Problem 1: Multiple-choice questions 1. A local government received $100,000 from the federal government to train its public service employees to combat terrorist activities. The resources received by the local government should be reported on the local government's government-wide statement of activities under the column headed A. Operating grants. B. Capital grants. C. User charges. D. General revenues. 2. A local government received $5,000,000 from the state for its share of the state's income taxes. The resources received by the local government should be reported on the local government's government-wide statement of activities under the column headed A. Operating grants. B. Capital grants. C. User charges. D. General revenues. 3. A local government received $1,000,000 from the federal government to repair its roads and bridges. The resources received by the local government should be reported on the local A. government's government-wide statement of activities under the column headed Operating grants. B. Capital grants. C. User charges. D. General revenues. 4. On the workpaper to convert governmental funds to governmental activities, which of the adjustments listed below is made because the total fund balance of the governmental funds is overstated? A. The adjustment for accrued but unmatured interest on general obligation bonds. B. The adjustment for the net pension liability related to police and firefighters' pensions. C. A and B. D. Neither A nor B. 5. On the workpaper to convert governmental funds to governmental activities, which of the adjustments listed below is made because the total fund balance of the governmental funds is understated? A. The adjustment for sales tax revenues that should have been recognized this year under accrual accounting but were reported as deferred inflows of resources at year-end because of the modified accrual basis of accounting. B. The adjustment for capital assets acquired by governmental funds. C. A and B. D. Neither A nor B.