Day 12 - Weekend Study

Question 1

What is the internal service fund used for?

Answer 1

It accounts for providing goods and services from one Government Dept to another on a cost reimbursement basis

MCQ-01060

Question 2

What is the JE: sold a $100k bond at 95 and incurred $3k of bond issuance costs.

Answer 2

Dr - Cash $92k
Dr - Discount $8k
Cr - Bond Payable $100k

MCQ-14651

Question 3

The unamortized discount on bonds payable is a:

Answer 3

Contra-Account to Bonds Payable

As the Discount is amortized, the Discount decreases, and CV of the Bond increases

MCQ-07231

Question 4

What happens to Interest Expense and Stockholders Equity if the premium on a bond payable is NOT amortized?

Answer 4

Int. Exp.= Overstated
The bond premium is amortized over the life of the bond, with amortized amounts decreasing interest expense each period

Stockholders Equity = Understated
Overstating an expense decreases net income

MCQ-08505

Question 5

What is the annual interest payment of a bond?

Answer 5

FV × Stated Rate

WATCH SKILLBUILDER VIDEO

MCQ-00470

Question 6

Interest incurred on a bond issue is always for the period:

Answer 6

The bonds are outstanding (aka the bond issue date)

MCQ-04488

Question 7

The Market Value of a bond issue at a discount is the:

Answer 7

PV of two cash flows:

1. PV of Principal Amount

PLUS

2. PV of all future Interest Payments

Note: Both are at the MARKET (EFFECTIVE) INTEREST RATE

MCQ-00646

Question 8

For governmental units, GAAP requires that Encumbrances Outstanding at year end be reported as:

Answer 8

A component of COMMITTED or ASSIGNED fund balance

MCQ-01188

Question 9

Equation for Bonds: Interest Expense & Interest Paid

Answer 9

Interest Expense = CV × Mkt Rate

Interest Paid = FV × Stated Rate

MCQ-00485

Question 10

How are Revenues and Expenses recorded for an Enterprise Fund (Golf Course) and a Governmental Fund (Police Dept.)?

Answer 10

Enterprise = Rev. & Exp. MUST be distinguished between Operating and Non-Operating

Governmental = Do NOT record expenses Money spent is either an Expenditure or a Financing Use

MCQ-07929

Question 11

What are the two methods of presenting the Stmt of Cash Flows:

Answer 11

1. Direct Method - Start with Cash collected from Customers LESS Cash paid for operating Expenses
2. Indirect Method - Reconciliation = NI + Depr. + Losses - Gains

MCQ00679

Question 12

What transaction does not affect the Stmt of Cash Flows?

Answer 12

Dividends Declared

Declared does NOT mean they were PAID

MCQ-00679

Question 13

What inventory costing method will produce a lower inventory turnover ratio in an inflationary economy?

Answer 13

Inventory Turnover = COGS / Avg. Inventory

We are looking for the answer that would result in a lower COGS figure

During RISING Prices FIFO = LOWEST COGS

MCQ-06925

Question 14

Name the Nongovernmental Not-For-Profit Organizations FS:

Answer 14

BS = Statement of Financial Position

IS = Statement of Activities

CF = Statement of Cash Flows

MCQ-06963

Question 15

Name Government-Wide FS:

Answer 15

BS = Statement of Net Position

IS = Statement of Activities

NO CASH FLOWS

MCQ-06951

Question 16

Name Governmental Funds FS: GRaSPP

Answer 16

BS = Balance Sheet

IS = Statement of Revenues, Expenditures, and Changes in Fund Balances

MCQ-06951

Question 17

Name Proprietary Funds FS: SE

Answer 17

BS = Statement of Net Position

IS = Statement of Revenues, Expenses, and Changes in Fund Net Position

CF = Statement of Cash Flows

MCQ-06951

Question 18

Name Fiduciary Funds FS: CIPPOE

Answer 18

BS = Statement of Fiduciary Net Position

IS = Statement of Changes in Fiduciary Net Position

MCQ-06951

Question 19

What activities should be excluded when governmental fund FS are converted into Government-Wide FS?

Answer 19

Fiduciary Activities - Fiduciary transactions are treated as if those transactions were conducted with an independent trustee

MCQ-06951

Question 20

When there is a change in the reporting entity, how should the change be reported in the FS?

Answer 20

Retrospectively, including note disclosures, and application to all prior period FS presented

A change in reporting entity is treated similar to a change in accounting principal = REPORTED Retrospectively