FAR 13

Question 1

How do you record the JE for a new truck?

Answer 1

Dr. Cash
Dr. New Truck
Cr. Gain on exchange
Cr. Old Truck (net)

Question 2

When a non monetary exchange lacks commercial substance, the general rule is?

Answer 2

No gain or loss is recognized and the book value approach is used, unless the cash/boot received is a proportional part of the gain recognized.

Question 3

Personal financial statements should report assets and liabilities at?

Answer 3

Estimated current values at the date of the financial statements.

Question 4

Demand bank deposits and long term receivables are considered?

Answer 4

Monetary assets.

Question 5

Any security deposit is recorded as?

Answer 5

A liability, refundable security.

Question 6

In a bond transaction, stockholders equity is increased by?

Answer 6

The value of the warrants.

Question 7

How does a lessee record a lease with no bargain purchase option (a operating lease not finance)

Answer 7

The lessee records the lease as an asset and a liability at the lower (lesser) of the FMV of the asset at inception of the lease or cost (PV of the min lease payments)

Question 8

How should a lease be depreciated (amortized) if the lessee does not take ownership at the end of the lease?

Answer 8

Depreciated amortized over the lease terms.

Question 9

What should be disclosed for operating leases having remaining lease terms in excess of one year?

Answer 9

The future minimum rental payments required as of the last BS date should be disclosed in the aggregate and for each of the next five succeeding years.

Question 10

How do you calculate a bonds book value?

Answer 10

The face value less the unamortized discount.

Question 11

Encumbrances would not appear in which fund?

Answer 11

Enterprise.

Question 12

If a government is agreeing to accept cash and spend it in a specified way, where does it belong?

Answer 12

Special revenue fund.

Question 13

Sales taxes collected by Arien to be distributed to other governmental units belongs in which fund?

Answer 13

Agency fund.

Question 14

A forfeiture act confiscate cash from illegal activities and disbursements can be used only for law enforcement activities. What fund does that belong in?

Answer 14

Special revenue fund.

Question 15

What is a focus used in proprietary funds?

Answer 15

Income determination, capital maintenance and measurement of cash flows and balances.

Question 16

An enterprise fund would be used when?

Answer 16

1) User charges cover the costs of the general public service and
2) net income information can be provided for an activity.

Question 17

Accounting for financing of an agency’s services to other government departments on a cost-reimbursement basis should be accounted for in an?

Answer 17

Internal service fund.

Question 18

The town operates municipal electric and water utilities. In which fund should the operations of the utilities be accounted for?

Answer 18

The enterprise fund. This fund accounts for a govt’s FOR PROFIT type of operations, which provide goods or services to the general public.

Question 19

What are internal service funds?

Answer 19

Proprietary funds, which service internal users, one dept servicing another within the governmental entity.

Question 20

What are special revenue funds?

Answer 20

Governmental funds, which account for proceeds of special revenue sources that are legally restricted to expenditure for specified purposes (such as a the fuel tax for highways).

Question 21

The billings for transportation services provided to other governmental units are recorded by the internal service funds as?

Answer 21

Operating revenues
Dr. Due from other funds
Cr. Operating Expenses

Question 22

A city purchased a piece of equipment to be used by a dept. financed by the general fund. How should the city report the acquisition in the general fund?

Answer 22

As an expenditure. Under the current financial resources measurement focus, all fixed asset acquisitions are recorded as expenditures.

Question 23

The prescribed format for the presentation of the statement of financial position of a governmental fund adheres to what equation?

Answer 23

Assets and deferred outflows of resources equals liabilities and deferred inflows of resources plus fund balance

Question 24

What are permanent funds used for?

Answer 24

To account for principal that is restricted and may not be expended.

Question 25

When should the expenditures account be debited in the general fund?

Answer 25

At the inception of a lease for the principal portion of the lease payments whenever a lease purchase agreement is financed by the general fund.

Question 26

In preparing gov’t wide financials, interfund receivables and payables between governmental and enterprise fund should be?

Answer 26

Reported as internal balances.

Question 27

Government-wide financial statements should classify net assets as?

Answer 27

1. Net Investment in capital assets
2. Restricted
3. Unrestricted.

Question 28

Not for profit entities classify net assets as?

Answer 28

1. Permanently restricted
2. Temporarily restricted
3. Unrestricted

Question 29

How should operating expenses for a nongovernmental not for profit organization be reported?

Answer 29

Change in unrestricted net assets.

Question 30

The government-wide financial statements are prepared using the what focus and basis of accounting?

Answer 30

Economic resources method

Full accrual basis of accounting