ACCT567 Week 4 Midterm Exam Complete Solution

ACCT567 Week 4 Midterm Exam A++ Graded 1. (TCOs A and B) Fiduciary funds are to use which of the following measurement and basis of accounting? (Points : 5) Economic resource measurement focus and accrual basis of accounting. Current financial resources measurement focus and accrual basis of accounting. Economic resources measurement focus and modified accrual basis of accounting. None of the above, the fiduciary funds have no revenues. 2. (TCOs A and B) Funds other than the General Fund are required to be considered to be a major fund when (Points : 5) (A) total assets, liabilities, revenues, or expenditures/expenses of that fund constitute 10 percent of either the governmental or enterprise category. (B) total assets, liabilities, revenues, or expenditures/expenses of that fund are at least 5 percent of the total of the governmental and enterprise category. The conditions of either A or B exist. The conditions of both A and B exist. 3. (TCOs A and B) Which of the following is most correct with regard to Management’s Discussion and Analysis? (Points : 5) Both state and local governments and federal agencies are required to provide a MD&A. Federal agency financial reports are required to provide a MD&A. State and local government agencies are required to provide a MD&A. Both state and local government and federal agencies are encouraged, but not required to provide a MD&A. 4. (TCOs B and C) With regards to budgetary reporting by governmental entities, which of the following is not a true statement? (Points : 5) While GASB standards guide the format of the comparison, it does not require governments to maintain budgetary accounts. GASB standards require governmental entities to present a comparison of budgeted and actual results for the General Fund and special revenue funds with legally adopted budgets. Budgetary accounts are required to appear in the general purpose financial statements. The basis of accounting used to report the actual column in the budgetary comparison schedule is prepared according to legal requirements for budget preparation even if it departs from GASB Statements. 5. (TCOs B and C) The proper journal entry to record an encumbrance would include which of the following? (Points : 5) (A) A debit to the Encumbrance Account. (B) A debit to the Reserve for Encumbrances Account. (C) A credit to the Reserve for Encumbrances Account. A and C would both be included in the journal entry. 6. (TCOs B and C)) Capital assets that are used by an enterprise fund should be accounted for in the following fund? (Points : 5) Enterprise fund but no depreciation on the capital assets should be recorded. Enterprise fund and depreciation on the capital assets should be recorded. Business-type activities journal but no depreciation on the capital assets should be recorded. Governmental activities journal and depreciation on the capital assets should be recorded. 7. (TCO E) When a government acquires general fixed assets under a capital lease agreement, how should the asset be recorded in the government-wide financial statements? (Points : 5) As an expense when payments are made. At the inception of the lease agreement at the lesser of the present value of the minimum lease payments of the fair market value of the property. As an expenditure when payments are made. None of the above 8. (TCO E) Which of the following projects would usually be accounted for in a capital projects fund? (Points : 5) (A) Payment of interest on bonds that are issued to finance the construction of a new city hall. (B) The construction of a parking garage that is operated as an enterprise fund. (C) The construction of a fire station addition. Both A and B would be accounted for in a capital projects fund. 9. (TCO E) Which of the following statements is a true statement regarding the reporting of debt service funds? (Points : 5) Debt service funds are reported in a separate column in the governmental fund financial statements. Debt service funds are reported in the other governmental funds column in the governmental fund financial statements. Debt service funds are reported in a separate column in the government-wide financial statements. Debt service funds are reported in the governmental activities column in the government-wide financial statements. 10. (TCO D) Under GASB Statement No. 33, when would a special revenue fund be considered to have satisfied the eligibility requirement of a reimbursement type federal grant? (Points : 5) Only as the work is completed for a project. When the work has started for the project. Only after the work is completely finished for the project. When a plan for the use of the funds has been developed and approved by the appropriate personnel 1. (TCO E)You are in a staff meeting with the city controller and one of your colleagues was quoted as follows: “Capital projects funds are established by a government to account for all plant or equipment acquired by construction.” Do you agree with this statement? Why or why not? (Points : 30) 2. (TCOs A and B)How are the major funds of a state or local government determined by a governmental entity? (Points : 30)

ACCT567 Week 4 Midterm Exam Graded

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