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Homework answers / question archive / True/False Questions 1)Because capital project, debt service and permanent funds use modified accrual accounting, these funds would typically record budgets

True/False Questions 1)Because capital project, debt service and permanent funds use modified accrual accounting, these funds would typically record budgets

Accounting

True/False Questions

1)Because capital project, debt service and permanent funds use modified accrual accounting, these funds would typically record budgets.

 

  1.  Because debt service and permanent funds use modified accrual accounting, these funds would typically record encumbrances.

 

 

  1. Capital Projects funds recognize expenses, but not encumbrances.

 

 

  1. Debt service funds should accrue interest and report principle payments due within the next12 months following year end.

 

 

  1. Unmatured principal installments and accrued interest which is due shortly after year end are required to be reported as liabilities in the debt service fund at year end.

 

 

  1.  All of the governmental funds except permanent funds use the modified accrual basis of accounting

 

 

  1. A special assessment tax is a tax levy that is assessed against only those taxpayers who are deemed to benefit from the service or project paid for by the proceeds of the special assessment levy.

 

 

  1.  Special assessments may be levied to finance construction projects or to provide current services.

 

 

  1.  Positive fund balances of capital projects funds are classified as nonspendable, restricted, committed, or assigned.

 

 

  1. Unexpended resources transferred to the debt service fund from the General Fund would typically be classified as Restricted Fund Balance.

 

  1. If a sinking fund is required by creditors or law, the unexpended resources would be classified as Restricted Fund Balance.

 

 

  1. Unexpended intergovernmental grants and taxes dedicated to capital improvements in a capital projects fund are likely to be classified as Committed Fund Balance

 

 

  1. Unexpended intergovernmental grants and taxes dedicated to capital improvements in a capital projects fund are likely to be classified as Restricted Fund Balance

 

 

  1. The residual classification for governmental funds other than the General Fund is Assigned.

 

 

  1. Fund balances of debt service funds are classified among the categories identified in GASB Statement 54 as Restricted and Unrestricted.

 

  1. If a bond sinking fund is required by creditors or law, the unexpended resources would be classified as Restricted.

 

 

  1. The principal of permanent funds is classified as Nonspendable Fund Balance.

 

 

  1.  The fund balance of permanent funds should be classified as Nonspendable, Spendable and Committed.

 

 

  1. Any governmental fund may have a positive Unassigned Fund Balance.

 

 

  1.  Net assets represented by supplies and prepaid expenses are classified in governmental funds as Nonspendable Fund balance.

 

  1. Bond refunding is repurchasing bonds from bondholders using residual money left over after a capital project has been completed.

 

 

  1.  The principal of permanent funds must be classified as Restricted Fund Balance.

 

 

  1. The portion of a permanent fund which is spendable should be reported as Unassigned Fund Balance.

 

 

  1. When bonds are sold to construct a capital asset through a capital projects fund, an entry would be made to debit Cash and credit Bonds Payable in the capital projects fund.

 

 

  1.  Capital projects funds use the financial resources measurement focus and accrual basis of accounting.

 

 

  1. Capital projects funds are always included in the Budgetary Comparison Schedule.

 

 

  1. When governments construct projects that are financed with special assessment debt, to be paid back by affected property owners, those projects could be accounted for in capital projects funds.

 

 

  1. Debt service funds are used to account for the payment of principal and interest of both general and enterprise related long-term debt of a state or local governmental unit.

 

 

  1. When accounting for interest expenditures through debt service funds, interest is required to be accrued at year-end.

 

 

  1. Interest revenues should be accrued at year-end on investments held by a permanent fund.

 

 

  1. The current and long-term portions of General Long-term Debt are normally reported in a debt service fund.

 

 

  1. A special assessment tax is assessed against all tax payers regardless of who benefits.

 

 

  1. Funds whose earnings benefit individuals, private organizations, or other governments are reported in private-purpose trust funds.

 

  1. An encumbrance in a capital project fund is created when the contract for the work is signed or issued.

 

 

  1. If a government issues new debt, and places the proceeds in an escrow account pending the maturity date of existing debt, the existing debt is said to be defeased.

 

  1. When a government receives a gift that must be invested permanently and the investment proceeds are used to benefit the government or its citizens, it would be appropriate to account for that gift in a private purpose trust fund.

 

  1. Investments of permanent funds should be reported at fair value, if determinable, and unrealized gains reported along with realized gains as “Investment Income-Net Increase in Fair Value of Investments.”

 

 

  1. Capital outlay expenditures of capital projects funds will typically result in additions to the general fixed assets reported in the governmental fund Balance Sheet.

 

 

  1. In a Statement of Revenues, Expenditures, and Changes in Fund Balances, Transfers In are reported within Total Revenues.

 

 

  1. Under governmental accounting principles for capital and operating leases; expenditures are recorded each period for the amount of the annual lease payment for all leases, but the expenditures are classified differently for capital and operating leases.

 

 

  1. Premiums generated from the issuance of bonds for a capital projects fund are generally transferred to the Debt Service Fund.

 

 

  1. Capital assets are not reported in governmental funds.

 

 

  1. Capital project funds exist for the duration of the project for which it is created and are then closed.

 

 

  1. A non-expendable trust which benefits a government or its citizenry and which stipulates that earnings only (not principal) may be used for its prescribed purpose would be reported in a Special Revenue Fund.

 

 

  1. Private-purpose Trust Funds benefit individuals, private organizations, or other governments.

 

 

  1. When using debt service accounting, interest on long term debt is not to be accrued unless the payment is due in no more than one month and the government has resources available for payment.

 

 

  1. Budgets are typically recorded for Capital Projects Funds.

 

  1. Budgets are typically recorded for Debt Service Funds.

 

 

  1. Budgets are typically not recorded for Special Revenue Funds.

 

  1. Permanent funds account for resources that are donor restricted to the extent earnings (but not principal) may be used to support government programs.

 

 

  1. Encumbrance accounting is typically not used for Permanent Funds.

 

 

  1. General Funds and special revenue funds typically record budgets.

 

 

  1. Budgets are typically recorded for capital projects, debt service, and permanent funds. 

 

 

  1. If taxes and/or special assessments are levied specifically for payment of interest and principal on long-term debt, those taxes are recognized as revenues of the debt service fund.

 

 

  1. An annuity serial bond is one where the amount of the principal increases each year by the same amount that the interest payments decrease.

 

 

  1. A Debt Service Fund is a fund type that is used to account for revenues and other financing sources that are intended to service debt.

 

 

  1. Major sources of funding for Capital Project Funds include the issuance of long term debt and grants from other governmental units.

 

 

  1. Fund basis financial statements in which capital projects funds are reported are the Governmental Funds Balance Sheet and the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances.

 

 

  1. Fixed assets of completed projects are recorded in the accounts of capital projects funds.

 

  1. A gift of $1,000,000 to a city, to be invested permanently, with the proceeds to be used to maintain the city war memorials should be accounted for in a special revenue fund.

 

 

  1. A gift of $1,000,000 to a city, to be invested permanently, with the proceeds to be used to maintain the city war memorials should be accounted for in a special projects fund.

 

  1. If a government has debt service due no more than one month after the end of a fiscal year and has the resources available, then it is permitted to accrue expenditures and a fund liability for the debt service.

 

 

 

 

Multiple Choice Questions

 

 

  1. Budgets are typically recorded for which of the following:

A)  Capital Projects Funds.

B)  Debt Service Funds.

C)  Special Revenue Funds.

D)  None of the above

 

  1. Encumbrance accounting is only typically used for

A) Permanent Funds.

B) Debt Service Funds.

C) Capital Projects Funds.

D) None of the above.

 

  1. Which of the following funds typically record budgets?

A) General Funds, special revenue funds, capital projects, debt service, and permanent.

B) Only General Funds.

C) General Funds and permanent funds.

D) General Funds and special revenue funds.

  1. What is the correct debit or credit for the following scenario: A contract was issued for the major part of work to be done by a private contractor in the amount of $1,200,000 for a new County court house?

A) Debit: Budgetary Fund Balance -- Reserve for Encumbrances.

B) Debit: Construction expenditures.

C) Credit: Cash.

D) Debit: Encumbrances.

 

 

  1. When taxes and/or special assessments are levied specifically for payment of interest and principal on long-term debt, those taxes are recognized:

A) As revenues in the General Fund with transfers made to the debt service funds for payments.

B) As Other Financing Sources in the debt service fund.

C) As revenues in the capital projects fund with transfers made to the debt service funds for payments.

D) As revenues in the debt service fund.

 

 

  1. Capital project funds

A)  Receive all of their money from tax revenues.

B)  Exist only for the duration of the project for which they are created.

C)  Record debt issuances as revenues.

D)  all of the above.

 

 

  1. Which of the following is a major source of funding for capital projects funds?

A) Gifts from individuals and corporations.

B) Proceeds from issuance of Long-term debt.

C) Grants.

D) All of the above.

 

 

  1. An encumbrance in a capital project fund is created

A)  When the project is paid for in full. 

B)  When the work on the project begins.

C)  When the work on the project is finished.

D)  When a contract is signed or issued.

 

 

  1.  Which of the following statements is false?
    1. The corpus (principal) from a permanent fund should be classified as Nonspendable.
    2. Unexpended intergovernmental grants and taxes dedicated to capital improvements in a capital projects fund are likely to be classified as Assigned Fund Balance
    3. The residual classification for funds other than the General Fund is Assigned.
    4. If a bond sinking fund is required by creditors or law, the unexpended resources would be classified as Restricted.

 

 

  1. Which of the following statements is true?
  1. Fund balances of debt service funds are classified as Restricted and Unrestricted.
  2. The fund balance of permanent funds should be classified as Nonspendable, Spendable and Committed.
  3. The principal of permanent funds are classified as Nonspendable Fund Balance.
  4. Any governmental fund may have an Unassigned Fund Balance

 

 

 

  1. Which of the following statements is false?
  1.  Resources representing supplies and prepaid items are classified in governmental funds as Nonspendable Fund balance.
  2. Capital Projects, debt service and permanent funds do not typically record budgets.
  3. Debt service and permanent funds do not record encumbrances.
  4. Principal of permanent funds is classified as Committed Fund Balance

 

 

  1. With respect to Capital Projects Funds, which of the following is correct?
  1.  These funds commonly account for resources provided by long-term debt issues or dedicated taxes.
  2. Capital assets appear in both the government-wide and the fund basis financial statements
  3. A and B are both correct
  4. Neither A or B is correct

 

 

  1.  With respect to Debt Service Funds, which of the following is not correct?
  1. Typically, resources are provided through transfers from the General or other funds.
  2. Encumbrances are recorded to reflect principal payments that are expected to come due within the current accounting period.
  3. There are two types of debt service expenditures:  interest and principal
  4. In most cases, interest and principal payments are not recorded until payment is due.

 

 

  1. If a trust is to be used for the benefit individuals, private organizations or other governments, the following fund(s) should be used:

A) Special revenue fund.

B) Permanent fund.

C) Private purpose fund.

D) Either A or B, depending upon whether the principal must be maintained.

 

 

  1.  With respect to Permanent Funds, which of the following is not true?
  1. The principal is classified as Nonspendable Fund balance
  2. Permanent Funds are created when resources are provided by private donation.
  3. Earnings in excess of expenditures must be added to principal corpus.
  4. Permanent Funds use the current financial resources measurement focus.

 

 

  1. Which of the following fund(s) should be used if resources are provided by a donor with the stipulation that they be used for the benefit of the citizenry?

A) Special revenue fund.

B) Permanent fund.

C) Private purpose fund.

D) Either A or B, depending upon whether the principal must be maintained.

 

 

  1. Which of the following statements is false?
  1. All of the governmental funds use the modified accrual basis of accounting
  2. Debt service funds are required to report accrued interest payable as current liabilities.
  3. General fixed assets that are acquired with governmental fund resources are recorded as expenditures in the governmental funds but are displayed as capital assets in the governmental-wide financial statements
  4. Permanent funds reflect resources that are legally restricted so that principal may not be expended and earnings are used to benefit the government or its citizenry

 

 

  1.  When a government acquires general fixed assets under a capital lease agreement, the asset should be recorded in the General Fund’s fund basis financial statements:
  1.  As a capital asset and lease obligation at the inception of the lease agreement at the lesser of the present value of the minimum lease payments or the fair market value of the property
  2. as an expenditure when payments are made
  3. As a capital asset and lease obligation at the inception of the lease agreement for the total lease payments
  4. as an expense when payments are made

 

 

 

  1.  Which of the following is a common source of funding for capital projects?
  1. Issuance of long term debt
  2. Proceeds of dedicated taxes
  3. Grants from other governments
  4. All of the above are sources of funding for capital projects

 

 

  1. Which of the following is true with respect to special assessment levies?
  1. If the government is not liable for the special assessment debt directly or through guarantee, the special assessment is accounted for in an agency fund
  2. Taxpayers may opt out of a service-type special assessment if they agree to not use the service funded by the assessment
  3. Service-type special assessments may not be accounted for in the General or special revenue fund.
  4. Construction-type special assessments are accumulated until there is enough money to finance the construction project

 

 

  1.  If the government is primarily or secondarily liable for the payment of debt principal and interest for a special assessment project,:
  1. The tax levy and debt service expenditures should be recorded in an internal service fund. 
  2. A special revenue fund should account for the proceeds of the debt and construction expenditures
  3. The project is accounted for within governmental type funds as if it were a governmental project
  4. The debt is not recorded in the government-wide statements

 

 

  1.  With respect to Debt Service Funds, which of the following is true?
  1. Payments under capital lease obligations may be reported in debt service funds
  2. Debt service funds use accrual accounting
  3. Each separate long-term obligation must be accounted for in a separate debt  service fund
  4. All of the above are true

 

 

  1.  Which of the following statements regarding serial bonds is false?
  1. The principal on serial bonds is paid over the term of the bonds.
  2. The assets of a debt service fund may include Cash with Fiscal Agent
  3. If the first payment is delayed for more than a year with equal payments thereafter, the bonds are deferred serial bonds
  4. The principal repayment on an annuity serial bonds decreases each year as the outstanding balance decreases

 

 

  1. Which of the following is true with respect to long-term debt?
  1. Term bonds mature in equal installments over the term of the bond.
  2. If a sinking fund is required by creditor or law, the unexpended resources of its debt service fund would be classified as assigned.
  3. Resources transferred to the debt service fund from the General Fund would typically be classified as Other Financing Sources by the debt service fund.
  4. If bonds supporting a capital project are issued at a premium, typically the premium may be used on capital expenditures.

 

 

  1. Which of the following is not correct regarding Government Trust Accounting?
  1.  If a trust is to benefit the government or its citizenry, it should be accounted for in a special revenue or permanent fund.
  2. If a trust is to benefit individuals, private organizations, or other governments, it should be accounted for in a private-purpose trust fund.
  3. The journal entry to establish a permanent fund would include a credit to Fund Balance – Nonspendable.
  4. Trust funds accounted for in a permanent fund use accrual accounting

 

 

 

  1. Which of the following projects would normally be accounted for in a capital projects fund? 

            A)  The construction of a police station addition.

            B)   The construction of a parking garage operated as an enterprise fund.

            C)   Payment of interest on bonds issued to finance the construction of a new city hall.

            D)  Both A and B would be accounted for in a capital projects fund.

 

 

  1. General fixed assets that are acquired with governmental fund resources are reported as assets in the:

            A)  General Fund.

            B)   Capital Projects Fund.

            C)   General Fund or Capital Projects Fund, depending upon which fund provided the resources.

            D)  None of the above.

 

 

  1. When a purchase order is issued under a Capital Projects fund, how should the transaction be recorded?

            A)  Debit Expenditures and credit Budgetary Fund Balance -- Reserve for Encumbrances.

            B)   Debit Encumbrances Control and credit Budgetary Fund Balance -- Reserve for Encumbrances.  

            C)   Debit Expenditures and credit Vouchers payable.

            D)  Debit Encumbrances Control and credit Vouchers payable.

 

 

  1. Which of the following lease criteria would not qualify a lease as a capital lease?

            A)  The lease transfers ownership of the property to the lessee by the end of the lease term.

            B)   The lease contains an option to purchase the leased property at its fair market value.

            C)   The lease term is equal to or greater than 75% of the estimated economic life of the leased property.

            D)  The present value of the minimum lease payments equals or exceeds 90% of the fair value of the leased property.

 

 

  1. Where should a government report special assessment debt that the government is not liable for in any way?

            A)  Capital projects fund.

            B)   Debt service fund.

            C)   Government-wide statements (not in a fund).

            D)  None of the above.

 

 

  1. If taxes and/or special assessments are levied by the General Fund, and then are subsequently transferred to the debt service fund, they are:

            A)  Recorded as revenues of the debt service fund.

            B)   Included as transfers out in the General Fund but are not as revenue in that fund.

            C)   Included in the revenues of the General Fund and are also reported by the General Fund as transfers out to the debt service fund.  

            D)  Recorded as an expense and voucher payable by the General Fund and are recorded as a revenue and receivable by the debt service fund.

 

 

  1. If taxes are levied specifically for payment of interest and principal on long-term debt, those taxes are:

            A)  Included as a liability of the General Fund.

            B)   Recorded as operating transfers to the debt service fund.

            C)   Included as revenues of the debt service fund.

            D)  Both A and B are correct.

                        

        

 

  1. Which of the following bond types has a payment schedule in which the amount of annual principal repayment is scheduled to increase each year by approximately the same amount that interest payments decrease?

            A)  Regular.

            B)   Deferred.

            C)   Annuity.

            D)  Irregular.

 

 

  1. Governmental funds, other than the General Fund, are considered major if:

           

  1. Total Assets, Liabilities, Revenues, or Expenditures of that individual governmental fund are at least 10% of the corresponding total (assets, liabilities, and so forth) for all governmental funds.
  2. Total Assets, Liabilities, Revenues, or Expenditures of the individual governmental fund are at least 5% of the corresponding total for all governmental and enterprise funds combined.

 

            A)  I only.

            B)   II only.

            C)   Either I or II, but need not be both.

            D)  Both I and II.

 

 

  1. Which of the following would be accounted for as a permanent fund?

            A)  An intergovernmental grant of $500,000 to a city to be used for low income housing.

            B)   A gift of $500,000 to a city, to be invested permanently, with the proceeds to be distributed as scholarships.

            C)   A gift of $500,000 to a city, to be invested permanently, with the proceeds to be used to maintain the city cemetery.

            D)  A gift of $500,000 to a city to be used for a new caretaker’s residence at the local cemetery.

 

 

  1. Siler City receives a trust donation for the purpose of maintaining flower beds in city parks, but the donor does not specify that the principal must be maintained.  This type of trust would be most appropriately accounted for in a:

            A)  Permanent Fund.

            B)   General Fund.

            C)   Private Purpose Trust Fund.

            D)  Special Revenue Fund.

 

        

  1. Proceeds of tax supported bonds are recognized in a capital projects fund as a(an):

            A)  Revenue.

            B)   Liability.

            C)   Other Financing Source.

            D)  Other Financing Use.

 

 

  1. When a governmental unit is primarily or secondarily liable for the debt, debt proceeds for special assessment obligations levied for the construction phase of a capital improvement project should be reported in which of the following fund types?

            A)  General.

            B)   Capital projects.

            C)   Agency.

            D)  Debt service.

 

 

  1. Which of the following is true regarding capital projects funds?

            A)  Capital projects funds are considered to be governmental funds.

            B)   Capital projects funds use the economic resources measurement focus and       accrual basis of accounting.

            C)   Encumbrance accounting is not used.

            D)  Fixed assets are depreciated in capital projects funds.

 

  1. If bonds issued to fund a capital project are sold at a premium, the additional money received is:

            A)  Recorded as Other Financing Sources – Premium on Bonds in the capital projects fund.

            B)   Transferred from the capital projects fund to the debt service fund.

            C)   Transferred from the capital projects fund to the General Fund.

            D)  Both A and B are correct.           

 

 

  1. When a payment is due to a contractor from capital projects fund resources, the debit would be to:

            A)  A capital asset account.

            B)   Encumbrances Control.

            C)   Expenditures-Capital Outlay.

            D)  None of the above, no entry is made until payment.

 

 

  1. When a capital project has been constructed entirely with bond proceeds and funds are left over at the end of the project, which of the following would normally take place?

            A)  The funds would be transferred to a debt service fund; the capital projects fund would debit Other Financing Uses-Transfers Out and the debt service fund would credit Other Financing Sources-Transfers In.

            B)   The funds would be transferred to a debt service fund; the capital projects fund would debit Expenditures and the debt service fund would credit Other Financing Sources-Transfers In.

            C)   The funds would be transferred to the General Fund and expended for any     purpose desired by the management of the government.

            D)  The funds would be returned to the bondholders.

 

 

  1. Debt service funds use the same measurement focus and basis of accounting as:

            A)  Internal service funds.

            B)   Special revenue funds.

            C)   Both (a) and (b).

            D)  None of the above.

 

 

  1. Grant proceeds received from the state for a capital project would be recorded in a capital projects fund of a city government as a (an):

            A)  Revenue.

            B)   Other Financing Source.

            C)   Direct addition to Fund Balance.

            D)  Other Financing Use.

 

 

  1. Cash provided by the General Fund for a capital project would be recorded in a capital projects fund as a (an):

            A)  Revenue.

            B)   Other Financing Use.

            C)   Direct addition to Fund Balance.

            D)  Other Financing Source – Transfer In.

 

 

  1. A transfer from the General Fund to a debt service fund to make annual payments on principal and interest would be recorded in the debt service fund as a (an):

            A)  Other Financing Source.

            B)   Revenue.

            C)   Direct addition to Fund Balance.

            D)  Other Financing Use.

 

 

  1. Which of the following would be accounted for as a permanent fund?
  1. A gift of $65,000 to a school district, to be invested permanently, with the proceeds to be awarded as college scholarships to graduating seniors.
  2. A gift of $65,000 to a school district, to be used for landscaping improvements.
  3. A gift of $65,000 to a city to be invested permanently, with the proceeds to be used to buy books for the city library.
  4. Both A and C

    

 

  1. Which of the following should be accounted for in a permanent fund?
  1. A gift of $1,000,000 to a city, to be invested permanently, with the proceeds to be used to maintain the city war memorials.
  2. A gift of $100,000 to a school board, to be given out $10,000 a year to the class valedictorian as a college scholarship.
  3. A gift of $100,000 to a city, to be expended next year to purchase books for the city library.
  4. A gift of $1,000,000 to a city, to be invested permanently, with the proceeds to be used to distribute to one or more nonprofit groups.

 

 

  1. Which of the following is not true regarding permanent funds?

            A)  Permanent funds are considered governmental funds.

            B)   Permanent funds use the current financial resources measurement focus and modified accrual basis of accounting.

            C)   Permanent funds are appropriate when a gift must be invested and the proceeds used to benefit individuals or organizations.

            D)  Major permanent funds would be reported in the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances.

 

  1. Which of the following is true regarding accounting for investments of permanent funds?

            A)  Gains and losses on investments would not be reported in the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances but are reported in the government-wide Statement of Activities

            B)   Investments with determinable fair values must be reported at fair value.

            C)   Both of the above are true.

            D)  Neither of the above is true

 

 

  1. A government signed a five-year capital lease on January 1, 2015 to obtain some equipment.  The lease provided that the government would make a down payment of $20,000 and four $20,000 payments each year after that, beginning January 1, 2016.  The government has a fiscal year ending December 31.  Upon inception of the lease, the government, in its governmental fund accounting records would:

            A)  Debit expenditures for $20,000 and credit cash for $20,000.

            B)   Debit expenditures for $100,000, credit cash for $20,000, and credit accounts payable for $80,000.

            C)   Debit expenditures for the present value of the payments (including the $20,000 down payment), credit cash for $20,000, and credit accounts payable for the difference between the   $20,000 and the present value of the future payments.

            D)  Debit expenditures for the present value of the payments (including the $20,000 down payment), credit cash for $20,000, and credit other financing sources for the difference between the $20,000 and the present value of the future payments.

 

 

 

A government entered into a capital lease agreement to acquire equipment for the general government on January 1, 2015.  Five payments of $9,000 each are to be made, beginning on December 31, 2015.  Discounting is at 6%, computed annually.  The present value of the five payments is $37,911.

 

  1. Which of the following would be true as of January 1, 2015?

            A)  An entry would be made debiting Expenditures and crediting Other Financing Sources-Capital Leases in a governmental fund, both in the amount of $45,000.

            B)   An entry would be made debiting Equipment and crediting Capital Leases Payable in a governmental fund, both in the amount of $37,911.

            C)   An entry would be made debiting Capital Expenditure and crediting Capital Leases Payable in a governmental fund, both in the amount of $37,911.

            D)  An entry would be made debiting Expenditures and crediting Other Financing Sources-Capital Leases in a governmental fund, both in the amount of $37,911.

 

 

  1. Premiums generated from the issuance of bonds for a capital projects fund are generally:

A)  Transferred to the General Fund.

B)  Retained in the capital projects fund.

C)  Transferred to the debt service fund.

D)  None of the above.

 

 

 

  1. The following are sources of funds for the debt service fund except:

A)  Tax levies specifically designed for debt service.

B)  General taxes levied by the General Fund and transferred to the debt service fund.

C)  Special assessments levied against property.

D)  All of the above are sources of funds for the debt service fund.

 

  1. Which of the following is/are true regarding Capital Projects Funds?

A)  A major source of funding for capital projects funds is the issuance of long-term debt.

B)  Capital project funds only exist for the duration of the project for which it is created.

C)  Capital Project funds use the Modified Accrual Basis of Accounting.

D)  All of the above are true.

 

  1. A non-expendable trust which benefits a government or its citizenry and which stipulates that earnings only (not principal) may be used for its provided purpose should be reported in a:

A)  Permanent Fund.

B)  Special Revenue Fund.

C)  Private-purpose Trust Fund.

D)  None of the Above.

 

 

  1. The following description provides the best definition for which fund: Accounts for resources that are legally restricted and both earnings and principal may be used to support government programs.

A) Capital projects.

B) Special Revenue.

C) General Fund.

D) Permanent.

 

           

  1. A construction contract was issued for an addition to the county jail in the amount of $2,300,000.  When the project was approximately half finished, the contractor submitted an invoice for payment of $1,150,000.  Which partial entry below is not required to record this transaction?

A)  Credit Contracts Payable $1,150,000.

B)  Debit Expenditures – Capital Outlay $1,150,000.

C)  Credit Encumbrances Control $2,300,000.

D)  Credit Encumbrances Control $1,150,000.

 

 

  1. A special assessment tax is

A)  Assessed against all property owners following a referendum in which voters approved the special project being constructed.

B)  Assessed only against certain property owners who are deemed to benefit from the service or project being paid for by the proceeds of the special assessment levy.

C) A waiver of property taxes for businesses willing to locate within a government’s jurisdiction.

D) None of the above

 

 

 

  1. Which of the following serial bonds has the first scheduled installment delayed for a period of more than 1 year after the date of the issue?

A) Annuity Serial Bonds.

B)  Regular Serial Bonds.

C)  Irregular Serial Bonds.

D)  Deferred Serial Bonds.

 

  1. Capital project funds record the proceeds of debt issued as:

A) Other Financing Sources.

B) Revenues.

C) Expenses.

D) Liabilities.

 

  1. The journal entry for the Debt Service fund upon the receipt of money from the General Fund would be:

A) Debit to Cash and a credit to Transfers Payable.

B) Debit to Transfer In and credit to Cash.

C) Debit to Cash and credit to Transfer In.

D) Debit to Cash and credit to Transfer Out.

 

           

  1. At the inception of a capital lease agreement for a piece of equipment used in governmental operations,

A) A liability is incurred and reported in the governmental fund’s balance sheet.

B) A liability is incurred and reported in the government-wide financial statements.

C) An expenditure is recorded in the governmental fund.

D) Both B and C.

 

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