1. Which of the following statements is true regarding the definition of a fund? 2. Which of the following statements is true regarding the basic financial statements of a state or local government? 3. Which of the following sets of elements are common to both governmental financial statements and for-profit financial statements? 4. The measurement focus and basis of accounting that should be used for the governmental fund financial statements are: Measurement Focus Basis of Accounting a. Current financial resources Modified accrual b. Current financial resources Accrual c. Economic resources Modified accrual d. Economic resources Accrual 5. Which of the following amounts that are identified at the end of the fiscal year would be classified as a restricted fund balance? 6. Separate reporting for major funds is needed because 7. Assets and liabilities of activities for which the government is acting in either a custodial or trustee capacity for individuals, organizations, or other

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1

Finance Jan 19, 2021

1. Which of the following statements is true regarding the definition of a fund?

2. Which of the following statements is true regarding the basic financial statements of a state or local government?

3. Which of the following sets of elements are common to both governmental financial statements and for-profit financial statements?

4. The measurement focus and basis of accounting that should be used for the governmental fund financial statements are:

	Measurement Focus	Basis of Accounting
a.	Current financial resources	Modified accrual
b.	Current financial resources	Accrual
c.	Economic resources	Modified accrual
d.	Economic resources	Accrual

5. Which of the following amounts that are identified at the end of the fiscal year would be classified as a restricted fund balance?

6. Separate reporting for major funds is needed because

7. Assets and liabilities of activities for which the government is acting in either a custodial or trustee capacity for individuals, organizations, or other governments should be reported in

8. For each of the following fund types, indicate the fund category by selecting either Governmental funds, Proprietary funds, or Fiduciary funds for each item.

		Fund Category
1.	Custodial fund
2.	Permanent fund
3.	Debt service fund
4.	Internal service fund
5.	Pension (and other employee benefit) trust fund
6.	Special revenue fund
7.	Enterprise fund
8.	General Fund
9.	Investment trust fund
10.	Capital projects fund
11.	Private-purpose trust fund

9. Section A provides a list of the results of Allentown’s analysis of its governmental fund balances at its fiscal year end. Section B provides a list of the possible classifications for reporting the items listed in Section A.

Required

Using the choices provided in Section B, choose the classification of reporting that would most likely be used in the situations given in Section A.

Section A		Section B
1.	At year-end a special revenue fund has a $50,000 fund balance on which there are no constraints.
2.	Allentown has a $1,000,000 emergency reserve fund it set aside. According to the town ordinance, funds can only be used from this fund with approval of two-thirds of the governing body, which is the town council.
3.	Allentown determined that the General Fund has $22,000 in inventory it should report on its fund financial statements.
4.	Allentown issued bonds that sold at a premium. Using the authority allowed her by the town council, the city manager made the decision to set aside the $100,000 premium to pay the principal on the debt when it comes due in a future period.
5.	The federal government has provided a grant for emergency housing assistance that can only be used for low-income families. Allentown determined $250,000 of the grant funds remained at year-end.
6.	Allentown had a balance in its prepaid insurance account of $464,000 at the end of the fiscal year.
7.	At the end of the reporting period, Allentown’s General Fund statement of revenues, expenditures, and changes in fund balances reported a net change in fund balances of $154,238.
8.	Allentown’s mayor indicated that he was setting aside $25,000 of funds for the future purchase of land for a town park.
9.	The Allentown council passed an ordinance requiring that 5% of the town’s sales tax revenue be set aside for economic development; this year that amount was $24,650.
10.	The capital projects fund ended the reporting period with a negative fund balance.

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