FAR Module 9 Part 5 Flashcards
During the year ended December 31, Year 1, Todd City received a state cost reimbursement grant to buy a bus, and an additional grant for bus operation in Year 1. In Year 1, only 90% of the capital grant was used for the bus purchase, but 100% of the operating grant was disbursed.
In reporting the state grants for the bus purchase and operation, what should Todd include as grant revenues for the year ended December 31, Year 1?
90% of the capital grant?
100% of the capital grant?
Operating grant?
In reporting the state grants for the bus purchase and operation, Todd should include 90% of the capital grant and all of the operating grant. Grant revenues are recognized as revenues in the year in which the monies are used.
Encumbrances outstanding at year-end in a state’s general fund would most likely be reported as a:
Fund balance commitment in the general fund
Fund balance restriction in the general fund
Liability in the general fund
Liability in the general long-term debt account group
Encumbrances are commitments or assignments of fund balance representing the amount of unperformed contracts for goods or services. Encumbrances at year-end do not constitute expenditures or liabilities. Therefore, at year-end encumbrances are reclassified as a commitment of assignment of fund balance that is not appropriate for expenditure.
During the year, a city’s electric utility, which is operated as an enterprise fund, rendered billings for electricity supplied to the general fund. Which of the following accounts should be debited by the general fund?
Other financing uses-operating transfers out
Expenditures
Appropriations
Due to electric utility enterprise fund
Transfers between funds do not generally give rise to operating expenditures and revenues. However, an exception is made for quasi-external transactions (one in which the governmental fund acquires a good or service that could have been purchased from an unrelated business enterprise). Routine service charges for utilities is one example of a quasi-external transaction. The following entry should be made in the general fund to record billings from the enterprise fund:
DR Expenditures XXX
CR Due to electric utility enterprise fund XXX
The following financial resources were among those received by Seco City during Year 1:
For acquisition of major capital facilities $6,000,000
To create a non-expendable trust (e.g. an inmate/jail commissary) $2,000,000
With respect to the foregoing resources, what amount should be recorded in special revenue funds?
$2,000,000
$0
$6,000,000
$8,000,000
With respect to the foregoing resources, the amount recorded in the special revenue funds should be $0.
The $6,000,000 for acquisition of major capital facilities should be recorded to the capital projects fund.
The $2,000,000 to create a non-expendable trust should be recorded in the private purpose trust fund.
On March 2, Year 1, Finch City issued 10-year general obligation bonds at face amount with interest payable March 1 and September 1. The proceeds were to be used to finance the construction of a civic center over the period of April 1, Year 1, to March 31, Year 2. During the fiscal year ended June 30, Year 1, no resources had been provided to the debt service fund for the payment of principal and interest.
On June 30, Year 1, Finch’s financial statements should report the construction in progress for the civic center in the:
Capital projects fund?
Government-wide financial statements?
At the end of the fiscal year on June 30, Year 1. Finch’s government-wide state of net position should report the construction in progress for the civic center in the governmental activities column. It would not be in the capital projects fund, since each year’s capital project activities are closed out at the year end. (Prior to year end, construction in progress expenditures of the current year would be reported in the capital projects fund.)
Payment of principal and interest
All “expenditures” from (almost) every “operating” fund are debited to an account called “expenditure” control.
Assuming no outstanding encumbrances at year end, closing entries for which of the following situations would increase the unassigned fund balance in the general fund at year end?
Appropriations exceed actual expenditures
Actual revenues were less than estimated revenues
Actual expenditures exceed appropriations
Estimated revenues exceed actual appropriations
Unassigned fund balance represents the amount of current resources carried forward into the following year that will be available for appropriations.
Appropriations (estimated expenditures) in excess of actual expenditures would increase the unassigned fund balance. Not all of the original budget (appropriations) was spent, and the excess (assumed to be unencumbered by the fact pattern) was returned to fund balance.
The state levies a 4% sales tax on merchant sales volume while the local government levies a 2% tax on the same activity. Merchants are required to remit the full amount of all levied taxes to the state government within 15 days of month-end and the state is required to remit collected taxes to local authorities within 30 days of receipt. Assume the state and local authority had June 30 year-ends, and that sales volume for the months of June and July were $100,000 and $200,000, respectively. At June 30, each government would accrue the following related to sales activity:
(State) Tax Revenue, Payable and (Local) Tax Revenue
$12,000, $6,000 and $2,000
$4,000, $2,000 and $2,000
$12,000, $4,000 and $2,000
$12,000, $6,000 and $6,000
June Sales
* State Tax
= Tax Revenue for State
June Sales
* Local Tax
= Tax Revenue for Local
Harbor City’s appropriations control account at December 31, Year 1, had a balance of $7,000,000. When the budgetary accounts were closed at year-end, this $7,000,000 appropriations control balance should have:
Remained open
Been debited
Appeared as a contra account
Been credited
When closing the budgetary accounts at year-end, the “appropriations control account” should have been debited $7,000,000 to offset the $7,000,000 credit balance that existed before closing.
DR Appropriations control $7,000,000
CR Estimated Revenues $7,000,000
Investors and creditors are seeking to assess financial condition and results of operations.
Basic Financial Statements
Required Supplementary Information
Comprehensive annual financial reporting
Budgets and other special purpose reports
Basic Financial Statements
A grantor agency is seeking to determine the status of the city’s compliance with laws, rules, and regulations.
Basic Financial Statements
Required Supplementary Information
Comprehensive annual financial reporting
Budgets and other special purpose reports
Budgets and other special purpose reports
A citizen is looking to find out detailed information about the financial plan for the city in the coming year.
Basic Financial Statements
Required Supplementary Information
Comprehensive annual financial reporting
Budgets and other special purpose reports
Budgets and other special purpose reports
A citizen is looking to find out summary results of the city’s performance relative to budget for the previous fiscal year.
Basic Financial Statements
Required Supplementary Information
Comprehensive annual financial reporting
Budgets and other special purpose reports
Required supplementary information
A researcher is trying to determine he scope of the GASB Framework. The researcher will find that financial reporting objectives may not fully address:
Basic Financial Statements
Required Supplementary Information
Comprehensive annual financial reporting
Budgets and other special purpose reports
Budgets and other special purpose reports.
A researcher is trying to determine the scope of the GASB Framework. The researcher will find that financial reporting objectives pertain to:
All information used to assess accountability
All financial reporting
General purpose external financial reporting
GASB 34 reporting requirements
General purpose external financial reporting
