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Homework answers / question archive / HW    1) Which of the following statements is true regarding the definition of a fund?             a

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

Finance

HW

 

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

            a. A fund is a fiscal entity that is designed to provide reporting that demonstrates conformance with finance-related legal and contractual provisions separately from GAAP reporting.

            b. A fund is an accounting entity that is designed to enable reporting in conformity with GAAP without being restricted by legal or contractual provisions.

            c. A fund is a mechanism developed to provide accounting for revenues and expenditures that are subject to certain restrictions separate from revenues and expenditures that are not subject to restrictions.

            d. A fund exists to assist in carrying on activities and attaining objectives where there are no specific rules or restrictions.

 

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

            a. Separate columns should be provided in the government-wide financial statements for governmental activities and business-type activities.

            b. Governmental fund and proprietary fund financial statements should provide a separate column for each major fund.

            c. Aggregate information about all nonmajor governmental funds or nonmajor enterprise funds should be reported in a single column of the governmental fund or proprietary fund financial statements.

            d. All of the above.

 

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

a. Assets and net position.

b. Deferred outflows of resources and liabilities.

c. Assets and liabilities.

d. Net position and liabilities.

 

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?

            a. Resources the city manager has set aside for a major street repair.

            b. A federal grant that is to be used for playground equipment.

            c. Significant amounts of inventory.

            d. Endowment resources that the city must maintain in perpetuity.

 

 

6) Separate reporting for major funds is needed because

            a. Users of governmental financial statements are usually interested in the details of             every fund used by a government.

            b. It is illegal to aggregate funds where the elements of the fund represent at least 5             percent of the corresponding element for all funds of the same type.

            c. Users of governmental financial statements need to be able to examine the            activities and resources of fiduciary funds.

            d. Users of governmental financial statements need to be able to examine      funds that represent large dollar amounts of a government’s resources and        activities.

 

7) Assets and liabilities of activities for which the government is acting in either an agency or trustee capacity for individuals, organizations, or other governments should be re ported in:

            a. The fiduciary column of the government-wide financial statements.

            b. The fiduciary fund financial statements.

            c. Both government-wide and fiduciary fund statements.

            d. Neither government-wide nor fiduciary fund statements.

 

8)Under the modified accrual basis of accounting:

            a. Revenues are recognized at the time an exchange transaction occurs.

            b. Expenditures are recognized as the cost of an asset expires or is used up in          providing governmental services.

            c. Revenues are recognized when current financial resources become            measurable    and available to pay current-period obligations.

            d. Expenses are recognized when an obligation occurs for costs incurred in providing services.

 

9) Financial information about an internal service fund should be reported in the proprietary fund financial statements and the:

            a. Governmental Activities column of the government-wide financial statements.

            b. Business-type Activities column of the government-wide financial statements.

            c. Either a or b, depending on whether the internal service fund           predominantly serves governmental activities or business-type activities.

            d. None of the above. 

 

HW  CH 6  (correct)

 

1) Which of the following would not be considered a general long-term liability?

            a. The estimated liability to clean up the hazardous waste storage sites of the city’s Public Works Department.

            b. Capitalized equipment leases of the water utility fund.

            c. Compensated absences for the city’s Police Department.

            d. Five-year notes payable used to acquire computer equipment for the city’s             administrative offices.

 

2) Proceeds from bonds issued to construct a new city hall would most likely be recorded in the journal of the:

            a. Capital projects fund.

            b. Debt service fund.

            c. General Fund.

            d. Enterprise fund.

 

3) The liability for long-term debt issued to finance a capital project will appear in which financial statement?

            a. Government-wide statement of net position.

            b. Capital projects fund balance sheet.

            c. Debt service fund balance sheet.

            d. General fund balance sheet. 

 

4) Which one of the following statements regarding debt margin is correct?

            a. Debt margin is the total amount of indebtedness of specified types of debt that is allowed by law to be outstanding at any one time.

            b. Debt margin is calculated without regard to debt that is authorized but not yet     issued.

            c. Debt margin is the difference between the legal debt limit and the amount of         net indebtedness subject to limitation.

            d. All of the above statements regarding debt margin are correct.

 

5) Budgeting entries for a debt service fund would:  (pg 216-217)

            a. Not include an entry for estimated revenues since taxes are always recorded        directly into the General Fund.

            b. Include an estimated adjustment to bonds payable equal to the amount of             principal payments that will become legally due during the fiscal year.

            c. Include estimated other financing uses equal to the amount of interest payments that will become legally due during the fiscal year.

            d. Include appropriations for principal payments that will become legally due           during the fiscal year.

 

6) On March 2, 2017, 20-year, 6 percent, general obligation serial bonds were issued by Mossy County at the face amount of $3,000,000. Interest of 6 percent per year is due semiannually on March 1 and September 1. The first principal payment of $150,000 is due on March 1, 2018. The county’s fiscal yearend is December 31. What amounts are reported as interest expense in the government-wide financial statements and interest expenditure in the debt service fund for 2017?

 

 Interest Expense                                                                  Interest Expenditure

a. $150,000 *                                                                         $90,000 **

b. $90,000                                                                              $150,000

c. $150,000                                                                            $150,000

d. $150,000                                                                            $180,000

 

 

To compute interest expense:

3million x 6%=180k annually

180k x 10/12= 150k

To compute interest expenditure:

3 million x 6% =180k annually

180k x6/12 =90k

 

 

7) Debt service funds may be used to account for all of the following except:

            a. Repayment of debt principal.

            b. Lease payments under capital leases.

            c. Amortization of premiums on bonds payable.

            d. The proceeds of refunding bond issues.

 

8) Which of the following items would be reported in the Governmental Activities column of the government-wide financial statements?

 

Premium on Bonds Payable                                       Noncurrent Portion of General Long-term                                                                                   Liabilities Payable

 

a. Yes                                                               No

b. No                                                                No

c. No                                                                 Yes

d. Yes                                                               Yes 

 

 

HW  CH 7 

 

1)Within the government-wide financial statements, the column for Business-type Activities will generally include:

            a. Internal service funds only.

            b. Enterprise funds only.

            c. All internal service fund and enterprise fund transactions added together and       accounted for on the accrual basis of accounting.

            d. All enterprise fund transactions and only the internal service fund transactions    undertaken with governmental funds on the accrual basis of accounting.

 

2) Which of the following would most likely be accounted for in an internal service fund?

            a. The city pool.

            b. The city’s investments, which are pooled with the county’s and the school district’s investments.

            c. An asphalt plant used to supply the asphalt needed to resurface the city’s streets.             d. Proceeds from an endowment that are used to maintain the city’s library.

 

3) Under GASB standards, the City of Parkview is required to use an enterprise fund to account for its nature center if:

            a. It charges fees to assist in paying for the maintenance of the nature center.

            b. The Nature Center was originally financed through the issuance of general           obligation bonds.

            c. The ordinance that was passed to establish the nature center requires that all       costs of the Nature Center be paid for by user fees.

            d. All of the above are true.

 

4) During 2017, the Gateway City government recorded a $15,000 transfer from the General Fund to an internal service fund; a $25,000 transfer from the General Fund to an enterprise fund; a $10,000 transfer from an enterprise fund to an internal service fund, and a $5,000 transfer from an enterprise fund to the General Fund. In the Business-type Activities column of the government-wide financial statements, Gateway City should report:

            a. Net transfers out of $5,000.

            b. Net transfers in of $10,000.

            c. Net Transfers in of $25,000.

            d. Net Transfers in of $35,000.

 

5) Which of the following events would generally be classified as nonoperating on an enterprise fund’s statement of revenues, expenses, and changes in net position?

            a. Billing other funds of the same government for services.

            b. Loss on the sale of a piece of equipment.

            c. Depreciation expense.

            d. Administrative expense.

 

6) In reviewing the accounting records of the Transportation Services Fund, an internal service fund of Douglas City, you notice that the fund uses budgetary accounts. This is most likely because

            a. The administrators of the fund prefer to prepare a budget to use in managing the            fund.

            b. GASB requires the use of budgetary accounts in internal service funds.

            c. The city council must legally approve the fund’s budget.

            d. The accountants for the fund are unfamiliar with proper accounting procedures for a proprietary fund.

 

7) Under GASB standards, which of the following events would be classified as an investing activity on a proprietary fund’s statement of cash flows?

            a. Interest earned on certificates of deposit held by the proprietary fund.

            b. Purchase of equipment for use by the proprietary fund.

            c. Grant received to construct a building that will be used by the proprietary fund.

            d. All of the above would be considered investing activities for reporting purposes.

 

8)  An internal service fund used for insurance activities should recognize an expense and a liability when:

            a. A claim has been made, it is reasonably possible that a liability has been incurred,            and the amount will be reasonably estimable at some time in the near future.

            b. A claim has not been made, but it is reasonably possible that a liability has been   incurred or an asset has been impaired, and an amount can be reasonably estimated.      c. A claim has been made, it is probable that an asset has been impaired, and the   amount will be reasonably estimable at some time in the near future.

            d. A claim has been made, it is probable that a liability has been incurred, and the     amount can be reasonably estimated.

 

9) During the year an enterprise fund purchased $230,000 worth of equipment. The equipment was acquired with a cash down payment of $30,000 and a $200,000 loan. A partial year of depreciation on the equipment was taken in the amount of $23,000. What is the net effect of this transaction on the net position accounts of the enterprise fund?

            a. Net investment in capital assets is increased by $7,000.

            b. Net investment in capital assets is increased by $30,000.

            c. Net investment in capital assets is increased by $207,000.

            d. Net investment in capital assets is increased by $230,000

 

10)Tinsel Town had the following long-term liabilities at year end:

 

11) What amount should be recorded as long-term liabilities in the proprietary fund financial statements?

            a. $0.

            b. $200,000.

            c. $250,000.

            d. $450,000. 

 

    Ch 15 lecture : Accounting for Colleges and Universities

1)  Which of the following organizations would be considered a nongovernmental not-for-profit organization?

a. An organization that provides shelter for men who have been victims of domestic violence and has been designated as a not-for-profit organization by the IRS. The board of trustees is composed of county commissioners, but in the case of the dissolution of the organization, any remaining funds would be donated to the United Way. Funding for the organization comes entirely from contributions.

b. An organization that provides services to persons who wish to learn English as their second language. The organization is incorporated and is funded by fees charged to the learners. All profits are reinvested in the organization to provide further services. The organization has applied for not-for-profit status with the IRS.

C. organization classified by the IRS as a not-for-profit organization that employs individuals with disabilities in a workshop where the workers make custom stationery out of recycled goods. The organization receives cash and in-kind contributions as well as the proceeds from the sale of the stationery. The organization’s board is composed of local businessmen and women.

d. An organization that provides fund-raising services for other not-forprofit organizations. The organization is funded by fees for its services and was incorporated by the former chairperson of the local United Way organization. The organization distributes 40 percent of its profits to local charities.

 

2) According to GAAP, all not-for-profit organizations are required to prepare

a. A statement of activities, a statement of functional expense, and a statement of cash flows using accrual accounting.

b. A statement of activities, a balance sheet, and a statement of cash flows using accrual accounting. 

c. A statement of financial position, a statement of activities, a statement of cash flows and a statement of functional expenses using accrual accounting.

d. A statement of cash flows, a statement of activities, and a statement of financial position using either cash basis or accrual basis accounting.

 

3) Jane’s Planes is an organization that provides air transportation for critically ill children. A friend of Jane’s Planes, Richard Bucks donated a plane to be used over its remaining life solely for transportation of critically ill children. In addition, he donated a substantial amount of investments that were to be used strictly to generate income to help fund the organization’s expenses. These donations would be included in the organization’s net assets as: Plane Investments

a. Permanently restricted Permanently restricted

b. Temporarily restricted Permanently restricted

c. Permanently restricted Temporarily restricted

d. Temporarily restricted Temporarily restricted

 

4) In a local NFP elementary school’s statement of cash flows, a contribution restricted for use on a new building project would be reported as:

a. A financing activity.

b. A capital and related financing activity.

c. An investing activity.

d. An operating activity.

 

5) A wealthy donor promised $1 million to the local art museum to expand the size of its building, contingent on the museum obtaining a grant from the State Endowment for the Arts of at least $500,000. Upon completing a signed agreement with the donor, the museum should:

a. Record a debit to Contributions Receivable—Temporarily Restricted in the amount of $1,000,000.

b. Record a debit to Contributions Receivable—Temporarily Restricted in the amount of $500,000.

c. Not make a journal entry until the conditions of the agreement have been met.

d. Either a or c are permissible, depending on the museum’s established policy.

 

6) Orlando Perez, president of a local information systems company, volunteered his time to help develop software for Best Friends, a local no-kill pet shelter. The software will allow the organization to track intake, placement, and statistics of animals in its three locations. Without Mr. Perez’s assistance, Best Friends would have needed to hire someone to develop this software. Best Friends should record the value of Mr. P erez’s time as:

a. Program revenue and supporting services expense.

b. Contribution revenue and supporting services expense.

c. Program revenue and program expense.

d. Contribution revenue and a program expense.  

 

7)The Maryville Cultural Center recently conducted a successful talent show in which local talent performed for a nominal prize. The talent show is an ongoing major event and is central to the center’s mission. The event raised $4,800 in gross revenue. Expenses related to the event included $1,000 to rent an auditorium, $1,200 to advertise the event, $500 for trophies and other awards for the winner and the runners up, and $100 for printing and mailing tickets. The center believes there was no monetary value received by donors (attendees). To report this event in its statement of activities, the center will report:

a. Special event revenue of $4,800 and special event expense of $1,500.

b. Special event revenue of $4,800 and fund-raising expense of $1,300.

c. Special event revenue of $2,300 and fund-raising expense of $1,300.

d. Both a and b are correct.

 

8) Many not-for-profit organizations attempt to classify fund-raising expenses as program services expenses by making the activities look educational in nature or advocating for the mission of the organization. For such expenses to be reported as program services expenses, they must meet which of the following three criteria:

a. Purpose, mission-related, and benefit to the public.

b. Purpose, audience, and content.

c. Purpose, expand donor base, and content.

d. Reasonable, improve financial condition, and benefit to the public.

 

9) Save Our Beaches, a NFP organization, prepared and distributed a tri-fold flyer to individuals and families at White Sands Beach, a popular beach for both residents and tourists. The flyer provided information about beach pollution and invited the public to participate in the organization’s semi-annual beach cleanup. In addition, one segment of the flyer solicited contributions to the organization to help fund its activities. The cost of the flyer and its distribution would be considered:

a. A fund-raising cost.

b. A program cost.

c. Both a fund-raising and program cost.

d. A management and general expense.

 

10) A particular organization functions as an intermediary between donors and other beneficiary organizations. The intermediary organization must report contribution revenue from donors if:

a. The organization has variance power.

b. The organization elects to consistently report such donor gifts as contribution revenue.

c. The beneficiary organization requests a delay in receiving the contribution from the intermediary organization.

d. All of the above are correct.  

 

 

 

  Ch 16 lecture : Accounting for Health Care Organizations

 

1) Colleges and universities look to which standard-setting body for GAAP?

a. The GASB.

b. The FASB.

c. The NACUBO.

d. It depends on whether the entity is public, private, or for-profit.

 

2) Which of the following statements is prepared by both a private and public college or university?

a. Statement of net assets.

b. Statement of cash flows.

c. Statement of activities.

d. Statement of net position.

 

3) Which of the following is a true statement about tuition revenue in a college or university?

a. Scholarships should always be reported as expenses.

b. Tuition receivables estimated to be uncollectible should be reported as an operating expense.

c. Refunds should be reported as deductions from gross revenue.

d. All of these statements are true.

 

4) A university expended $2,475,000 on a new parking facility. The transaction was reported as an investing activity on its direct method statement of cash flows. What type of university prepared the statement of cash flows?

a. A public university.

b. A for-profit university.

c. A private university.

d. Either b or c.

 

5)Last year Zelnick College showed a positive revenue over expenses number for the first time in several years. The college is funded with contributions, grants, two government appropriations (state and local), and tuition and fees. Zelnick College is most likely what type of college?

a. A private for-profit college.

b. A private not-for-profit college.

c. A public university engaged primarily in governmental activities

d. A public university engaged primarily in business-type activities.

 

6)Gresham College is a local private college. When reviewing the college’s financial reports, you would expect to see which of the following categories on its statement of assets and liabilities?

a. Unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets.

b. Unrestricted net position, temporarily restricted net position, and permanently restricted net position. 

c. Unrestricted net position, restricted net position, and net investment in capital assets.

d. Unrestricted net assets, restricted net assets, and net investment in capital assets.

 

7)How would a university account for funds received from an external donor that are to be retained and invested, with the related earnings restricted to the purchase of library books?

a. Temporarily restricted net assets in a private university.

b. Permanently restricted net position in a private university.

c. Unrestricted net assets/position in either a private or public university.

d. Nonspendable, endowment in a public university.

 

8) Which of the following statements is incorrect concerning the financial reports of colleges and universities?

a. The NACUBO account titles are frequently used for reporting revenues and expenses by both private and public entities.

b. State appropriations are reported as nonoperating revenues by public entities.

c. Intangible assets are reported as a classification within capital assets by private entities.

d. Conditional contributions are not recognized by public or private entities.

 

9) Many endowment management policies establish a spending rate for the college or university’s endowment funds. A spending rate is best defined as:

a. The portion of the total return that can currently be used to carry out the endowment purpose.

b. The average rate of return earned on the endowment investments for the current fiscal year.

c. The moving average rate of return earned on endowment investments over a set period of time, such as a five-year moving average.

d. The percentage of the endowment corpus that can be used to carry out the endowment purpose.

 

10) Which of the following is a performance measure of an outcome?

a. Farley College students complete an undergraduate degree in an average of 4.3 years.

b. A state survey of employers showed that 70 percent of employers ranked Beasley State University’s graduates as “very well prepared” to enter the workforce.

c. Within six months of graduation, 75 percent of undergraduate students at Gravette College have a job in their field.

d. Faculty members at Ballard University published an average of two peer-reviewed papers each year. 

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