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b
1. As used in governmental accounting, interperiod equity refers to a concept of
a) providing the same level of services to citizens each year.
b) measuring whether current year revenues are sufficient to pay for current year services.
c) levying property taxes at the same rate each year.
d) requiring that general fund budgets be balanced each year.
a) providing the same level of services to citizens each year.
b) measuring whether current year revenues are sufficient to pay for current year services.
c) levying property taxes at the same rate each year.
d) requiring that general fund budgets be balanced each year.
a
2. For fund financial statements, the measurement focus and basis of accounting used by governmental fund types are
a) current financial resources and modified accrual accounting.
b) economic resources and modified accrual accounting.
c) financial resources and full accrual accounting.
d) economic resources and full accrual accounting
a) current financial resources and modified accrual accounting.
b) economic resources and modified accrual accounting.
c) financial resources and full accrual accounting.
d) economic resources and full accrual accounting
c
3. The modified accrual basis of accounting is used in presenting the fund financial statements of the governmental funds because
a) it is the superior method of accounting for the economic resources of any entity.
b) it provides information as to the extent the entity achieved interperiod equity.
c) it is budget oriented while facilitating comparisons among entities.
d) it results in accounting measurements based on the substance of transactions.
a) it is the superior method of accounting for the economic resources of any entity.
b) it provides information as to the extent the entity achieved interperiod equity.
c) it is budget oriented while facilitating comparisons among entities.
d) it results in accounting measurements based on the substance of transactions.
d
As used in defining the modified accrual basis of accounting, the term "available" means
a) received in cash.
b) will be received in cash within 60 days of year-end.
c) collection in cash is reasonably assured.
d) collected within the current period or expected to be collected soon enough thereafter to be used to pay liabilities of the current period
a) received in cash.
b) will be received in cash within 60 days of year-end.
c) collection in cash is reasonably assured.
d) collected within the current period or expected to be collected soon enough thereafter to be used to pay liabilities of the current period
d
Under the modified accrual basis of accounting, derived nonexchange revenues are recognized when
a) they are earned.
b) they are measurable and available to finance the expenditures of the current period.
c) the underlying exchange transaction occurs.
d) the underlying exchange transaction occurs and they are measurable and available to finance the expenditures of the current period.
a) they are earned.
b) they are measurable and available to finance the expenditures of the current period.
c) the underlying exchange transaction occurs.
d) the underlying exchange transaction occurs and they are measurable and available to finance the expenditures of the current period.
b
Under the accrual basis of accounting, property tax revenues are recognized
a) when they are received in cash.
b) in the year for which they were levied.
c) in the year for which they were levied and when collection in cash is reasonably assured.
d) they are available to finance expenditures of the fiscal period.
a) when they are received in cash.
b) in the year for which they were levied.
c) in the year for which they were levied and when collection in cash is reasonably assured.
d) they are available to finance expenditures of the fiscal period.
d
Under the modified accrual basis of accounting, the amount of property tax revenues that should be recognized by a governmental entity in the current year related to the current year levy will be
a) the total amount of the levy.
b) the expected collectible portion of the levy.
c) the portion of the levy collected.
d) the portion of the levy collected in the current year or within sixty days of the fiscal period.
a) the total amount of the levy.
b) the expected collectible portion of the levy.
c) the portion of the levy collected.
d) the portion of the levy collected in the current year or within sixty days of the fiscal period.
d
8. Under the modified accrual basis of accounting, investment revenues for the current period should include
a) only interest and dividends received.
b) all interest and dividends received during the period plus all accruals of interest and dividends earned.
c) all interest and dividends received plus gains and losses on securities that were sold during the period.
d) all interest and dividends received, all gains and losses on securities sold and all changes in market values on securities held in the portfolio at year-end
a) only interest and dividends received.
b) all interest and dividends received during the period plus all accruals of interest and dividends earned.
c) all interest and dividends received plus gains and losses on securities that were sold during the period.
d) all interest and dividends received, all gains and losses on securities sold and all changes in market values on securities held in the portfolio at year-end
d
9. Under the accrual basis of accounting used by governments, investment revenues for the current period should include
a) only interest and dividends received.
b) all interest and dividends received during the period plus all accruals of interest and dividends earned.
c) all interest and dividends received plus gains and losses on securities that were sold during the period.
d) all interest and dividends received, all gains and losses on securities sold and all changes in market values on securities held in the portfolio at year-end
a) only interest and dividends received.
b) all interest and dividends received during the period plus all accruals of interest and dividends earned.
c) all interest and dividends received plus gains and losses on securities that were sold during the period.
d) all interest and dividends received, all gains and losses on securities sold and all changes in market values on securities held in the portfolio at year-end
d
Under the modified accrual basis of accounting, imposed nonexchange revenues (such as fines) should be recognized
a) when assessed.
b) when the government has an enforceable legal claim.
c) when collected.
d) when the government has an enforceable legal claim and when the collected within the current period or soon enough thereafter to be used to pay the liabilities of the current period.
a) when assessed.
b) when the government has an enforceable legal claim.
c) when collected.
d) when the government has an enforceable legal claim and when the collected within the current period or soon enough thereafter to be used to pay the liabilities of the current period.
b
Under the accrual basis of accounting, imposed nonexchange revenues (such as fines) should be recognized
a) when assessed.
b) when the government has an enforceable legal claim.
c) when collected.
d) when the government has an enforceable legal claim and when the collected within the current period or soon enough thereafter to be used to pay the liabilities of the current period
a) when assessed.
b) when the government has an enforceable legal claim.
c) when collected.
d) when the government has an enforceable legal claim and when the collected within the current period or soon enough thereafter to be used to pay the liabilities of the current period
a
Under the modified accrual basis of accounting, gains and losses on disposal of fixed assets
a) are not recognized.
b) are recognized when the proceeds (cash) of the sale are received (on the installment basis).
c) are recognized only if there is a gain.
d) are recognized when the sale occurs, regardless of when the cash is collected
a) are not recognized.
b) are recognized when the proceeds (cash) of the sale are received (on the installment basis).
c) are recognized only if there is a gain.
d) are recognized when the sale occurs, regardless of when the cash is collected
d
Under the accrual basis of accounting, gains and losses on disposal of fixed assets
a) are not recognized.
b) are recognized when the proceeds (cash) of the sale are received (on the installment basis).
c) are recognized only if there is a gain.
d) are recognized when the sale occurs, regardless of when the cash is collected
a) are not recognized.
b) are recognized when the proceeds (cash) of the sale are received (on the installment basis).
c) are recognized only if there is a gain.
d) are recognized when the sale occurs, regardless of when the cash is collected
a
Under the modified accrual basis of accounting, license fees, permits, and other miscellaneous revenue are generally recognized for practical purposes
a) when cash is received.
b) when the exchange takes place.
c) over the period during which the government obtains an enforceable legal claim.
d) when related expenditures are incurred.
a) when cash is received.
b) when the exchange takes place.
c) over the period during which the government obtains an enforceable legal claim.
d) when related expenditures are incurred.
b
Ideally, under the accrual basis of accounting, license fees, permits, and other miscellaneous revenue should be recognized
a) when cash is received.
b) when the exchange takes place.
c) over the period during which the government obtains an enforceable legal claim.
d) when related expenditures are incurred.
a) when cash is received.
b) when the exchange takes place.
c) over the period during which the government obtains an enforceable legal claim.
d) when related expenditures are incurred.
c
A city that has a 12/31 fiscal year end has adopted a policy of recognizing the maximum amount of property tax revenue allowable under GAAP. Property taxes of $720,0000 (of which 10% are estimated to be uncollectible) are levied in October 2010 to finance the activities of the fiscal year 2011. During 2011, cash collections related to property taxes levied in October 2010 were $600,000. In 2012 the following amounts related to the property taxes levied in October 2010 were collected: January $30,000; March, $6,000. For the fiscal year ended 12/31/11, what amount should be recognized as property tax revenues related to the 2010 levy on the governmental fund financial statements?
a) $720,000.
b) $648,000.
c) $630,000.
e) $600,000
a) $720,000.
b) $648,000.
c) $630,000.
e) $600,000
b
A city that has a 12/31 fiscal year end has adopted a policy of recognizing the maximum amount of property tax revenue allowable under GAAP. Property taxes of $720,0000 (of which 10% are estimated to be uncollectible) are levied in October 2010 to finance the activities of the fiscal year 2011. During 2011, cash collections related to property taxes levied in October 2010 were $600,000. In 2012 the following amounts related to the property taxes levied in October 2010 were collected: January $30,000; March, $6,000. For the fiscal year ended 12/31/11, what amount should be recognized as property tax revenues related to the 2010 levy on the government-wide financial statements?
a) $720,000.
b) $648,000.
c) $630,000.
d) $600,000
a) $720,000.
b) $648,000.
c) $630,000.
d) $600,000
c
A city that has a 12/31 fiscal year end has adopted a policy of recognizing property tax revenue consistent with the 60-day rule allowable period under GAAP. Property taxes of $600,000 (of which none are estimated to be uncollectible) are levied in October 2010 to finance the activities of fiscal year 2011. Property taxes are due in two installments June 20 and December 20. Cash collections related to property taxes are as follows:
1/15/11 for property taxes levied in 2009, due in 2010 $ 25,000
2/15/11 for property taxes levied in 2009, due in 2010 $ 15,000
3/15/11 for property taxes levied in 2009, due in 2010 $ 10,000
6/20/11 First installment of taxes levied in 2010, due 6/20/11 $350,000
12/20/11 Second installment of taxes levied in 2010, due 12/20/11 $150,000
1/15/12 for property taxes levied in 2010, due in 2011 $ 15,000
2/15/12 for property taxes levied in 2010, due in 2011 $ 10,000
3/15/12 for property taxes levied in 2010, due in 2011 $ 5,000
The total amount of property tax revenue that should be recognized in the governmental fund financial statements in 2011 is:
a) $600,000.
b) $575,000.
c) $535,000.
d) $525,000
1/15/11 for property taxes levied in 2009, due in 2010 $ 25,000
2/15/11 for property taxes levied in 2009, due in 2010 $ 15,000
3/15/11 for property taxes levied in 2009, due in 2010 $ 10,000
6/20/11 First installment of taxes levied in 2010, due 6/20/11 $350,000
12/20/11 Second installment of taxes levied in 2010, due 12/20/11 $150,000
1/15/12 for property taxes levied in 2010, due in 2011 $ 15,000
2/15/12 for property taxes levied in 2010, due in 2011 $ 10,000
3/15/12 for property taxes levied in 2010, due in 2011 $ 5,000
The total amount of property tax revenue that should be recognized in the governmental fund financial statements in 2011 is:
a) $600,000.
b) $575,000.
c) $535,000.
d) $525,000
a
A city that has a 12/31 fiscal year end has adopted a policy of recognizing property tax revenue consistent with the 60-day rule allowable period under GAAP. Property taxes of $600,000 (of which none are estimated to be uncollectible) are levied in October 2010 to finance the activities of fiscal year 2011. Property taxes are due in two installments June 20 and December 20. Cash collections related to property taxes are as follows:
1/15/11 for property taxes levied in 2009, due in 2010 $ 25,000
2/15/11 for property taxes levied in 2009, due in 2010 $ 15,000
3/15/11 for property taxes levied in 2009, due in 2010 $ 10,000
6/20/11 First installment of taxes levied in 2010, due 6/20/11 $350,000
12/20/11 Second installment of taxes levied in 2010, due 12/20/11 $150,000
1/15/12 for property taxes levied in 2010, due in 2011 $ 15,000
2/15/12 for property taxes levied in 2010, due in 2011 $ 10,000
3/15/12 for property taxes levied in 2010, due in 2011 $ 5,000
The total amount of property tax revenue that will be recognized in the government-wide financial statements in 2011 is:
a) $600,000.
b) $575,000.
c) $535,000.
d) $525,000.
1/15/11 for property taxes levied in 2009, due in 2010 $ 25,000
2/15/11 for property taxes levied in 2009, due in 2010 $ 15,000
3/15/11 for property taxes levied in 2009, due in 2010 $ 10,000
6/20/11 First installment of taxes levied in 2010, due 6/20/11 $350,000
12/20/11 Second installment of taxes levied in 2010, due 12/20/11 $150,000
1/15/12 for property taxes levied in 2010, due in 2011 $ 15,000
2/15/12 for property taxes levied in 2010, due in 2011 $ 10,000
3/15/12 for property taxes levied in 2010, due in 2011 $ 5,000
The total amount of property tax revenue that will be recognized in the government-wide financial statements in 2011 is:
a) $600,000.
b) $575,000.
c) $535,000.
d) $525,000.
d
Under GAAP, property taxes levied in one fiscal period to finance the activities of the following fiscal period are recognized as revenue in the governmental fund financial statements
a) in the year levied.
b) in the year for which they are intended to finance the activities.
c) when collected, regardless of when levied.
d) in the year for which they are intended to finance the activities, if collected within that period or within a period no greater than 60 days after the close of the fiscal year.
a) in the year levied.
b) in the year for which they are intended to finance the activities.
c) when collected, regardless of when levied.
d) in the year for which they are intended to finance the activities, if collected within that period or within a period no greater than 60 days after the close of the fiscal year.
b
Under GAAP, property taxes levied in one fiscal period to finance the activities of the following fiscal period are recognized as revenue in the government-wide financial statements
a) in the year levied.
b) in the year for which they are intended to finance the activities.
c) when collected, regardless of when levied.
d.) in the year for which they are intended to finance the activities, if collected within that period or within a period no greater than 60 days after the close of the fiscal year
a) in the year levied.
b) in the year for which they are intended to finance the activities.
c) when collected, regardless of when levied.
d.) in the year for which they are intended to finance the activities, if collected within that period or within a period no greater than 60 days after the close of the fiscal year
c
A City levies a 2% sales tax. Sales tax must be remitted by the merchants to the City by the 20th day of the month following the month in which the sale occurred. Cash received by the City related to sales tax is as follows:
Amount received 1/20/10, applicable to December 2010 sales $100
Amount received 2/20/10, applicable to January 2011 sales $ 30
Amount received during 2010 related to February-November 2011 sales $400
Amount received 1/20/12 for December 2011 sales $110
Amount received 2/20/12 for January 2012 $ 40
Assuming the City uses the same period to define "available" as the maximum period allowable for property taxes, what amount should it recognize in the governmental fund financial statement as sales tax revenue for the fiscal year ended 12/31/11.
a) $430.
b) $530.
c) $540.
d) $550.
Amount received 1/20/10, applicable to December 2010 sales $100
Amount received 2/20/10, applicable to January 2011 sales $ 30
Amount received during 2010 related to February-November 2011 sales $400
Amount received 1/20/12 for December 2011 sales $110
Amount received 2/20/12 for January 2012 $ 40
Assuming the City uses the same period to define "available" as the maximum period allowable for property taxes, what amount should it recognize in the governmental fund financial statement as sales tax revenue for the fiscal year ended 12/31/11.
a) $430.
b) $530.
c) $540.
d) $550.
c
A City levies a 2% sales tax. Sales tax must be remitted by the merchants to the City by the 20th day of the month following the month in which the sale occurred. Cash received by the City related to sales tax is as follows:
Amount received 1/20/11, applicable to December 2010 sales $100
Amount received 2/20/11, applicable to January 2011 sales $ 30
Amount received during 2011 related to February-November 2011 sales $400
Amount received 1/20/12 for December 2011 sales $110
Amount received 2/20/12 for January 2012 $ 40
Assuming the City uses the same period to define "available" as the maximum period allowable for property taxes, what amount should it recognize in the government-wide financial statement as sales tax revenue for the fiscal year ended 12/31/11.
a) $430.
b) $530.
c) $540.
d) $550
Amount received 1/20/11, applicable to December 2010 sales $100
Amount received 2/20/11, applicable to January 2011 sales $ 30
Amount received during 2011 related to February-November 2011 sales $400
Amount received 1/20/12 for December 2011 sales $110
Amount received 2/20/12 for January 2012 $ 40
Assuming the City uses the same period to define "available" as the maximum period allowable for property taxes, what amount should it recognize in the government-wide financial statement as sales tax revenue for the fiscal year ended 12/31/11.
a) $430.
b) $530.
c) $540.
d) $550
c
A City levies a 2% sales tax that is collected for them by the State. Sales tax must be remitted by the merchants to the State by the 20th day of the month following the month in which the sale occurred. The State has a policy of remitting sales taxes to the City within 30 days of collection by the State. Cash received by the State related to sales tax is as follows:
Amount received 1/20/11, applicable to December 2010 sales $100
Amount received 2/20/11, applicable to January 2011 sales $ 30
Amount received 3/20/11, applicable to February 2011 sales $ 20
Amount received during 2011 related to March-November 2011 sales $380
Amount received 1/20/12 for December 2011 sales $110
Amount received 2/20/12 for January 2012 $ 40
Amount received 3/20/12 for February 2012 $ 10
Assuming the City uses the same period to define "available" as the maximum period allowable for property taxes, what amount should it recognize as sales tax revenue in its governmental fund financial statements for the fiscal year ended 12/31/11.
a) $430.
b) $530.
c) $540.
d) $550.
Amount received 1/20/11, applicable to December 2010 sales $100
Amount received 2/20/11, applicable to January 2011 sales $ 30
Amount received 3/20/11, applicable to February 2011 sales $ 20
Amount received during 2011 related to March-November 2011 sales $380
Amount received 1/20/12 for December 2011 sales $110
Amount received 2/20/12 for January 2012 $ 40
Amount received 3/20/12 for February 2012 $ 10
Assuming the City uses the same period to define "available" as the maximum period allowable for property taxes, what amount should it recognize as sales tax revenue in its governmental fund financial statements for the fiscal year ended 12/31/11.
a) $430.
b) $530.
c) $540.
d) $550.
c
A City levies a 2% sales tax that is collected for them by the State. Sales tax must be remitted by the merchants to the State by the 20th day of the month following the month in which the sale occurred. The State has a policy of remitting sales taxes to the City within 30 days of collection by the State. Cash received by the State related to sales tax is as follows:
Amount received 1/20/11, applicable to December 2010 sales $100
Amount received 2/20/11, applicable to January 2011 sales $ 30
Amount received 3/20/11, applicable to February 2011 sales $ 20
Amount received during 2011 related to March-November 2011 sales $380
Amount received 1/20/12 for December 2011 sales $110
Amount received 2/20/12 for January 2012 $ 40
Amount received 3/20/12 for February 2012 $ 10
Assuming the City uses the same period to define "available" as the maximum period allowable for property taxes, what amount should it recognize as sales tax revenue in its government-wide financial statements for the fiscal year ended 12/31/11.
a) $430.
b) $530.
c) $540.
d) $550
Amount received 1/20/11, applicable to December 2010 sales $100
Amount received 2/20/11, applicable to January 2011 sales $ 30
Amount received 3/20/11, applicable to February 2011 sales $ 20
Amount received during 2011 related to March-November 2011 sales $380
Amount received 1/20/12 for December 2011 sales $110
Amount received 2/20/12 for January 2012 $ 40
Amount received 3/20/12 for February 2012 $ 10
Assuming the City uses the same period to define "available" as the maximum period allowable for property taxes, what amount should it recognize as sales tax revenue in its government-wide financial statements for the fiscal year ended 12/31/11.
a) $430.
b) $530.
c) $540.
d) $550
c
During 2011, a state has the following cash collections related to state income taxes
Payroll withholdings and estimated payments related to 2011 income $360
4/15/11 Balance of 2010 (net of $10 refunds) income taxes $ 40
1/15/12 payroll withholdings and estimated payments related to 2011 income $ 30
2/15/12 payroll withholdings and estimated payments related to 2011 income $ 35
3/15/12 payroll withholdings and estimated payments related to 2012 income $ 25
4/15/12 Balance of 2011 (net of $5 refunds) income taxes $ 45
Assuming that the state defines available as the maximum period allowable for property taxes, what is the amount of revenue that will be recognized in the 2011 governmental fund financial statements related to state income taxes?
a) $400.
b) $405.
c) $430.
d) $465.
Payroll withholdings and estimated payments related to 2011 income $360
4/15/11 Balance of 2010 (net of $10 refunds) income taxes $ 40
1/15/12 payroll withholdings and estimated payments related to 2011 income $ 30
2/15/12 payroll withholdings and estimated payments related to 2011 income $ 35
3/15/12 payroll withholdings and estimated payments related to 2012 income $ 25
4/15/12 Balance of 2011 (net of $5 refunds) income taxes $ 45
Assuming that the state defines available as the maximum period allowable for property taxes, what is the amount of revenue that will be recognized in the 2011 governmental fund financial statements related to state income taxes?
a) $400.
b) $405.
c) $430.
d) $465.
c
During 2011, a state has the following cash collections related to state income taxes
Payroll withholdings and estimated payments related to 2011 income $360
4/15/11 Balance of 2010 (net of $10 refunds) income taxes $ 40
1/15/12 payroll withholdings and estimated payments related to 2011 income $ 30
2/15/12 payroll withholdings and estimated payments related to 2011 income $ 35
3/15/12 payroll withholdings and estimated payments related to 2011 income $ 25
4/15/12 Balance of 2011 (net of $5 refunds) income taxes $ 45
Assuming that the state defines available as the maximum period allowable for property taxes, what is the amount of revenue that will be recognized in the 2011 government-wide financial statements related to state income taxes?
a) $400.
b) $475.
c) $430.
d) $465.
Payroll withholdings and estimated payments related to 2011 income $360
4/15/11 Balance of 2010 (net of $10 refunds) income taxes $ 40
1/15/12 payroll withholdings and estimated payments related to 2011 income $ 30
2/15/12 payroll withholdings and estimated payments related to 2011 income $ 35
3/15/12 payroll withholdings and estimated payments related to 2011 income $ 25
4/15/12 Balance of 2011 (net of $5 refunds) income taxes $ 45
Assuming that the state defines available as the maximum period allowable for property taxes, what is the amount of revenue that will be recognized in the 2011 government-wide financial statements related to state income taxes?
a) $400.
b) $475.
c) $430.
d) $465.
c
Under GAAP, income tax revenues should be recognized in the governmental fund financial statements in the accounting period
a) when collected in cash by the taxing authority.
b) in which the underlying income was earned, regardless of when collected.
c) in which the underlying income was earned, if collected in the current period or soon enough thereafter to pay liabilities of the current period.
d) when earned
a) when collected in cash by the taxing authority.
b) in which the underlying income was earned, regardless of when collected.
c) in which the underlying income was earned, if collected in the current period or soon enough thereafter to pay liabilities of the current period.
d) when earned
b
Under GAAP, income tax revenues should be recognized in the government-wide financial statements in the accounting period
a) when collected in cash by the taxing authority.
b) in which the underlying income was earned, regardless of when collected.
c) in which the underlying income was earned, if collected in the current period or soon enough thereafter to pay liabilities of the current period.
d) when earned
a) when collected in cash by the taxing authority.
b) in which the underlying income was earned, regardless of when collected.
c) in which the underlying income was earned, if collected in the current period or soon enough thereafter to pay liabilities of the current period.
d) when earned
c
A city with a 12/31 fiscal year-end requires that restaurants buy a license, renewable yearly. Proceeds of the license fees are intended to pay the salaries of inspectors in the health department. Licenses are issued for a fiscal year from October 1 to September 30. During 2011, cash collections related to licenses were as follows
Licenses issued during 2010 for the 10/1/06-9/30/11 fiscal year $ 30
Licenses issued during 2010 for the 10/1/07-9/30/12 fiscal year $180
It is anticipated that during 2012 the amount collected on licenses for the 10/1/07-9/30/08 fiscal year will be $45. In September 2010 the amount collected related to 10/1/06-9/30/07 licenses was $144. What amount should be recognized as revenue in the fund financial statements for the fiscal year ended 12/31/11?
a) $180.
b) $183.
c) $210.
d) $225
Licenses issued during 2010 for the 10/1/06-9/30/11 fiscal year $ 30
Licenses issued during 2010 for the 10/1/07-9/30/12 fiscal year $180
It is anticipated that during 2012 the amount collected on licenses for the 10/1/07-9/30/08 fiscal year will be $45. In September 2010 the amount collected related to 10/1/06-9/30/07 licenses was $144. What amount should be recognized as revenue in the fund financial statements for the fiscal year ended 12/31/11?
a) $180.
b) $183.
c) $210.
d) $225
b
During 2011, the city issued $300 in fines for failure to keep real property in 'acceptable' condition. During that period the city spent $200 to mow and clean up the unoccupied properties for which the fines were assessed. The city estimates that $30 of the fines issued in 2012 will be uncollectible. During 2011 the city collected $230 related to 2011 fines and $20 related to 2010 fines. The amount of revenue that the city should recognize in its 2011 governmental fund financial statements related to fines is
a) $230.
b) $250.
c) $270.
d) $300
a) $230.
b) $250.
c) $270.
d) $300
a
A city receives a $150,000 grant from the state to purchase vans to transport physically challenged individuals. During the current year the city receives the entire $150,000 and purchases one bus for $65,000 and issues a purchase order for another van for $60,000. The grant revenue that the city should recognize on the government-wide financial statements in the current year is
a) $-0-.
b) $ 65,000.
c) $125,000.
d) $150,000.
a) $-0-.
b) $ 65,000.
c) $125,000.
d) $150,000.
d
A city receives notice of a $150,000 grant from the state to purchase vans to transport physically challenged individuals. Although the city did not receive any of the grant funds during the current year, the city purchased one bus for $65,000 and issues a purchase order for another van for $60,000. The grant revenue that the city should recognize in the government-wide financial statements in the current year is
a) $-0-.
b) $ 65,000.
c) $125,000.
d) $150,000.
a) $-0-.
b) $ 65,000.
c) $125,000.
d) $150,000.
c
. Payments made to a state pension plan by the state government on behalf-of a local government should
a) not be displayed or disclosed in the local government financial statements.
b) be displayed as a revenue in the local government financial statements.
c) be displayed as both a revenue and an expenditure in the local government financial statements.
d) should be disclosed, but not displayed, in the local government financial statements.
a) not be displayed or disclosed in the local government financial statements.
b) be displayed as a revenue in the local government financial statements.
c) be displayed as both a revenue and an expenditure in the local government financial statements.
d) should be disclosed, but not displayed, in the local government financial statements.
c
Unrestricted grant revenues with a time requirement should be recognized
a) when the award is announced.
b) when the cash is received.
c) in the period in which the grant is required to be used.
d) when expenditures are recognized on grant-related activities.
a) when the award is announced.
b) when the cash is received.
c) in the period in which the grant is required to be used.
d) when expenditures are recognized on grant-related activities.
d
Reimbursement-type grant revenues are recognized in the accounting period in which
a) the award is made.
b) the cash is received.
c) the grantee is notified of the award.
d) expenditures are recorded on grant-related activities
a) the award is made.
b) the cash is received.
c) the grantee is notified of the award.
d) expenditures are recorded on grant-related activities
b
At the beginning of its fiscal year, a local government owned an investment with a historical cost of $85 and a fair value of $95. During the year, dividends of $2 were received. At the end of the year, the investment had a fair value of $100. The amount that should be recognized on the governmental fund financial statements for the year as investment income is
a) $-0-.
b) $7.
c) $15.
d) $17
a) $-0-.
b) $7.
c) $15.
d) $17
d
A local governmental entity began the year with a portfolio of securities with an historical cost of $1,200 and a fair value of $1,240. During the year the government acquired an additional security at a cost of $260 and sold for $200 a security that had an historical cost of $172 and a fair value at the beginning of the year of $190. At the end of the year, the securities portfolio had a fair value of $1,330. The amount that should be recognized on the financial statements for the year as investment income is
a) $10.
b) $20.
c) $28.
d) $30.
a) $10.
b) $20.
c) $28.
d) $30.
d
Under GAAP, investment income for governmental entities must include
a) only dividends and interest received during the period.
b) only dividends and interest earned during the period.
c) only realized gains and losses.
d) dividends and interest received during the period and both realized and unrealized gains and losses
a) only dividends and interest received during the period.
b) only dividends and interest earned during the period.
c) only realized gains and losses.
d) dividends and interest received during the period and both realized and unrealized gains and losses
d
A governmental entity is the recipient of a bequest of a multi-story office building that the government intends to use as a new city hall. The building has a historical cost of $850,000; a book value in the hands of the benefactor of $700,000; and a fair value of $1,050,000. The city should recognize on its governmental fund financial statements, donations revenue of
a) $-0-.
b) $700,000.
c) $850,000.
d) $1,050,000
a) $-0-.
b) $700,000.
c) $850,000.
d) $1,050,000
a
A governmental entity is the recipient of a bequest of a multi-story office building that the government intends to sell to support program activities. The building has a historical of $850,000; a book value in the hands of the benefactor of $700,000; and a fair value of $1,050,000. The city had not yet begun to try to sell the building when its annual financial statements were issued. The city should recognize on its governmental fund financial statements, donations revenue of
a) $-0-.
b) $700,000.
c) $850,000.
d) $1,050,000
a) $-0-.
b) $700,000.
c) $850,000.
d) $1,050,000
a
A city is the recipient of a cash bequest of $500,000 that must be used to plant flowers and shrubs in the city parks. During the year only $200,000 is actually received from the bequest and $150,000 is spent on shrubs. The amount that should be recognized as revenue by the city in its government-wide financial statements in the current year is
a) $-0-.
b) $150,000.
c) $200,000.
d) $500,000.
a) $-0-.
b) $150,000.
c) $200,000.
d) $500,000.
c
Governmental entities should recognize revenue from donated fixed assets that will be sold to support programs of the entity at which amount in their government-wide financial statements?
a) historical cost to the donor.
b) book value in the hands of the donor.
c) fair value of the donated assets.
d) zero.
a) historical cost to the donor.
b) book value in the hands of the donor.
c) fair value of the donated assets.
d) zero.
b
State governments should recognize food stamp revenue
a) when it receives the food stamps.
b) when food stamps are distributed by the state to eligible recipients.
c) when the recipient uses the food stamps
d) never. Food stamps are not financial resources
a) when it receives the food stamps.
b) when food stamps are distributed by the state to eligible recipients.
c) when the recipient uses the food stamps
d) never. Food stamps are not financial resources
b
Endowments are provided to governments with the specification that only the revenues generated from—not the contributed assets—may be used to finance specific programs. A government should recognize revenue from the initial endowment when
a) it receives the assets (cash).
b) when it receives the pledge.
c) ratably over 30 years.
d) never. The contributions themselves cannot be used to support the government's programs.
a) it receives the assets (cash).
b) when it receives the pledge.
c) ratably over 30 years.
d) never. The contributions themselves cannot be used to support the government's programs.
b
For purposes of recognizing property tax revenues in governmental funds, "available" is defined as
a. revenues received within 90 days of year-end.
b. revenues received within 60 days of year-end.
c. revenues received within 120 days of year-end.
d. being up to the judgment of the preparer
a. revenues received within 90 days of year-end.
b. revenues received within 60 days of year-end.
c. revenues received within 120 days of year-end.
d. being up to the judgment of the preparer
d
Which of the following is not characterized as non-exchange?
a) Sales taxes
b) Property taxes
c) Fines and forfeits
d) Charges for services
a) Sales taxes
b) Property taxes
c) Fines and forfeits
d) Charges for services
c
Which of the following is a derived tax revenue?
a. Income taxes
b. Sales taxes
c. Both of the above
d. Neither of the above
a. Income taxes
b. Sales taxes
c. Both of the above
d. Neither of the above
d
A wealthy philanthropist donates three buildings to H-Town. Each of the buildings has a fair market value of $5 million. H-Town plans to use Building 1 as a new fire station, but sell Buildings 2 and 3.
Building 2 is sold after year-end, but within the availability period. Building 3 fails to sell by the time H-Town issues the financial statements. As a result, which of the following represents the correct way to record revenue from the three buildings?
a). Dr Buildings $15 million
Cr Deferred revenue $5 million
Cr Revenue from donations $10 million
b). Dr Land held for sale $10 million
Cr Deferred revenue $5 million
Cr Revenue from donations $5 million
c). Dr Land held for sale $5 million
Cr Deferred revenue $5 million
d). Dr Land held for sale $5 million
Cr Revenue from donations $5 million
Building 2 is sold after year-end, but within the availability period. Building 3 fails to sell by the time H-Town issues the financial statements. As a result, which of the following represents the correct way to record revenue from the three buildings?
a). Dr Buildings $15 million
Cr Deferred revenue $5 million
Cr Revenue from donations $10 million
b). Dr Land held for sale $10 million
Cr Deferred revenue $5 million
Cr Revenue from donations $5 million
c). Dr Land held for sale $5 million
Cr Deferred revenue $5 million
d). Dr Land held for sale $5 million
Cr Revenue from donations $5 million