Review Exam 2

Question 1

Permanent funds

Answer 1

are used to report resources that are legally restricted to the extent that only the earnings, not the principal, may be used for purposes that support the governments programs

Question 2

Capital projects funds

Answer 2

Governments often use capital projects funds to account for and report major capital acquisition and construction activities. The capital projects funds would account only for the capital activities of those projects that are considered to be governmental, rather than proprietary

Question 3

Debt service funds

Answer 3

a type of governmental fund that is used to account for debt service. Debt service is making principal and interest payments on the governments debt

Question 4

Special revenue funds

Answer 4

account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for a specified purpose other than debt service or capital projects

Question 5

Under modified accrual basis of accounting, revenues are recognized when

Answer 5

They are measurable and available

Question 6

Expenditures are

Answer 6

decreases in net financial resources and are generally recognized when the related liability is incurred

Question 7

Interfund transactions

Answer 7

transactions between individual funds

Question 8

arms length transaction

Answer 8

a transaction in which both parties act in their own self interest and are not subject to pressure or influence

Question 9

Interfund Loans

Answer 9

Resources that from one fund to another with the understanding that they will be repaid in the future

Question 10

With an interfund loan, the fund providing the resources records a ____ and the fund receiving the resources records a _____

Answer 10

1. Interfund receivable (Due from other funds)
2. Interfund payable (Due to other funds)

Question 11

Interfund transfers

Answer 11

Represent flows of cash or other assets from one fund to another without the requirement of repayment

Question 12

Interfund services provided and used

Answer 12

Represent transactions involving sales and purchases of goods or services between funds

Question 13

Interfund transfers

Answer 13

Represent flows of cash or other assets from one fund to another without a requirement for repayment

Question 14

General fund

Answer 14

The chief operating fund of a government. It accounts for all current financial resources of a government except for those current financial resources that are accounted for in another fund

Question 15

Enterprise funds

Answer 15

Are appropriate when a government offers services to the public on a user-charge basis

Question 16

Internal service funds

Answer 16

are used to account for the financing of goods or services provided by one department or agency of a governmental unit to other departments or agencies of the same governmental unit on a cost-reimbursement basis