Government Accounting Test 1

Front 1

Neither governments nor not-for-profits have defined ownership interests like those of businesses.

-True

-False

Back 1

True

Front 2

Paying the health care benefits of retirees out of current operating funds promotes inter period equity.

-True

-False

Back 2

False

Front 3

Governments have the authority to issue tax-exempt debt on behalf of not-for-profits

-True

-False

Back 3

True

Front 4

The GASB establishes generally accepted accounting principles for the federal government.

-True

-False

Back 4

False

Front 5

The government-wide statements of net position combines the amounts in the governmental activities column with the amounts in the business-type activities column to calculate the total column.

-True

-False

Back 5

False

Front 6

In the statement of net activities in the government-wide statements, revenues are reported using full accrual accounting.

-True

-False

Back 6

True

Front 7

Unassigned fund balance can be positive only for the general fund.

-True

-False

Back 7

True

Front 8

Equipment that is used in a vehicle repair service to provide service to other departments on a cost reimbursement basis is reported in an internal service fund.

-True

-False

Back 8

True

Front 9

The city council voted to transfer funds from the general fund to the debt service fund. These funds would be classified assigned.

-True

-False

Back 9

False

Front 10

A cash flow statement is prepared for governmental funds.

-True

-False

Back 10

False

Front 11

Permanent funds are fiduciary funds.

-True

-False

Back 11

False

Front 12

Enterprise funds prepare a statement of revenue, expenses, and changes in fund net position.

-True

-False

Back 12

True

Front 13

The appropriations budget concentrates on the construction and acquisition of long-lived assets and typically covers multiple years.

-True

-False

Back 13

False

Front 14

GASB establishes the accounting principles that states must use when they prepare their budgets for approval by their legislatures.

-True

-False

Back 14

False

Front 15

In order to balance the state's budget, Washington changed the mortality assumptions used to calculate its pension expense, now figuring that employees will retire later and die sooner.

-True

-False

Back 15

True

Front 16

Prepare journal entry:

The county issued $7,000,000 in long-term revenue bonds. The bonds require that the funds be used to build a new landing strip at the county's airport. The landing fees charged to customers are set so that the fees cover the airport's costs of operating the landing strip and repay its debt. The bonds are not backed by the taxing power of the county.

Back 16

Enterprise fund

Cash $7,000,000

Bonds Payable ($7,000,000)

Front 17

Prepare journal entry:

The county received $4,000,000 in cash from a grant for the construction of a new highway through the county.

Back 17

Capital Projects Fund

Cash $4,000,000

Grant Revenue-Restricted ($4,000,000)

Front 18

Prepare journal entry:

The county spent $3,000,000 for construction of a new highway using the funds from the $4,000,000 grant.

Back 18

Capital Projects Fund

Construction expenditures-restricted $3,000,000

Cash ($3,000,000)

Front 19

Prepare journal entry:

The county made a principal payment of $200,000 from a fund dedicated for repayment of debt. The funds used to make the payment were assigned.

Back 19

Debt Service Fund

Principal expenditure - assigned $200,000

Cash ($200,000)

Front 20

Prepare journal entry:

The county's electric utility sold $500,000 of electricity to its citizens. The electricity rates are set to cover the cost of the production and distribution of the electricity.

Back 20

Enterprise fund

Cash $500,000

Electricity Sales Revenue-unrestricted ($500,000)