FAR 7

Question 1

Proprietary funds, such as enterprise funds, carry their own debt. Amounts associated with “enterprise fund” debt is?

Answer 1

Statement of net assets.

Question 2

How are capital assets treated?

Answer 2

Capital leases are treated as if a purchase of fixed assets with related debt for net present value of lease payments. Capital assets and liability amount will both increase.

Question 3

The appropriations control account of a governmental unit is debited when?

Answer 3

The budgetary accounts are closed at the end of the year.

Question 4

The budgetary control account of a governmental-type fund is increased when?

Answer 4

A purchase order is approved.

Question 5

A city has a defined contribution plan. How should the city report the pension plan in its financial statements?

Answer 5

Employees should disclose employer and employee obligations to contribute to the plan, a breif statement about the plan, and employee eligibility requirements.

Question 6

A city should issue a statement of cash flows for which funds?

Answer 6

A stmt of cash flows should be issued for all proprietary funds (Enterprise and internal service fund). No statement of cash flows should be issued for either governmental funds or fiduciary funds.

Question 7

Under modified accrual basis of accoutning, earned revenues should be recognized in the accounting period in which they are

Answer 7

Measurable and available.

Question 8

Property taxes levied in fiscal year 1 to finance the general fund budget of fiscal year 2 should be reported as general fund revenues in fiscal year 2 for the amount

Answer 8

Collected before the end of fiscal year 2 or shortly thereafter.

Question 9

How do you record a budget?

Answer 9

Dr. Estimated Revenues
Cr. Approrpiations Control
Cr. Estimated transfer to debt service fund
Cr. Budgetary control

Question 10

What do you record in a special revenue fund?

Answer 10

Special revenue funds account for revenues and expenditures that are LEGALLY RESTRICTED or COMMITTED for specific purposes other than debt service or capital projects.

Question 11

Where would you record levies on affected property owners to install sidewalks?

Answer 11

Capital Projects Fund.

Question 12

Where would a non-reciprocal transfer be reported?

Answer 12

Internal Service Fund as a credit to “Transfers”

Question 13

If a city legall adopts its annual general fund budget on the modified accrual basis of accounting, its estimated revenues should be reported

Answer 13

On the modified accrual basis of accounting in the general fund budgetary comparison schedule.

Question 14

When goods are received that had been approved for purchase, the:

Answer 14

Encumbrances account should be decreased
Expenditures account should be increased
Receipt of goods prior to payment results in an accrual of the expenditure.

Question 15

An enterprise fund would be used when the governing body requires that:

Answer 15

1) User charges cover the costs of general public services

2) Net income information be provided for an activity

Question 16

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

Answer 16

Internal service fund.

Question 17

The amounts in a general fund’s encumbrance account include only

Answer 17

Outstanding purchase order amounts.

Question 18

Once an “actual expenditure for that order” has taken place (goods have been received), what happens?

Answer 18

The encumbrance is reversed and the actual expenditure is recorded as vouchers or accounts payable.

Question 19

When serial bonds are serviced through a debt service funds with cash provided from the general fund, the debt service fund should report cash receipts and cash payments as?

Answer 19

Transfers (other financing sources)]
Cash Payments (Operating Expenditures)

Question 20

The debt service fund, which uses modified accrual accounting, will accrue interest when?

Answer 20

Only when it is legally due, and not at interim dates.

Question 21

Proceeds from the general obligation bonds should be recorded in the?

Answer 21

Capital projects fund.

Question 22

Liabilities associated with governmental activities should be displayed in the?

Answer 22

Governmental activities column of the statement of net position.

Question 23

At the end of the year, construction in progress for a project should be reported in

Answer 23

The government wide statement of net position because the capital projects fund is closed out at year end.

Question 24

Money collected by a state for the benefit of one of its cities that imposes an income tax on its residents should be accounted for by the state in an?

Answer 24

Agency fund.
Dr. Cash
Cr. Due to other funds- City of X
Cr. Due to states general fund (if state charged fee for the service)

Question 25

The amount of the foregoing revenue that should be accounted for in governmental type funds is?

Answer 25

Property Taxes-which goes into the general fund

Question 26

Net rental revenue (after depreciation) from a parking garage is accounted for in an

Answer 26

Enterprise fund, which is a proprietary fund.

Question 27

Interested earned on investments held for employees retirement benefits should be accounted for

Answer 27

in a pension trust fund.

Question 28

To record the billing for data processing services provided to other governmental units, the internal service fund should

Answer 28

Credit operating revenues, just like commercial accounting.

Question 29

In reporting the state grants for the purchase and operation, the city should?

Answer 29

Include the capital grant and all of the operating grant. Grant revenues are recognized as revenues in the year in which monies are used.

Question 30

What should be debited in the general fund at the inception of a lease?

Answer 30

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

Question 31

All “expenditures” from almost every “operating” fund are debited to an account called

Answer 31

“expenditure control”
Dr. Expenditures Control
Cr. Cash

Question 32

Equipment acquired through a “capital lease” arrangement should be accounted for as

Answer 32

Equipment

Question 33

Revenue items are

Answer 33

“other financing sources”

Question 34

The equipment (capital) lease payment made one year after acquisition by the internal service fund should be recorded as?

Answer 34

Dr. Capital Lease Payable (Principal)
Dr. Expense Control (interest)
Cr. Cash

Question 35

What account should be debited in the governmental-type fund that made the employer pension contribution?

Answer 35

Expenditures control

Question 36

In the required supplementary information to financial statements, the actuarially determined contributions should be shown to the extent available for a minimum of

Answer 36

10 years or how long the city has been in existence for.

Question 37

What are bond anticipation notes?

Answer 37

Current liabilities if the entity does not have the ability to refinance as a non current obligation.

Question 38

A budgeted excess of revenue over appropriations should be ?

Answer 38

Credited to budgetary control:
Dr. Est Revenues
Cr. Appropriations
Cr. Budgetary Control