Advanced Accounting Chapter 17, Chapter 18, Chapter 19

Which of the following steps in the acquisition of goods and services occurs first?
a. Appropriation
b. Encumbrance
c. Budget
d. Expenditure

c. Budget
1. Budget
2. Appropriation
3. Record Encumbrance
4. Reverse encumbrance and record expenditure

What account is used to earmark the fund bal. to recognize the contingent obligations of goods ordered but not yet received?
a. Appropriations
b. Encumbrances
c. Obligations
d. Fund bal. - AFE

d. Fund bal. - AFE

When a governmental unit's Estimated Revenue's Control account is closed out at end of fiscal year, the excess of estimated revenues over estimated revenues appropriations is:
a. Dr. to Fund Bal. - Unassigned
b. Dr. to Fund Bal. - AFE
c. Dr. to BFB - UNAS

c. Dr. to BFB - UNASSIGNED

Carson City's general fund issued purchase orders of $630,000 to vendors for supplies. Which of the following entries should the city make to record this transaction?
a. ENCUMBRANCES......630,000
BFB - AFE.......................................630,000
b.

a. ENCUMBRANCES...........630,000
BFB - AFE.................................630,000

The following balance's are included in the subsidiary records of Dogwood's Parks and Recreation Department on March 31, 20X2:
Appropriations - Supplies 7500
Expenditures - Supplies 4500
Encumbrances - Supply Orders 750
How much does the department have a

b. $2250
(7500-750-4500)=2250

The board of commissioners of the City of Elgin adopted its budget for the year ending July 31, 20X2, which indicated revenue of $1,000,000 and appropriations of $900,000. If the budget is formally integrated into the accounting records, what is the requi

c. ESTIMATED REV.'S CONTROL..............1,000,000
APPROPRIATIONS CONTROL.......................900,000
BFB - UNASSIGNED...........................................100,000

Which of the following accounts of a governmental unit is credited when the budget is recorded?
a. Encumbrances
b. BFB - AFE
c. Estimated Revenue Control
d. Appropriations Control

d. Appropriations Control

Which of the following accounts of a governmental unit is debited when supplies previously ordered are received?
a. Encumbrances
b. BFB - AFE
c. Voucher's Payable
d. Appropriations Control

b. BFB - AFE

Oak City issued a purchase order for supplies with an estimated cost of $5000. When the supplies and accompanying invoice were received, the invoice indicated a $4950 actual price. What amount should Oak City debit or credit to BFB - AFE?
a. $5000
b. $(50

a. $5000
ENCUMBRANCES
BFB -AFE
BFB- AFE
ENCUMBRANCES

For the budgetary year ending December 31, 20X6, Johnson City expects the following inflows of resources in its general fund:
Property taxes, licenses, and fines $9,000,000
Transfer in from ISF $500,000
Transfer in from debt service fund $1,000,000
In the

a. $9,000,000

Encumbrances outstanding in year-end in a state's general fund should be reported as a:
a. Liability in the general fund
b. Fun bal. designation in the general fund
c. Fund bal. reserve in the general fund
d. Liability in the general long-term debt accoun

c. Fund bal. reserve in the general fund

Interperiod equity is an objective of financial reporting for governmental entities. According to the GASB, is interperiod equity fundamental to public administration? Is it a component of accountability?
a. Yes; Yes
b. No; No
c. Yes; No
d. No; Yes

a. Yes; Yes

Which of the following statements is correct regarding comparability of governmental financial reports?
a. Comparability is not relevant in governmental financial reporting
b. Differences between financial reports should be due to substantive differences

b. Differences between financial reports should be due to substantive differences in underlying transactions or the governmental structure

Type of interfund transaction and transfer to receive bills from an ISF for using city-owned vehicles.
a. Interfund loan
b. Interfund service provided and used
c. Interfund transfer
d. Interfund reimbursement

b. Interfund service provided and used

Type of interfund transaction and transfer to transfer cash to start an enterprise fund that does not have to return the cash to the general fund.
a. Interfund loan
b. Interfund service provided and used
c. Interfund transfer
d. Interfund reimbursement

c. Interfund transfer

Type of interfund transaction and transfer to receive cash from a discounted special revenue fund.
a. Interfund loan
b. Interfund service provided and used
c. Interfund transfer
d. Interfund reimbursement

c. Interfund transfer

Type of interfund transaction and transfer to transfer cash to a capital projects fund to help construct a building.
a. Interfund loan
b. Interfund service provided and used
c. Interfund transfer
d. Interfund reimbursement

c. Interfund transfer

Type of interfund transaction and transfer to transfer cash to a debt service fund to pay interest and principal of general long-term debt.
a. Interfund loan
b. Interfund service provided and used
c. Interfund transfer
d. Interfund reimbursement

c. Interfund transfer

Type of interfund transaction and transfer to transfer cash to the pension trust fund representing the employer's contribution for the pension of general fund employee's.
a. Interfund loan
b. Interfund service provided and used
c. Interfund transfer
d. In

b. Interfund service provided and used

Type of interfund transaction and transfer to transfer resources to an enterprise fund that is expected to repay these resources with interest.
a. Interfund loan
b. Interfund service provided and used
c. Interfund transfer
d. Interfund reimbursement

a. Interfund loan

Type of interfund transaction and transfer to transfer cash to a special revenue fund that incurred and paid expenditures on behalf of the general fund.
a. Interfund loan
b. Interfund service provided and used
c. Interfund transfer
d. Interfund reimbursem

d. Interfund reimbursement

Type of interfund transaction and transfer to receive from an ISF cash that represented repayment of an advance made during the previous year.
a. Interfund loan
b. Interfund service provided and used
c. Interfund transfer
d. Interfund reimbursement

a. Interfund loan

Type of interfund transaction and transfer to receive bills from an enterprise fund for using public parking facilities.
a. Interfund loan
b. Interfund service provided and used
c. Interfund transfer
d. Interfund reimbursement

b. Interfund service provided and used

General fund following operating budget for fiscal year beginning July 1, 20X9:
Estimated Revenue's 5,100,000
Appropriations 4,200,000
Budgeted transfer in from debt service fund 200,000
Budgeted transfer out from capital projects fund 500,000
When the ge

a. Cr. $600,000

In a town's general fund operating budget for the year, the amount of its estimated revenue's exceeded the amount of its appropriations. This excess should be:
a. Cr. Fund Bal. - Unassigned
b. Dr. BFB - UNASSIGNED
c. Dr. Fund Bal. - Unassigned
d. Cr. BFB

d. Cr. BFB - UNASSIGNED

Assuming there is a budget surplus, which of the following accounts are credited when the general funds records its operating budget at the beginning of the year?
a. APPROPRIATIONS CONTROL and BFB - UNASSIGNED
b. BFB - AFE and EXPENDITURES
c. ESTIMATED RE

a. APPROPRIATIONS CONTROL and BFB - UNASSIGNED

Under the modified accrual basis of accounting, revenue should be recognized when it is:
a. Available and earned
b. Measurable and earned
c. Measurable and available
d. Received in cash

c. Measurable and available

Which of the following funds should use the modified accrual basis of accounting?
a. Debt service and private-purpose trust funds
b. Private-purpose trust and agency funds
c. Capital projects and special rev. funds
d. Internal service and enterprise funds

c. Capital projects and special rev. funds

Which of the following funds are classified as proprietary funds?
a. Agency and special rev. funds
b. Debt service and capital projects funds
c. Enterprise and internal service funds
d. Agency and pension trust funds

c. Enterprise and internal service funds

All of the following funds have a financial resources measurement focus with exception of which fund?
a. Private-purpose trust fund
b. Capital projects fund
c. Debt service fund
d. Special rev. fund

a. Private-purpose trust fund

Which organization has the authority to establish GAAP for state and local government entities?
a. FASB
b. GASB
c. MOFO
d. NCGA

b. GASB

Which of the following accounts are debited when closing entries are made for the general fund (assume outstanding encumbrances lapse @ year-end)?
i. APPROPRIATIONS CONTROL
ii. ESTIMATED REV.'S CONTROL
iii. ENCUMBRANCES
iv. BFB - AFE
v. REV. - PROPERTY TA

b. i, iv, v

July 25, 20X8, the city of Pullman, which reports on a calendar-year basis, ordered 5 police cars at an estimated cost of $200,000. On August 26, 20X8, the police cars were received, and the actual cost amounted to $197,000. Pullman encumbered the appropr

b. Dr. Expenditures $197,000

The general fund of the Town of Dean levied property taxes of $3,000,000 for the fiscal year beginning January 1, 20X8. It was estimated that 1% of the levy would be uncollectible. During the period January 1, 20X8 - December 31, 20X8, $2,960,000 of the r

b. $2,970,000

The government-wide financial statement's use the
a. Economic resources measurement focus and the accrual basis of accounting
b. Current financial resources measurement focus and the accrual basis of accounting
c. Economic resource measurement focus and t

a. Economic resources measurement focus and the accrual basis of accounting

The financial statement's for the governmental funds use the
a. Economic resources measurement focus and the accrual basis of accounting
b. Current financial resources measurement focus and the accrual basis of accounting
c. Economic resources measurement

d. Current financial resources measurement focus and the modified accrual basis of accounting

According to GASB 34, infrastructure fixed assets
a. Must be capitalized and depreciated
b. Must be capitalized, but government's do not have to depreciate them
c. May be capitalized and depreciated
d. Must be reported using the modified approach

b. Must be capitalized, but government's do not have to depreciate them

On which of the following government-wide financial statement's would you find all liabilities of a state or local government?
a. Statement of Net Position
b. Statement of Financial Condition
c. Statement of Activities
d. Statement of Financial Position

a. Statement of Net Position

On which of the following financial statement's would you find all of the capital assets of a local government?
a. Statement of Net Position
b. Statement of Financial Condition
c. Statement of Activities
d. Statement of Financial Postion

a. Statement of Net Position

For which fund category is a statement of cash flows prepared?
a. Governmental
b. Proprietary
c. Fiduciary
d. None of the above

b. Proprietary

Village of Hampton reported the following data for its governmental activities for the year ended June 30, 20X5:
Cash and cash equivalents = $1,880,000
Receivables = 459,000
Capital assets = 14,250,000
Accumulated depreciation = 1,750,000
Accounts payable

a. $8,839,000
14,839,000-6,000,000 = 8,839,000

Village of Hampton reported the following data for its governmental activities for the year ended June 30, 20X5:
Cash and cash equivalents = $1,880,000
Receivables = 459,000
Capital assets = 14,250,000
Accumulated depreciation = 1,750,000
Accounts payable

c. $7,150,000
14,250,000 - 1,750,000 - 5,350,000 = 7,150,000

Village of Hampton reported the following data for its governmental activities for the year ended June 30, 20X5:
Cash and cash equivalents = $1,880,000
Receivables = 459,000
Capital assets = 14,250,000
Accumulated depreciation = 1,750,000
Accounts payable

c. 1,035,000
8,839,000 - 7,150,000 - 654,000 = 1,035,000

Which of the following funds can be major assuming they meet the appropriate tests?
a. The parking meter special revenue fund and the water utility enterprise fund
b. The fire station capital projects fund and a property tax agency fund
c. The fire statio

a. The parking meter special revenue fund and the water utility enterprise fund

Where in the basic financial statements would you find a description of the measurement focus and the basis of accounting used in the government-wide financial statements?
a. In the Statement of Net Position
b. In the Statement of Activities
c. In MD&A
d.

d. In the notes to the financial statements

Where in the financial section of a CAFR would you find an analysis of the balances and transactions of individual funds?
a. In the government-wide financial statements
b. In the fund financial statements
c. In MD&A
d. In the notes to the financial statem

c. MD&A

December 31, 20X1, Tiffin Township paid a contractor $2,000,000 for the total cost of a new firehouse built in 20X1 on township-owned land. Financing was by means of a $1,500,000 general obligation (G.O.) bond issue sold at face amount on December 31, 20X

d. Other Financing Sources, $2,000,000; Expenditures, $2,000,000

A municipality's debt service fund is an example of which of the following types of funds?
a. Fiduciary
b. Governmental
c. Proprietary
d. Internal service

b. Governmental

Revenue of a governmental unit's special revenue fund should be recognized in the period in which
a. Revenue becomes available and measurable
b. Revenue becomes available for appropriation

a. Revenue becomes available and measurable

Taxes collected and held by a municipality for a school district would be accounted for in a(n)
a. Enterprise fund
b. Intragovernmental (internal) service fund
c. Agency fund
d. Special revenue fund

c. Agency fund

Interest expense on bonds payable should be recorded in a debt service fund
a. At the end of the fiscal period if the interest due date does not coincide with the end of the fiscal period
b. When issued
c. When legally payable
d. When paid

c. When legally payable

Which of the following funds does NOT have a fund balance?
a. General fund
b. Agency fund
c. Special revenue fund
d. Capital projects fund

b. Agency fund

When a capital projects fund transfers a premium from the issuance of general obligation bonds to another fund, the transfer should be accounted for as which type of interfund transaction or transfer?
a. As revenue
b. As a loan
c. As an interfund transfer

b. As a loan

Which of the following fiduciary funds does NOT require a statement of changes in net position?
I. Private-purpose trust fund
II. Agency fund
a. Both I and II
b. Neither I nor II
c. II only
d. I only

c. II only

Fixed assets and investments are reported in which of the following funds?
I. Fiduciary fund
II. Enterprise fund
III. Interfund service fund
IV. Capital projects fund
V. Debt service fund
a. II, IV, V
b. II, III, IV
c. I, II, V
d. I, II, III

d. I, II, III

Which of the following items would not be reported on the financial statements of a capital project fund?
a. Expenditures and revenues
b. Vouchers payable and unreserved fund balance
c. Long-term assets
d. Fund balance reserved for encumbrances and expend

c. Long-term assets

A special revenue fund should be used in which of the following situations for a state government?
a. For the proceeds of general obligation (G.O.) bonds that are to be used to construct major long-lived fixed assets
b. For gasoline taxes that are to be u

b. For gasoline taxes that are to be used exclusively to repair state roads and bridges

The government-wide financial statements prepared for a municipality should include assets acquired by the following funds:
General fund, Capital projects fund, ISF, Enterprise fund
a. Y, Y, N, N
b. Y, Y, Y, Y
c. N, Y, N, N
d. Y, N, N, N

b. Y, Y, Y, Y

Riviera Township reported the following data for its governmental activities for year-ended June 30, 20X9:
Item Amt.
Cash and equivalents $1,000,000
Receivables 300,000
Capital assets 8,500,000
Accumulated Depr. 1,200,000
Accounts Payable 400,000
Long-ter

c. $4,200,000

Government-wide financial statements prepared for a municipality include:
Statement of net assets, statement of activities, statement of cash flows
a. Y, Y, Y
b. Y, Y, N
c. N, N, N
d. N, Y, Y

b. Y, Y, N

On the statement of cash flows prepared for an ISF, cash received from customers and cash paid for operating expenses should be reported as:
a. Capital and related to financing activities
b. Investing activities
c. Operating activities
d. Noncapital finan

c. Operating activities

The town of Decorah issued general obligation (G.O.) serial bonds at par to finance construction of several new streets in the town. Construction activity was accounted for in a capital projects fund. On the date the general obligation (G.O.) serial bonds

a. Other Financing Sources - Bond Issue Proceeds

For the summer session of 20X2, Pacific University assessed its students $1,700,000 (net of refunds) covering tuition and fees for educational and general purposes. However, only $1,500,000 was expected to be realized because scholarships totaling $150,00

a. $1,500,000
$1,700,000-150,000-50,000 = $1,500,000

Tuition remissions for graduate student teaching assistantships should be classified by a university as 1.) revenue; 2.) expenditures
a. N, N
b. N, Y
c. Y, Y
d. Y, N

c. Y, Y

For the fall semester of 20X1, Dover University assessed its students $2,300,000 for tuition and fees. The net amount realized was only $2,100,000 because of the following revenue reductions:
Refunds occasioned by class cancellations and student withdrawa

a. $2,100,000
2,300,000-50,000-10,000-140,000= 2,100,000

Unrestricted net asset comprised $7,500,000 of assets and $4,500,000 of liabilities (including deferred revenues of $150,000). Among the receipts recorded during the year were unrestricted gifts of $550,000 and restricted grants totaling $330,000 of which

c. $3,000,000

Unrestricted net asset comprised $7,500,000 of assets and $4,500,000 of liabilities (including deferred revenues of $150,000). Among the receipts recorded during the year were unrestricted gifts of $550,000 and restricted grants totaling $330,000 of which

d. $880,000
550,000+330,000= 880,000

Unrestricted net asset comprised $7,500,000 of assets and $4,500,000 of liabilities (including deferred revenues of $150,000). Among the receipts recorded during the year were unrestricted gifts of $550,000 and restricted grants totaling $330,000 of which

b. $200,000

Under its established rate structure, Dodge Hospital would have earned patient service revenue of $5,000,000 for year ended December 31, 20X3. However, Dodge did not expect to collect this amount because of contractual adjustments of $500,000 to third par

a. $4,500,000
5,000,000 - 500,000 = 4,500,000

Under its established rate structure, Dodge Hospital would have earned patient service revenue of $5,000,000 for year ended December 31, 20X3. However, Dodge did not expect to collect this amount because of contractual adjustments of $500,000 to third par

c. Increase in unrestricted revenue, gifts, and other support

Under its established rate structure, Dodge Hospital would have earned patient service revenue of $5,000,000 for year ended December 31, 20X3. However, Dodge did not expect to collect this amount because of contractual adjustments of $500,000 to third par

d. $740,000
40,000 + 700,000 = 740,000

Donated medicines that a hospital normally would purchase should be recorded at fair value and should be credited directly to
a. Unrestricted revenue
b. Expense of medicine
c. Fund balance
d. Deferred revenue

a. Unrestricted revenue

Which of the following would normally be included as revenue of a not-for-profit hospital?
a. Unrestricted interest income from an endowment fund
b. An unrestricted gift
c. Tuition received from an educational program
d. All of the above

d. All of the above

An unrestricted gift pledge from an annual contributor to a not-for-profit hospital made in December 20X1 and paid in March 20X2 would generally be credited to
a. Contribution revenue in 20X1
b. Contribution revenue in 20X2
c. Other income in 20X1
d. Othe

a. Contribution revenue in 20X1 - when pledge is received

An organization of high school seniors assist patients at Lake Hospital. These student volunteers perform services that the hospital would not otherwise provide, such as wheeling patients in the park and reading to them. Lake has no ER-EE relationship wit

d. $0

Which of the following would be included in the unrestricted funds of a not-for-profit hospital?
a. Permanent endowments
b. Term endowments
c. Board-designated funds originating from previously accumulated income
d. Funds designated by the donor for plant

c. Board-designated funds originating from previously accumulated income

During the year ended December 31, 20X1, Greenacre Hospital received the following donations stated at their respective fair values:
Essential specialized employee-type services from members of a religious group............$100,000
Medical supplies restri

c. $130,000

Johnson Hospital's PP&E (net of depreciation) consists of the following:
Land...............$500,000
Buildings......$10,000,000
Movable Equipment.............$2,000,000
What amount should it report as restricted assets?
a. $0
b. $2,000,000
c. $10,500,000

a. $0

Depreciation should be recognized in the financial statements of
a. Proprietary (for-profit) hospitals only
b. Both proprietary and not-for-profit hospitals
c. Both proprietary and not-for-profit hospitals only when they are affiliated with a college or u

b. Both proprietary and not-for-profit hospitals

Mar. 1, 20X1, Rowe established a $100,000 endowment fund, the income from which is to be paid to Central Hospital for general operating purposes. Central does not control the fund's principal. The donor appointed Sycamore National Bank as trustee of this

d. Memorandum entry only

Jan. 2, 20X2, a not-for-profit botanical society received a gift of an exhaustible fixed asset with an estimated useful life of 10 years and no salvage value. The donor's cost of this asset was $20,000, and its fair market value at the date of the gift wa

a. $3000
30,000/10 years = 3000

20X1 a not-for-profit trade association enrolled five new member companies, each of which was obligated to pay non-refundable initiation fees of $1000. The association received these fees in 20X1. Three of the new members paid the initiation fees in 20X1,

a. $5000

Roberts Foundation received a nonexpendable endowment of $500,000 in 20X3 from Multi Enterprise and invested it in publicly traded securities. Multi did not specify how gains and losses from dispositions of endowment assets were to be treated. No restrict

b. $40,000

July 20X2 Ross donated $200,000 cash to a church with the stipulation that the revenue generated from this gift be paid to him during his lifetime. The conditions of this donation are that after Ross dies, the church may use the principal for any purpose

d. Both a and c

The following expenditures were among those not-for-profit botanical society incurred during 20X4:
Printing of annual report......$15,000
Unsolicited merchandise sent to encourage contributions......$35,000
What amount should be classified as fund-raising

c. $35,000

Trees Forever, a community foundation, incurred $5000 in expenses during 20X3 putting on its annual fund-raising talent show. In its statement of activities, Trees Forever should report the $5000 as
a. Contra-asset account
b. Contra-revenue account
c. Red

d. Part of fund-raising costs

20X3 Burr Foundation's board of trustees designated $100,000 from its current funds for college scholarships. Also in 20X3, the foundation received a bequest of $200,000 from the estate of a benefactor who specified that it be used for hiring teachers to

c. $200,000

United Together, a labor union, had the following receipts and expenses for year ended December 31, 20X2:
Receipts:
Per capita dues........$680,000
Initiation fees.............$90,000
Sales of organizational supplies.............................$60,000
No

d. $830,000

United Together, a labor union, had the following receipts and expenses for year ended December 31, 20X2:
Receipts:
Per capita dues........$680,000
Initiation fees.............$90,000
Sales of organizational supplies.............................$60,000
No

a. $500,000

United Together, a labor union, had the following receipts and expenses for year ended December 31, 20X2:
Receipts:
Per capita dues........$680,000
Initiation fees.............$90,000
Sales of organizational supplies.............................$60,000
No

c. $30,000 and $25,000 respectively

A private, not-for-profit hospital reported the following information:
Charity Care, $20,000 of charity care services performed
Investments, donated with fair market value of $100,000 and an original cost of $75,000
Plant Assets, donated with fair market

b. $150,000

A private, not-for-profit hospital received a donation of medicine from the XYZ Pharmaceutical Company on March 15, 20X9. The cost of the medicine to the company was $66,000, and its market value was $110,000. Twenty percent of the medicine was used by th

c. $110,000

Hospital Inc., a not-for-profit org. with no governmental association, reported the following in its accounts for year end:
Gross Patient Service Rev. (GPSR) from all services provided at the established billing rates of the hospital (charity care = $25,0

d. $680,000

Healing Angel Hospital, operated by a religious org., billed patients $13,000,000 for services rendered during year ended June 30, 20X3. The hospital realized cash of $10,700,000 from the patient billings because of the following reductions:
i.) Contractu

d. $11,600,000

Statement of operations prepared for a private, not-for-profit hospital, patient service revenue earned during the year is reported net of amounts for which of the following items?
i. Contractual adjustments
ii. Bad debt expense
a. i only
b. Either i or i

a. i only

The governing board of a hospital operated by a religious org. designated $3,000,000 of cash to be used for plant expansion. The cash was invested in stocks and bond which earned $250,000 of dividend and interest income. The income from investments should

a. Operating income

Unrestricted gifts and endowment income of a private university are reported as:
a. Increases in the fund unrestricted on the statement of activities
b. Revenues unrestricted on the statement of current funds, revenues, expenditures, and other changes
c.

d. Revenues unrestricted on the statement of activities

Unrestricted funds of a private university designated by the governing board for a specific future purpose should be reported as part of:
a. Net assets unrestricted
b. Term endowments
c. Net assets restricted
d. Board-restricted net assets

a. Net assets unrestricted

Year ended June 30, 20X7, a university assessed its students a total of $10,000,000 for tuition and fees. Included in this amount was $750,000 of tuition remissions awarded to grad. T.A.'s, and $1,500,000 of scholarships awarded to undergrad. students. Tu

c. $8,500,000

In accordance with ASC 958, pledges, which are temporarily restricted by donors, are reported as increases in temporarily restricted net assets on the statement of activities of a voluntary, health, and welfare org. when the
a. Pledges are made by donors

a Pledges are made by donors

Voluntary health and welfare org. received $300,000 contribution Apr. 15, 20X9, from a donor who stipulated the donation be invested permanently in stocks and bonds. The donor further stipulated earnings from the investments be spent in according to wishe

c. Increase net assets $300,000 restricted, and net assets unrestricted $6000