C) Capital Projects Fund D) All of the above E) Both items B and C 9) General Fund resources of $500,000 were contributed to a Capital Projects Fund to finance a portion of the cost of a major capital project. This transaction is an example of an interfund A) Transfer. B) Loan. C) Reimbursement transaction. D) Services provided and used transaction. 10) A Special Revenue Fund A) Must be used to account for all nonexpendable restricted or committed resources. B) Is used to account for resources that are restricted or committed to expenditures for specific purposes other than debt service or capital outlay. C) Must be used to account for all expendable restricted or committed resources. D) Is used to account for resources restricted or committed to expenditures for capital outlay or debt service purposes. 11) Ledford County levied property taxes of $10,000,000, 2% of which is expected to be uncollectible. Prior to this new levy, the county still had $ 350,000 of uncollected taxes from previous years. How much should be reported as Taxes Receivable after the new levy has been recorded? A) $9,800,000 B) $10,150,000 C) $10,000,000 D) $10,350,000 E) None of the above. 2 12) A new computer, which had been estimated to cost $28,000, was received. The actual cost of the computer was $29,400. To record this in the special revenue fund, A) Expenditures should be debited for $29,400. B) The general capital assets account should be debited for $28,000. C) Expenditures should be debited for $28,000. D) None of the above. 13) If an Enterprise Fund transfers $10,000 to the General Fund and the General Fund loans $15,000 to an Internal Service Fund, the effect on the General Fund fund balance would be A) $0. B) A net increase of $5,000. C) A net decrease of $5,000. D) An increase of $10,000. E) A decrease of $15,000. 14) A local school district issued a short-term note payable to purchase $500,000 of recreation equipment. The note will be repaid with General Fund resources. The General Fund would report A) Expenditures of $500,000. B) Expenditures of $500,000 and revenues of $500,000 from issuance of the note. C) A note payable of $500,000. D) A capital asset of $500,000. E) A capital asset of $500,000 and a note payable of $500,000. F) Both items A and C. 15) Assume the General Fund has two outstanding investments as of its 6/30/X5 year end, as follows: $100,000 Certificate of Deposit, 6 month original maturity, 3% annual interest rate, purchased 4/30/X5 $500,000 Commercial Paper, 8 month original maturity, 3% annual interest rate, purchased 1/31/X5 The interest revenue that would be recorded in the GAAP-based external financial statements for the General Fund as of 6/30/X5 would be A) $11,500. B) $6,250. C) $0 interest revenue is not recorded until actually received. D) $500. E) $6,750. 3 16) Hannah County has a total fund balance in the General Fund as of the end of the year of $1,565,000. Assume the following: The budget officer decided to set aside $405,000 for new road maintenance. (The county's governing board had previously given her this authority.) Unspent restricted drug enforcement grant proceeds of $75,000 Purchase orders of $41,000, which were not related to restricted or committed resources, were outstanding at year-end, The county's governing board passed a resolution to use $500,000 for construction of a fleet maintenance facility In the year-end financial statements, Hannah County would report unassigned fund balance and assigned fund balance, respectively, in the General Fund as A) $575,000 unassigned fund balance; $405,000 assigned fund balance. B) $949,000 unassigned fund balance; $41,000 assigned fund balance. C) $544,000 unassigned fund balance; $446,000 assigned fund balance. D) $405,000 unassigned fund balance; $544,000 assigned fund balance. E) $544,000 unassigned fund balance; $405,000 assigned fund balance. 17) The "Unencumbered Balance" in an expenditure subsidiary ledger represents A) Appropriation less encumbrances. B) Appropriation less expenditures. C) Estimated revenue less appropriation. D) Appropriation less expenditures and encumbrances. 18) Which of the following budgetary entries would the town of Geneva make upon adoption of its Special Revenue Fund Budget for the year? Assume the following: Estimated Revenues $6,400,000 Appropriations 6,080,000 A) dr cr Expenditures $ 6,080,000 Unreserved Fund Balance 320,000 Revenues $6,400,000 B) dr cr Appropriations $6,080,000 Unreserved Fund Balance 320,000 Estimated Revenues $6,400,000 C) dr cr Estimated Revenues $6,400,000 Appropriations $6,080,000 Unreserved Fund Balance 320,000 D) None of the above. 19) As part of a government's basic financial statements and required supplementary information, a budgetary comparison schedule is required for which funds? A) General Fund only B) General Fund and each annually budgeted major Special Revenue Fund C) All governmental funds with annual enacted budgets D) All funds 4 20) A city levies $200,000 of property taxes for its current fiscal year. One percent of the tax levy is expected to be uncollectible. The city collects $170,000 of its taxes during the year and another $25,000 during the first two months of the following year. What amount of property tax revenues should the city report in the General Fund financial statements for the current fiscal year? A) $200,000 B) $170,000. C) $195,000 D) $198,000 21) In Year 1, a county levied $1,500,000 of property taxes and collected $1,400,000 of that levy; in Year 2, the levy was $1,550,000 and the related collections totaled $1,495,000; in Year 3, the levy was $1,575,000 and the related collections totaled $1,530,000. Also, collections of past due taxes in Years 1, 2, and 3 were $15,000, $14,000, and $19,000, respectively. Assuming that the General Fund's deferred revenue at the beginning of Year 1 was $410,000, what would deferred revenue be as of the end of Year 3? A) $610,000 B) $362,000 C) $658,000 D) $562,000 E) $410,000 22) The town of Lily Branch anticipated that discount opportunities of up to $3,000 would be taken by their taxpayers. Which of the following statements accurately reflects the accounting for the anticipated discounts when the taxes are levied? A) Revenues are recorded at the time of levy net of anticipated discounts. Taxes receivable are recorded at the full levy amount. B) Taxes receivable are reduced by the amount of discounts anticipated. The discounts anticipated are recorded as expenditures. C) Revenues are initially recorded at the entire levy amount. Discounts taken are recorded as expenditures when they are actually taken. D) None of the above. 23) Which of the following governmental fund revenue sources are typically recorded as revenues only as they are actually received in cash? A) Sales taxes B) Building permit fees C) Reimbursement grants D) Property taxes E) All of the above revenue sources are only recognized as they are collected in cash. 24) The county received a $1,500,000 restricted grant from the state government to be used to improve its public safety department's communication systems. The county has met all eligibility requirements of the grant. In the current year, the General Fund should report this grant as A) Deferred revenues. B) Other financing sources. C) Revenues. D) None of the above. 5 25) When a governmental entity is decreasing the fair market value of an investment, the appropriate debit would be to A) Cash. B) Investment income. C) Loss on investments. D) Investments. Problem. (10 points each) 1) Indicate how the following funds would be classified as to type: (G) governmental, (P) proprietary, or as (F) fiduciary. _____ Internal service _____ Agency _____ General _____ Special revenue _____ Investment trust _____ Capital projects _____ Debt service _____ Pension trust _____ Permanent _____ Enterprise _____ Private-purpose trust 2) Prepare the general journal entries to 1. Record the following transactions in the General Ledger accounts of the Kessinger County General Fund. A. Paid $500,000 to the Bridge Bond Debt Service Fund to provide for upcoming principal and interest payments. B. Paid $5,000,000 to the Kessinger County Airport Fund to provide financing for a major expansion project; $2,000,000 is not required to be repaid, but $3,000,000 is to be repaid at the end of five years. C. Loaned $320,000 to the Holstein Skywalk Capital Projects Fundto be repaid in 90 days. D. Paid $22,000 to the Highways Special Revenue Fund to repay it for General Fund employee salaries that were inadvertently recorded as expenditures of that fund. E. Received a bill from the County Electric Utility Enterprise Fund for electricity usage charged to General Fund departments and agencies, $3,000. 2. Explain how each of the foregoing transactions is reported in the Kessinger County General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance. 6 3) Prepare the general journal entries required to record the following transactions and information in the General Fund of a county. 1. The county adopted the General Fund budget for the year. Estimated revenues were $250,000, appropriations enacted totaled $240,000. 2. The county levied property taxes of $250,000 for the fiscal year. The county typically collects 99% of its levy. This amount is expected to be collected during the fiscal year or shortly thereafter. 3. The county placed orders for supplies for General Fund departments. The estimated cost of these items was $130,000. 4. The county collects $245,000 of property taxes. 5. Some of the supplies ordered were received. Invoices totaling $115,000 were received for supplies ordered at an estimated cost of $113,000. The invoices were approved for payment, but not paid. 6. Vouchers totaling $115,000 were paid. 7. Salaries totaling $125,000 were paid. 8. Accounts are closed at year end. 4) Prepare the general journal entries to record the following transactions of the Quinones County General Fund: 1. Quinones County borrowed $1,000,000 by issuing 6-month tax anticipation notes bearing interest at 6%. The notes are to be repaid from property tax collections during the fiscal year. 2. The county repaid the tax anticipation notes, along with $30,000 interest, at the due date. 3. The county ordered a new patrol car for the Sheriff's Department. The purchase order was for $35,000. 4. The county received the new patrol car two months before the end of the fiscal year. Its actual cost was $35,000.The county paid $5,000 upon receipt and signed a 9% short-term note payable for the balance. 5. The county services one of its general obligation serial bond issues directly from the General Fund, that is, a Debt Service Fund is not used. The annual principal and interest payment, which is due two months before year end, was paid. The principal payment was $200,000 and the interest was $120,000. (Next year's interest payment will be $108,000.)