exam 3 Flashcards
For government-wide financial statements, what account is credited when a piece of
equipment is leased on a capital lease?
A. Equipment-Capital Lease
B. Encumbrances-Long Term
C. Encumbrances-Lease Obligations
D. Capital Lease Obligation
E. The lease is not recorded.
D. Capital Lease Obligation
For fund financial statements, what account is credited when a piece of equipment is leased on a capital lease?
A.
Equipment-Capital Lease.
B.
Encumbrances-Long Term.
C.
Encumbrances-Lease Obligations.
D.
Capital Lease Obligation.
E.
Other Financing Sources-Capital Lease.
E. Other Financing Sources-Capital Lease.
Jones College, a public institution of higher education, must prepare financial statements
A.
As if the college was an enterprise fund.
B.
Following the same rules as state and local governments.
C.
According to GAAP.
D.
As if the college was a fiduciary fund.
E.
In the same manner as private colleges and universities.
B.
Following the same rules as state and local governments.
For the purpose of government-wide financial statements, the cost of cleaning up a government-owned landfill and closing the landfill
A.
Is not recognized until the costs are actually incurred.
B.
Is accrued and amortized over the expected useful life of the landfill.
C.
Is accrued on a pro-rated basis each period based on how full the landfill is.
D.
Is accrued in full at the time the costs become estimable.
E.
Is treated as an encumbrance at the time it become estimable, and then as an expenditure when it is actually paid.
C.
Is accrued on a pro-rated basis each period based on how full the landfill is.
A method of depreciation for infrastructure assets that allows the expensing of all maintenance costs each year instead of computing depreciation is called
A.
Government-wide depreciation.
B.
Proprietary depreciation.
C.
GASB depreciation.
D.
Modified approach.
E.
Alternative depreciation.
Modified approach.
Drye Township has received a donation of a rare painting worth $1,000,000. For Drye’s
government-wide financial statements, three criteria must be met before Drye can opt not to recognize the painting as an asset. Which of the following is not one of the three criteria?
(1.) The painting is held for public exhibition, education, or research in furtherance of public
service, rather than financial gain.
(2. ) The painting is scheduled to be sold immediately at auction.
(3. ) The painting is protected, kept unencumbered, cared for, and preserved.
A. Item 1 is not one of the three criteria.
B. Item 2 is not one of the three criteria.
C. Item 3 is not one of the three criteria.
D. All three items are required criteria.
E. None of the three items are required criteria.
B. Item 2 is not one of the three criteria.
Which one of the following is a criterion for identifying a primary government?
A.
it has an appointed board of directors.
B.
it is fiscally dependent.
C.
it is a local government.
D.
it has a separately elected governing body.
E.
it must prepare financial statements.
D.
it has a separately elected governing body.
A local government’s basic financial statements would include a statement of cash flows for all
A.
proprietary fund types.
B.
governmental fund types.
C.
fund types.
D.
fiduciary fund types.
E.
A statement of cash flows is not required for any fund types.
A.
proprietary fund types.
According to the GASB (Governmental Accounting Standards Board), which one of the following is not a criterion for determining whether a government is legally separate?
A.
The government can determine its own budget.
B.
The government can issue debt.
C.
The government has corporate powers including the right to sue and be sued.
D.
The government has the power to levy taxes.
E.
The government can issue preferred stock.
E.
The government can issue preferred stock.
Which of the following is not a criterion of a capital lease?
A.
The lease transfers ownership of the property to the lessee by the end of the lease term.
B.
The present value of the minimum lease payments equals or exceeds 90 percent of the fair value of the leased property, net of lessor’s investment tax credit.
C.
The lease contains an option to purchase the leased property at a bargain price.
D.
The lease contains an option to renew.
E.
The lease term is equal to or greater than 75 percent of the estimated economic life of the leased property.
D.
The lease contains an option to renew.
A five-year lease is signed by the City of Wachovia for equipment with a seven-year life. The asset will be returned to the lessor at the end of the lease. The present value of the lease is $20,000, and annual payments of $5,411.41 are payable beginning on the date the lease is signed. The interest portion of the second payment is $1,604.75. The equipment is to be used in City Hall and was purchased from appropriated funds of the General Fund.
What should be recorded in the General Fund on the date the lease is signed?
D. Exp.- leased asset 20k other fin. sourcces- cap lease 20k exp.- lease principal 5.4k cash 5.4k
A five-year lease is signed by the City of Wachovia for equipment with a seven-year life. The asset will be returned to the lessor at the end of the lease. The present value of the lease is $20,000, and annual payments of $5,411.41 are payable beginning on the date the lease is signed. The interest portion of the second payment is $1,604.75. The equipment is to be used in City Hall and was purchased from appropriated funds of the General Fund.
What should be recorded in the General Fund one year from the date the lease is signed?
B.
Exp. interest 1.6k
exp. lease principal 3.8k
Cash 5.4k
A five-year lease is signed by the City of Wachovia for equipment with a seven-year life. The asset will be returned to the lessor at the end of the lease. The present value of the lease is $20,000, and annual payments of $5,411.41 are payable beginning on the date the lease is signed. The interest portion of the second payment is $1,604.75. The equipment is to be used in City Hall and was purchased from appropriated funds of the General Fund.
What entry should be made for the government-wide financial statements on the date the lease is signed?
d.
Equipment 20k
cash 5411
cap lease obligation- 14k
A five-year lease is signed by the City of Wachovia for equipment with a seven-year life. The asset will be returned to the lessor at the end of the lease. The present value of the lease is $20,000, and annual payments of $5,411.41 are payable beginning on the date the lease is signed. The interest portion of the second payment is $1,604.75. The equipment is to be used in City Hall and was purchased from appropriated funds of the General Fund.
What entry should be made for the government-wide financial statements one year from the date the lease is signed?
B.
int exp 1.6k
Cap. lease obli 3.8k
cash 5.4k
Which of the following is a section of the general purpose external financial statements of a state or local government?
(1) Management’s discussion and analysis (MD&A).
(2) Required supplementary information (other than MD&A).
(3) Basic financial statements and notes to financial statements.
A.
1 and 2.
B.
2 and 3.
C.
1 and 3.
D.
3 only.
E.
1, 2, and 3.
16.
Which of the following must be presented in the MD&A of a government?
A.
A brief discussion of the basic financial statements.
B.
Total assets.
C.
Total liabilities.
D.
Net assets.
E.
An organization chart of government officials.
A.
A brief discussion of the basic financial statements.
What are the three broad sections of a state or local government’s CAFR?
A.
Introductory, financial, and statistical.
B.
Financial statements, notes to the financial statements, and component units.
C.
Introductory, statistical, and component units.
D.
Component units, financial, and statistical.
E.
Financial statements, notes to the financial statements, and statistical.
A.
Introductory, financial, and statistical.
Which of the following is a financial statement of a proprietary fund?
A.
Balance sheet.
B.
Statement of Operations.
C.
Statement of Changes in Cash Flows.
D.
Statement of Net Assets.
E.
Statement of Revenues, Expenditures, and Changes in Fund Balance.
D.
Statement of Net Assets.
Which criteria must be met to be considered a special purpose government?
(1.) Have a separately elected governing body
(2.) Be legally independent
(3.) Be fiscally independent
A.
1 only.
B.
1 and 2.
C.
2 and 3.
D.
1 and 3.
E.
1, 2, and 3.
E.
1, 2, and 3.
Which statement is false regarding the government-wide Statement of Net Assets?
A.
the purpose of the Statement of Net Assets is to report the economic resources of the government as a whole.
B.
assets are reported excluding capital assets.
C.
capital assets are reported net of depreciation.
D.
investments are reported at fair value rather than historical cost.
E.
Business-type activities include Enterprise Funds.
B.
assets are reported excluding capital assets.
Which item is not included on the government-wide Statement of Activities?
A.
revenues.
B.
expenses.
C.
assets.
D.
operating grants.
E.
capital contributions.
C.
assets.
Which statement is false regarding the Balance Sheet for Fund Financial Statements?
A.
The Balance Sheet for Fund Financial Statements measures only current financial resources of the governmental entity.
B.
The Balance Sheet for Fund Financial Statements uses the modified accrual method for timing purposes.
C.
Capital Assets are not reported on the Balance Sheet for Fund Financial Statements.
D.
The Balance Sheet for Fund Financial Statements measures only long-term financial resources of the governmental entity.
E.
Long-term debts are not reported on the Balance Sheet for Fund Financial Statements.
D.
The Balance Sheet for Fund Financial Statements measures only long-term financial resources of the governmental entity.
The city operates a public pool where each person is assessed a $2 entrance fee. Which fund is most appropriate to record these revenues?
A.
General Fund.
B.
Enterprise Fund.
C.
Special Revenue Fund.
D.
Internal Service Fund.
E.
Capital Projects Fund.
B.
Enterprise Fund.
Which statement is false regarding the Statement of Revenues, Expenditures, and Changes in Fund Balance when it is included with government-wide financial statements?
A.
The Statement of Revenues, Expenditures, and Changes in Fund Balance uses the modified accrual method for timing purposes.
B.
The Statement of Revenues, Expenditures, and Changes in Fund Balance presents revenues as either program revenues or general revenues.
C.
A presentation reconciles the change in governmental fund balance to the change in net assets for governmental activities.
D.
Other financing sources are presented on the Statement of Revenues, Expenditures, and Changes in Fund Balance.
E.
All non-major funds are combined and reported together.
B.
The Statement of Revenues, Expenditures, and Changes in Fund Balance presents revenues as either program revenues or general revenues.
A city starts a solid waste landfill during 2012. When the landfill was opened the city estimated that it would fill to capacity within 5 years and that the cost to cover the facility would be $1.5 million which will not be paid until the facility is closed. At the end of 2012, the facility was 20% full, and at the end of 2013 the facility was 45% full. On government-wide financial statements, which of the following are the appropriate amounts to present in the financial statements for 2013?
A.
Both expense and liability will be zero.
B.
Expense will be $300,000 and liability will be $600,000.
C.
Expense will be $600,000 and liability will be $600,000.
D.
Expense will be $675,000 and liability will be $600,000.
E.
Expense will be $375,000 and liability will be $675,000.
E.
Expense will be $375,000 and liability will be $675,000.
A city starts a solid waste landfill during 2012. When the landfill was opened the city estimated that it would fill to capacity within 5 years and that the cost to cover the facility would be $1.5 million which will not be paid until the facility is closed. At the end of 2012, the facility was 20% full, and at the end of 2013 the facility was 45% full. If the landfill is judged to be a governmental fund, what liability is reported on the fund financial statements at the end of 2013?
A.
$0.
B.
$300,000.
C.
$375,000.
D.
$600,000.
E.
$675,000.
A.
$0.
The employees of the City of Raymond earn vacation compensation that totals $1,500 per week. During 2013, $30,000 in vacation time was taken and the remainder is expected to be used during the latter part of next year. In the government-wide financial statements, assuming there was no beginning balance, what liability should be reported at the end of 2013?
A.
$0.
B.
$1,500.
C.
$30,000.
D.
$48,000.
E.
$78,000.
D.
$48,000.
