Ch 5 Hw Flashcards
What is the basic rule for recognizing property tax revenues in governmental-type funds?
Property tax revenues are recognized in the fiscal period for which the tax is levied, provided the taxes are available
What does available mean?
The taxes must be collected within the current period or soon enough there after to be used to pay liabilities of the current period (should not exceed 60 days)
Cite two examples of circumstances in which a government may find it necessary to record deferred inflows of resources in governmental-type funds.
Property taxes levied for the current year but that will not be collected until after 60 days in the next year
Grant proceeds received during the current year but are restricted for use in a future year
What is the basic rule for recognizing intergovernmental grant revenues in governmental-type funds?
GASB standards requires revenues to be recognized in the period that all applicable eligibility requirements have been met and the resources are available
What is the GASB standard for reporting expenditures from governmental funds for employee pension benefits and retiree health care benefits?
GASB requires expenditures to equal the amount paid by the employer to the plan and the change during the period in the related government liability, if any
What is the difference between interfund transfers and interfund loans?
Interfund transfers record flows of assets from one fund to another without equivalent flows of assets in return and without a requirement for repayment
Interfund loans occur when one fund lends cash to another with a requirement for repayment
Why is depreciation not recorded in governmental-type funds?
Governmental-type funds use the current financial resources measurement focus therefore purchases of capital assets are accounted for as immediate expenditures, rather than as depreciable, balance sheet assets
What is an “other financing source or use”? Give some examples.
Something that causes an increase or decrease in the assets of a fund that generally do not increase or decrease the net assets of the entity as a whole.
Some examples are interfund transfers, proceeds from the issuance of debt, and proceeds from the sale of capital assets.
What is the purpose of reporting fund balance in five classifications? What is the difference between restricted fund balance and assigned fund balance?
It demonstrates the extent to which the entity is bound to honor constraints on the purposes for which fund balance may be spent
Restricted - has external restrictions imposed by creditors or the law
Assigned - has internal restrictions which can be removed and reclassified
A village levied property taxes of $910,000 for calendar year 2022 on January 1, 2022 and immediately set up an allowance of $10,000 for uncollectible taxes. The village collected $870,000 in cash during 2022. It expected to collect $22,000 of the unpaid taxes during the first 60 days of 2023 and an additional $8,000 during the rest of 2023. How much should the village recognize as property tax revenues in its 2022 General Fund financial statements?
a. $870,000
b. $892,000
c. $900,000
d. $910,000
b. $892,000
Based on the information in the previous scenario, how much should the village report as Deferred revenues—property taxes in its 2022 General Fund financial statements?
a. $0
b. $8,000
c. $18,000
d. $30,000
b. $8,000
Which of the following transactions or events best describes when a grant recipient may recognize revenues from intergovernmental grants in governmental-type funds?
a. The recipient receives cash from the grant provider
b. The recipient enters into a contract with the grant provider
c. The recipient spends all the resources made available in the grant
d. The recipient complies with all grant eligibility requirements, and the resources are “available”
d. The recipient complies with all grant eligibility requirements, and the resources are “available”
These two events occurred in the same city toward the end of calendar year 2022:
City employees earned $85,000 during the last week of December 2022, but were not paid until early January 2023
A city sanitation vehicle accidentally sideswiped a parked car in December 2022. The city acknowledges that it was at fault, and its attorneys believe it will need to pay $10,000 to settle the claim. However, the city is slow in settling claims, so it probably won’t pay the claim until early 2024
Based on these two events, how much should the city report as expenditures in its financial statements for the year ended December 31, 2022?
a. $0
b. $10,000
c. $85,000
d. $95,000
c. $85,000
A state provides pension benefits to retired employees who have worked at least five years for the state. Based on employee salaries during 2022, the state actuary calculated that the employees earned pension benefits totaling $14 million. The state appropriated $10 million to the General Fund for payment to its Pension Trust Fund. However, the state encountered financial problems during 2022. It sent its pension system a check for $8 million in October 2022, saying that it would pay no more for the year. The Pension Trust Fund actually paid pension benefits of $3 million during 2022. How much should the General Fund recognize as pension expenditures for 2022?
a. $3 million
b. $8 million
c. $10 million
d. $14 million
b. $8 million
Which of the following involves a routine movement of cash from the General Fund to a Debt Service Fund in order to provide resources for the Debt Service Fund to pay interest and principal on a bond issue?
a. An interfund transfer
b. An interfund loan
c. An interfund service provided and used
d. An interfund reimbursement
a. An interfund transfer
Which of the following transactions creates an expenditure on the General Fund statement of revenues, expenditures, and changes in fund balance?
a. A loan to the Sewage Enterprise Fund
b. A transfer of resources to the Debt Service Fund so the Debt Service Fund can pay debt service on general obligation debt
c. A transfer of resources to the Capital Projects Fund to help pay for a major capital project
d. A purchase of water from the Water Enterprise Fund
d. A purchase of water from the Water Enterprise Fund
If the City of Castletown sells a surplus ambulance, the entry to record this sale on the books of the General Fund should include which of the following?
a. A credit to Other financing sources—proceeds from sale of fixed assets
b. A debit to Encumbrances—capital equipment
c. A credit to Encumbrances—capital equipment
d. A credit to the Vehicles and Equipment fixed asset account
a. A credit to Other financing sources—proceeds from sale of fixed assets
