D250 PA

Who does the GASB set accounting and financial reporting standards for?

Why is the traditional business model of accounting inadequate for governments and nonprofit organizations (NPOs)?

Which fiscal practice promotes the concept of interperiod equity?

Which accounting equation represents a governmental organization?

Which term describes the government and not-for-profit equivalent of the term owners' equity?

Which functions should be accounted for in an internal service fund?

Which basis of accounting determines what assets and liabilities will be given accounting recognition and be reported on the balance sheet?

Which activity is an example of a custodial fund?

What does the economic resources measurement for full accrual basis do?

Why should governments separate resources into funds?

How should a local government report the budgetary comparison schedule if a state law requires that local governments prepare general fund and special revenue fund budgets on a basis that differs from the basis of accounting required by GAAP?

Expenditures for supplies ordered by a special revenue fund were inadvertently recorded in the accounts of the general fund in the amount of \$100.

What should the journal entry for the general fund include, upon reimbursement of the \$100, later the same month?

What is the first recording step for the general fund?

When should an encumbrance be recorded?

How many days after the close of the year must revenues from property taxes be received to satisfy the criteria of having been received soon enough to pay the liabilities of the current period?

Land is donated to a city in Year 1. The city intends to sell the land. The value of the land at the time of donation is \$50,000. The city sells the land at the end of Year 2 for \$60,000.

How should the city record the gift of the land in its Year 1 government-wide statements?

What is the issue of debt at relatively low, tax-exempt rates of interest and the investment of the proceeds in taxable securities yielding a higher return?

A property tax is levied in Year 20X1. The total amount of the levy is \$200 million. \$150 million is collected in 20X1. By the time the financial statements are issued in 20X2, no additional amounts had been collected. It is expected that \$20 million will be uncollectible.

Which amount should be reported as property tax revenue in the 20X1 fund financial statements?

In May of 20X1, \$100,000 in state sales taxes are collected by merchants. The May sales tax returns and transmittals of the collected taxes are due in July of 20X1. The state has adopted the 60-day availability criterion. When preparing its financial statements for the year ended June 30, 20X1, the state determined the following regarding the balance:

\$20,000 was remitted in June, 20X1.
\$70,000 was remitted in July, 20X1.
\$8,000 was remitted in August, 20X1.
\$2,000 had not yet been collected at the time the reports were finalized in September, 20X1.

Which amount of sales tax revenue should the state recognize for May in its June 30, 20X1, fund-level statements?

In June of 20X1, \$100,000 in state sales taxes and \$20,000 in municipal sales taxes are collected by merchants. The state collects the sales taxes on behalf of its only municipality. Transfers taxes collected on behalf of the municipality are transferred from the state 90 days after collection. Merchants file tax returns and transfer \$90,000 of the collected taxes to the state in July. The remainder is transferred to the state in August. The municipality lacks the ability to determine the amount of tax collected by the time it prepares its financial statements dated June 30, 20X1.

Which amount should this municipality recognize as June sales tax revenue in its June 30 statements?

When should governments maintain a capital projects fund, if at all?

A city’s general fund purchases machinery for \$100,000 at the end of Year 1. The machinery has a 10-year useful life and no salvage value.

What should be the city record for this purchase in its Year 1 fund statement?

A city’s pension is run by a third-party administrator. The administrator calculates the amount due to the pension each year at the end of the year. In Year 1, the administrator informed the city that $20 million was due to the pension fund. The city will pay the $20 million to the administrator in January of Year 2.

Which entry should this city make in its general fund when it receives notice from the administrator at the end of Year 1?

In the current fiscal year, a governmental fund purchases \$100,000 of supplies. Assume the government uses the purchases method.

How should this purchase be accounted for in the current fiscal year fund-level statements?

How should wages and salaries be accounted for?

A city’s employee is paid \$15 per hour and has accrued 40 hours of vacation time in the year 20X1. The employee used 20 hours of vacation in 20X1. The unused vacation hours will be carried forward to future periods indefinitely.

How should the city record this employee’s use of vacation hours when they are used?

A city makes a payment of \$100,000 from its general fund to its capital projects fund.

How should the city record this payment in its capital projects fund?

In 20X1, a city issues \$1 million of 10% bonds to fund a capital improvement. The bonds were issued at par value on April 1. Interest is due every six months from the issue date.

Which amount of interest expense should be reported in the government-wide financial statements for the year ended December 31, 20X1?

A city issues \$2 million of bonds at par. It incurred \$0.1 million in associated costs to issue the bonds. The money raised by the bonds will go to a capital projects fund.

Which accounting entry should this city make in its capital project fund?

At the end of the fiscal year, a city must make a \$10,000 payment on its bonds payable account. Funds will be transferred from the general fund to the debt service fund for the amount. The funds have not been transferred at this time.

Which accounting entry accurately reflects this transaction from the debt service fund’s perspective?

In 20X1, a city issues \$10 million, 8% bonds at par on April 1, to build improvements for its utility enterprise fund. Interest is payable every six months from the date of issuance.

Which amount of interest expense should this city report for the year ended 12/31/20X1?

A city issues \$5.0 million of bonds at a premium of \$0.5 million. It incurs \$0.1 million in associated costs during the issue.

What is the amount of net proceeds from this bond issuance?

During a time of high unemployment, a state may borrow from the federal government to cover deficiencies in its unemployment insurance fund. The state issues a special assessment to employers in order to raise funds to pay back the federal government.

How should special assessment amounts collected and the amount owed to the federal government be reported in the government-wide financial statements?

On June 1, 20X1, a government issues \$400,000 in 12% bonds. Interest is payable every six months. The bonds are issued at par. The government has a fiscal year-end of June 30.

Which amount of interest expense is reported in the government-wide statements for 20X1?

A government issues 10-year bonds with a face value of \$100,000. The bonds were issued at a 2% premium. The government incurred \$3,000 in issuance costs.

Which expenditure should the city record for this bond issuance?

A government has determined that a capital asset has been impaired. The original cost was \$25 million. The carrying value is \$10 million. The government is revaluing the asset using the deflated depreciated replacement cost approach. The deflated depreciated cost of the asset is \$2.75 million.

What is the amount of the impairment loss?

A governmental fund owns equipment worth \$100,000 that is depreciated on a straight-line basis for its useful life of 10 years. Each year the government spends \$4,000 to maintain the equipment.

Which amount of expenditure related to the equipment should the fund report in its financial statements?

A state had an investment with a cost of \$600,000 that was actively traded. At the end of Year 1, the price of an identical investment was \$550,000 and the price of a similar investment was \$575,000. The comptroller calculated the fair value at \$525,000 based on an income approach.

What was the value of the investment at the end of Year 1?

A government issued \$10,000,000 of demand bonds and obtained an acceptable takeout agreement from a bank.

How should the entity recognize the bond proceeds in a government fund?

A city had the following activity over the last year:

1. Issued a \$10,000,000 bond
2. Factoring of \$1,000,000 of receivables
3. Received a 90-day loan from the local bank for \$100,000
4. Provided an intrafund loan for 180 days for a total of \$1,000

Which amount is considered a long-term obligation on the city's government-wide financial statements?

What should be the accounting entry for the issuance of \$100,000 of bonds in the general fund?

A city issued \$3,000,000, long-term, 5% bonds to acquire a new building. Interest was paid annually on December 31. The bonds were issued at a discount, and \$2,500,000 was received. The proceeds were recorded in the general fund.

What is the accounting entry to reflect the proceeds of bond proceeds?

A government maintains an internal service fund to insure all government vehicles for loss and damage and for liability to third parties. The internal service fund bills the general fund for \$400,000 and the utility fund for \$100,000, of which \$50,000 is for potential claims. \$240,000 in claims was incurred during 20X1.

Which entry, if any, should the internal service fund make to recognize the insurance premiums?

A city's internal service fund billed the general fund \$10,000 for motor pool costs, which have yet to be paid. The motor pool fund is used to manage vehicle activity within the government.

Which journal entry reflects this transaction from the internal service fund's perspective?

What is one of the three basic proprietary fund statements?

A city has received an order for a new set of computers for its internal service fund. When the order was placed, the value of the computers was assessed at \$200,000. When the computers were received, the order came to \$300,000.

Which accounting entry records the purchase of the computers?

What is one of the three broad components of the statement of net position?

A general fund contributes \$100,000 to an internal service fund. The contribution is not considered an interfund loan.

How should this amount be reported in the internal service fund?

An internal service fund bills the utility fund for \$200,000. The internal service fund also bills other funds accounted for in the general fund for \$250,000 to recognize services provided during the month.

Which entry, if any, should be recorded in the internal service fund to recognize the billings?

What is the measurement focus of accounting for fiduciary funds?

What is one of the main types of fiduciary funds?

What is one of the main types of fiduciary funds?

Which fiduciary fund should a government put funds into to pay for postretirement benefits?

A municipality has determined that it must prepare government-wide financial statements.

What can be assumed about the municipality?

Which fund type is excluded from the asset and revenue thresholds and presented separately?

A city is preparing to report on the pension trust fund for its employees.

Where should this fund activity be presented on the city's annual comprehensive financial report (ACFR)?

What is an example of required supplementary information (RSI)?

Which annual comprehensive financial report (ACFR) requirement includes the 5 components: financial trends, revenue capacity, debt capacity, demographic data, and operating data?

A city is preparing the following information for end-of-year reporting activity:


projections of income growth over the next 15 years
forecast of city birth rates over the next 20 years
estimate of job creation initiatives over the next 20 years


Where should this information be presented in the annual comprehensive financial report (ACFR)?

Two neighboring cities, City A and City B, jointly operate a public transportation system. Generated revenues cover all expenses. City A's ownership interest in the system is 20%.

How should City A report its interest in the transportation system in its government-wide financial statements?

A county hospital has a 501(c)(3) not-for-profit fundraising foundation to assist economically disadvantaged patients. The hospital appoints three of the seven board members. The foundation's revenues and assets provide a material benefit to the hospital.

Which rules should the county use to determine the appropriate presentation of the foundation in its government-wide financial statements?

A nonprofit organization (NPO) chooses not to recognize contributions of collectibles.

Which criterion outlined in FASB Statement No. 116 must this NPO meet?

A nonprofit healthcare provider recruits a local contractor to repair its air conditioning unit. If the contractor had billed the clinic at standard rates, the cost would have been \$12,000. The costs meet the criteria to be recorded as contributed services.

What should be the journal entry to recognize these contributed services?

Which criterion must be met for contributions of services from volunteers to be recorded by a nonprofit?

Which entity is primarily responsible for providing the authoritative financial reporting guidance for nonprofit organizations?

A museum’s main operating revenues are derived from admissions and membership fees.

How should the revenues in fiscal year 2020 totaling \$505 be recorded?

How does a statement of financial position differ from a balance sheet?

What is true regarding a nonprofit statement of cash flows?

What is one requirement for recording contributed services as donations?

Which classification would repayment of debt belong under in the statement of cash flows of a nonprofit entity?