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| 1.
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Which of the following is NOT a class of nonexchange transaction, as defined by GASB Statement 33? |
| | A) | Voluntary nonexchange transactions |
| | B) | Derived tax revenues |
| | C) | Government-mandated nonexchange transactions |
| | D) | Interfund loans |
| | E) | None of the above |
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| 2.
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Under the terms of GASB 33, if a nonexchange revenue is NOT restricted by the grantor, donor, or legislation, it is considered to be an increase in which of the following? |
| | A) | Restricted net assets |
| | B) | Unreserved fund balance |
| | C) | Unrestricted net assets |
| | D) | Reserved fund balance |
| | E) | None of the above |
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| 3.
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Which of the following is NOT an eligibility requirement for recognition of assets and revenues from a nonexchange transaction? |
| | A) | Time requirements |
| | B) | Matching requirements |
| | C) | Reimbursements |
| | D) | Contingencies |
| | E) | None of the above |
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| 4.
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One of the eligibility requirements for nonexchange transactions is related to contingencies. For resources that are pledged with a contingency attached, |
| | A) | The revenue and asset should be recognized when the resources are received |
| | B) | The asset should be recognized when the resources are pledged. A deferred revenue should be recorded at that time, with the revenue recognized when the contingency has been met |
| | C) | Both the receivable and the revenue should be recognized when the contingency has been met |
| | D) | The asset and revenue should be recorded as if there was no contingency associated with them |
| | E) | None of the above |
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| 5.
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Property taxes are an important source of revenue for the city of Clifton. The total amount of revenue recorded when the property taxes were levied for 2007 was $4,765,000. At the end of the fiscal year, city officials conclude that $500,000 of this amount will not be collected until more than 60 days of fiscal year 2008 have passed. Related to the property tax levy for 2007, what amount of revenue should be recognized on the fund-basis financial statements and on the government-wide Statement of Activities? |
| | A) | $4,265,000 on the fund financial statements and $4,765,000 on the government-wide statements |
| | B) | $4,265,000 on both the fund financial statements and the government-wide financial statements |
| | C) | $4,765,000 on both the fund financial statements and the government-wide financial statements |
| | D) | $4,765,000 on the fund financial statements and $4,265,000 on the government-wide financial statements |
| | E) | GASB allows the government to choose between answer A and answer B |
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| 6.
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Fines and forfeits are an example of |
| | A) | Derived tax revenues |
| | B) | Imposed nonexchange transactions |
| | C) | Government-mandated nonexchange transaction |
| | D) | Voluntary nonexchange transaction |
| | E) | An exchange or exchange-like transaction |
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| 7.
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Which of the following is an example of a derived tax revenue? |
| | A) | Charges for services |
| | B) | Property taxes |
| | C) | Grants and entitlements |
| | D) | Sales taxes |
| | E) | None of the above |
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| 8.
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Which of the following is NOT true regarding recognition of sales tax revenues under accrual accounting? |
| | A) | Revenue is recognized at the same time as the asset, whether or not the underlying transaction has occurred |
| | B) | Assets are recognized when the tax is imposed or when resources are received, whichever comes first |
| | C) | Tax is considered "imposed" when the underlying transaction occurs |
| | D) | If resources are received before the underlying transaction occurs, a liability called Deferred Revenues is recognized instead of revenue. |
| | E) | None of the above |
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| 9.
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Which of the following is an example of an imposed nonexchange revenue? |
| | A) | Sales taxes |
| | B) | Voluntary contributions from individuals |
| | C) | Property taxes |
| | D) | Motor fuel taxes |
| | E) | None of the above |
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| 10.
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Which of the following is NOT true regarding recognition of property taxes under accrual accounting? |
| | A) | Revenues should be recognized, net of estimated refunds and estimated uncollectible taxes, in the period for which the taxes are levied. |
| | B) | Assets should be recognized when the resources are received. |
| | C) | An enforceable legal claim to property tax revenues exists when specified in the enabling legislation, typically on the lien or assessment date |
| | D) | All of the above are true |
| | E) | None of the above is true |
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| 11.
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Which of the following is NOT true regarding recognition of government-mandated nonexchange transactions under accrual accounting? |
| | A) | The providing government requires the receiving government to expend funds for a program mandated by the providing government |
| | B) | Eligibility requirements, such as "reimbursements" may exist |
| | C) | Revenues should be recognized when eligibility requirements are met |
| | D) | Assets should be recognized when resources are received |
| | E) | None of the above |
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| 12.
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Which of the following is NOT true regarding recognition of voluntary nonexchange transactions under accrual accounting? |
| | A) | The providing government does NOT mandate expenditures for a particular program |
| | B) | Voluntary exchange transactions may or may not have purpose restrictions |
| | C) | Cash received before eligibility requirements have been met is offset by the liability, Deferred Revenues |
| | D) | Assets and revenues are recognized when all eligibility requirements have been met |
| | E) | All of the above are true |
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| 13.
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With regard to revenue recognition under modified accrual accounting, which of the following is true? |
| | A) | Revenues are recognized when they become measurable and available to finance expenditures of the current period |
| | B) | Revenues are recognized when they are both measurable and earned |
| | C) | Revenues are recognized when they are collected |
| | D) | All of the above |
| | E) | None of the above |
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| 14.
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With regard to property tax recognition under modified accrual accounting, which of the following is true? |
| | A) | A government may choose to defer all property taxes not collected at year-end |
| | B) | Property taxes collected more than 60 days after year-end cannot be recognized in that fiscal year |
| | C) | If property taxes receivable are recognized but the revenue cannot be recognized, a liability, Deferred Revenues, is credited |
| | D) | All of the above |
| | E) | A and B |
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| 15.
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With regard to expenditure recognition under modified accrual accounting, which of the following is true? |
| | A) | Debt service expenditures for principal and interest are recorded when due |
| | B) | Expenditures are generally recognized when the related liability is incurred |
| | C) | If the government has a debt service payment due no longer than one month after fiscal year-end and has the resources available, it is permitted to record expenditures and a liability for the payment |
| | D) | All of the above |
| | E) | A and B |
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| 16.
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A special revenue fund received services that it did not have enough resources to pay for. When should the expenditure and fund liability be recognized? |
| | A) | The general rule is that the expenditure and fund liability cannot be recognized until there are sufficient resources in the fund. |
| | B) | In the absence of a modification, the expenditure and liability should be recognized when goods or services are received, regardless of whether sufficient resources are available in the fund. |
| | C) | GAAP require that the liability be recognized immediately, but the expenditure should not be recognized until sufficient resources are available in the fund. This procedure is designed to prevent overspending of resources. |
| | D) | GAAP allows the government to choose between answer A and answer B |
| | E) | None of the above |
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| 17.
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According to GASB Interpretation 6, which of the following is NOT a type of expenditure that should be recognized in governmental funds to the extent the liability will be paid with available resources? |
| | A) | Claims and judgments |
| | B) | Landfill closure and postclosure care costs |
| | C) | Compensated absences |
| | D) | Special termination benefits |
| | E) | None of the above |
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| 18.
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Which of the following is NOT a type of interfund transaction? |
| | A) | Reimbursements |
| | B) | Transfers |
| | C) | Interfund adjustments |
| | D) | Loans |
| | E) | None of the above |
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| 19.
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Assume the General Fund made a loan to the Health Special Revenue Fund to cover a temporary shortage of cash. What journal entry would the General Fund make to record the loan transaction? |
| | A) | Memorandum entry only |
| | B) | Debit Accounts Receivable, credit Cash |
| | C) | Debit Cash, credit Accounts Payable |
| | D) | Debit Due from Other Funds, credit Cash |
| | E) | Debit Cash, credit Due to Other Funds |
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| 20.
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Assume the General Fund make a loan to the Health Special Revenue Fund to cover a temporary shortage of cash. What journal entry would the Health Special Revenue Fund make to record the loan transaction? |
| | A) | Debit Cash, credit Accounts Payable |
| | B) | Debit Cash, credit Due to Other Funds |
| | C) | Debit Due from Other Funds, credit Cash |
| | D) | Debit Accounts Receivable, credit Cash |
| | E) | Memorandum entry only |
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| 21.
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What type of interfund transactions are described as flows of cash or other assets without a requirement for repayment? |
| | A) | Interfund loans |
| | B) | Interfund services provided and used |
| | C) | Interfund transfers |
| | D) | Interfund reimbursements |
| | E) | None of the above |
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| 22.
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At the end of 2007, the General Fund had $50,000 in deferred property taxes that were expected to be collected more than 60 days after year-end. At the beginning of 2008, what is the journal entry would be required to reflect that the $50,000 is expected to become available during that year? |
| | A) | Memorandum entry only |
| | B) | Debit Revenues Control, credit Deferred Revenues - Property Taxes |
| | C) | Debit Deferred Revenues - Property Taxes, credit Revenues Control |
| | D) | Debit Cash, credit Revenues Control |
| | E) | None of the above |
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| 23.
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The City of T arranged for a loan of $100,000 to meet its short-term cash needs prior to the expected collection of property taxes, by signing a tax anticipation note with the local bank. The entry to record the transaction is: |
| | A) | Debit Tax Anticipation Notes Payable, credit Cash for $100,000 |
| | B) | Debit Cash, credit Tax Anticipation Notes Payable for $100,000 |
| | C) | Debit Accounts Receivable, credit Cash for $100,000 |
| | D) | Memorandum entry only |
| | E) | None of the above |
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| 24.
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The County of P has estimated revenues from property taxes for 2007 should be $3,000,000 for the General Fund. Additionally, it estimated that 3% of property taxes will be uncollectible. The journal entry to record the gross levy is: |
| | A) | Debit Taxes Receivable - Current $3,092,784; credit Estimated Uncollectible Taxes - Current $92,784 and credit Revenues Control for $3,000,000 |
| | B) | Debit Taxes Receivable - Current $3,092,784 and credit Revenues Control $ 3,092,784 |
| | C) | Debit Taxes Receivable - Current $ 3,000,000; credit Estimated Uncollectible Taxes - Current $ 90,000 and credit Revenues Control $2,910,000 |
| | D) | Debit Taxes Receivable - Current $ 3,000,000 and credit Revenues Control $3,000,000 |
| | E) | None of the above |
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| 25.
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For 2007, City of W accrued $5,000 in interest on delinquent taxes from the first day of the fiscal year until the taxes were collected. The delinquent taxes amounted to $350,000, on which $30,000 in interest and penalties had been accrued at the end of 2006. All amounts were collected in 2007. What is the journal entry to record the accrual of interest in 2007? |
| | A) | Debit Revenues Control, credit Interest and Penalties Receivable on Taxes for $5,000 |
| | B) | Debit Interest and Penalties Receivable on Taxes, credit Revenues Control for $35,000 |
| | C) | Debit Revenues Control, credit Interest and Penalties Receivable on Taxes for $35,000 |
| | D) | Debit Interest and Penalties Receivable on Taxes, credit Revenues Control for $5,000 |
| | E) | None of the above |
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| 26.
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For 2007, City of W accrued $5,000 in interest on delinquent taxes from the first day of the fiscal year until the taxes were collected. The delinquent taxes amounted to $350,000, on which $30,000 in interest and penalties had been accrued at the end of 2006. All amounts were collected in 2007. What is the journal entry to record the collection of the delinquent taxes and the total interest and penalties owed on them? |
| | A) | Debit: Taxes Receivable - Delinquent $350,000 Debit: Interest and Penalties Receivable on Taxes 35,000 Credit: Cash $385,000 |
| | B) | Debit: Cash $380,000 Credit: Taxes Receivable - Delinquent $350,000 Credit: Interest and Penalties Receivable on Taxes 30,000 |
| | C) | Debit: Cash $385,000 Credit: Taxes Receivable - Delinquent $350,000 Credit: Interest and Penalties Receivable on Taxes $35,000 |
| | D) | Debit: Cash $350,000 Credit: Taxes Receivable - Delinquent $350,000 |
| | E) | None of the above |
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| 27.
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The City of T repaid its tax anticipation note of $100,000 after tax collections exceeded current disbursement needs. The amount of interest charged is $5,000. What is the journal entry to record the repayment? |
| | A) | Debit: Tax Anticipation Notes Payable $100,000 Debit: Expenditures Control $5,000 Credit: Cash $105,000 |
| | B) | Debit: Expenditures Control $105,000 Credit: Cash $105,000 |
| | C) | Debit: Expenditures Control $5,000 Credit: Cash $5,000 |
| | D) | Debit:Tax Anticipation Notes Payable $105,000 Credit: Cash $105,000 |
| | E) | None of the above |
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| 28.
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The General Fund of Prairie City was charged $50,000 for water service by the city's Water Utility Fund. Assume the cash will be paid at a later time. The General Fund entry to record this transaction would be: |
| | A) | Debit Expenditures Control, credit Accounts Payable for $50,000 |
| | B) | Debit Expenditures Control, credit Cash for $50,000 |
| | C) | Debit Expenditures Control, credit Due to Water Utility Fund for $50,000 |
| | D) | Debit Due from Water Utility Fund, credit Expenditures Control for $50,000 |
| | E) | None of the above |
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| 29.
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The General Fund made a budgeted transfer of $500,000 to the Debt Service Fund for the payment of semi-annual debt service. The entry to record the transfer of cash would be: |
| | A) | Debit Expenditures Control and credit Cash for $500,000 |
| | B) | Debit Other Financing Uses - Transfers Out Control and credit Cash for $500,000 |
| | C) | Debit Other Financing Sources - Transfers In Control and credit Cash for $500,000 |
| | D) | Debit Expenses Control and credit Cash for $500,000 |
| | E) | None of the above |
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| 30.
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The City of H determined that delinquent taxes totaling $50,000 had become uncollectible and should be written off. In addition, related interest and penalties of $5,000 were to be written off. The entry to write off the delinquent taxes is: |
| | A) | Debit: Taxes Receivable - Delinquent $50,000 Credit: Estimated Uncollectible Taxes - Delinquent $50,000 |
| | B) | Debit: Bad Debt Expense $50,000 Credit: Taxes Receivable - Delinquent $50,000 |
| | C) | Debit: Bad Debt Expense $55,000 Credit: Taxes Receivable - Delinquent $55,000 |
| | D) | Debit: Estimated Uncollectible Taxes - Delinquent $50,000 Credit: Taxes Receivable - Delinquent $50,000 |
| | E) | None of the above |
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| 31.
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The City of H determined that delinquent taxes totaling $50,000 had become uncollectible and should be written off. In addition, related interest and penalties of $5,000 were also to be written off. The entry to write off the related interest and penalties is: |
| | A) | Debit: Customer Accounts Expense $ 5,000 Credit: Interest and Penalties Receivable on Taxes $ 5,000 |
| | B) | Debit: Estimated Uncollectible Interest & Penalties $ 5,000 Credit: Interest and Penalties Receivable on Taxes $ 5,000 |
| | C) | Debit: Estimated Uncollectible Interest & Penalties $50,000 Credit: Interest and Penalties Receivable on Taxes $50,000 |
| | D) | Debit: Customer Accounts Expense $50,000 Credit: Interest and Penalties Receivable on Taxes $50,000 |
| | E) | None of the above |
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| 32.
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Assuming the County of F has earned $25,000 in interest and penalties on delinquent taxes during 2007 that it has not yet recognized, and that it estimates only $22,000 of that amount will be collectible, what is the entry to record the transaction? |
| | A) | Debit: Acounts Receivable $25,000 Credit: Revenues Control $25,000 |
| | B) | Debit: Accounts Receivable $25,000 Credit: Estimated Uncollectible Interest & Penalties $3,000 Credit: Revenues Control $22,000 |
| | C) | Debit: Interest and Penalties Receivable on Taxes $25,000 Credit: Estimated Uncollectible Interest & Penalties $ 3,000 Credit: Revenues Control 22,000 |
| | D) | Debit: Interest and Penalties Receivable on Taxes $25,000 Credit: Revenues Control $25,000 |
| | E) | None of the above |
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| 33.
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A review of the taxes receivable subsidiary ledger for City of D at fiscal year-end revealed that approximately $30,000 of property taxes would probably be received more than 60 days after fiscal year end. The entry to recognize this fact would be: |
| | A) | Memorandum entry only |
| | B) | Debit Deferred Revenues - Property Taxes, credit Revenues Control for $30,000 |
| | C) | Debit Revenues Control, credit Estimated Uncollectible Taxes - Current for $30,000 |
| | D) | Debit Taxes Receivable - Current, credit Revenues Control for $30,000 |
| | E) | Debit Revenues Control, credit Deferred Revenues - Property Taxes for $30,000 |
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| 34.
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During 2004, the County of W sold land for $500,000. The cash will be collected later. The entry to record this transaction is: |
| | A) | Memorandum entry only |
| | B) | Debit Accounts Receivable, credit Special Item - Proceeds from Sale of Land, $500,000 |
| | C) | Debit Cash, credit Special Item - Proceeds from Sale of Land, $500,000 |
| | D) | Debit Accounts Receivable, credit Revenues Control, $500,000 |
| | E) | Debit Cash, credit Special Item - Proceeds from Sale of Land, $500,000 |
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| 35.
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The General Fund received supplies inventory. At the time, an entry debiting Expenditures Control and crediting Cash was made. This entry is an example of which method of inventory recognition in governmental funds? |
| | A) | Consumption method |
| | B) | Last-in first-out method |
| | C) | First-in first-out method |
| | D) | Purchases method |
| | E) | None of the above |
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| 36.
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Which of the following accounts would NOT be closed by a General Fund at the end of the fiscal year? |
| | A) | Encumbrances Control |
| | B) | Other Financing Uses — Transfers Out Control |
| | C) | Due to Debt Service Fund |
| | D) | Estimated Revenues Control |
| | E) | Budgetary Fund Balance Reserved for Encumbrances |
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| 37.
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How would a sale of equipment at a loss be reported on the fund financial statements for the General Fund? |
| | A) | As a direct reduction of Fund Balance-Unreserved on the balance sheet |
| | B) | As an expenditure on the Statement of Revenues, Expenditures, and Changes in Fund Balance |
| | C) | As a special item, reported after Other Financing Sources and Other Financing Uses on the Statement of Revenues, Expenditures, and Changes in Fund Balance |
| | D) | The sale of equipment at a loss cannot be reported in the fund financial statements for the General Fund because equipment is not reported on the General Fund Balance Sheet. |
| | E) | None of the above |
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| 38.
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At the start of 2007, the city of Deleon received from the federal government a grant of $100,000 to support a literacy program. The grant requires that the city make expenditures for the program and submit a report to the federal government before funds are released to the city. The grant must be used up by the end of 2008. During 2007, the city spent $55,000 for the program and submitted to the federal government a report indicating the amount spent. By the end of the year, Deleon had received $44,000 in reimbursement from the federal government. What amount of revenue should Deleon recognize in 2007? |
| | A) | $100,000 |
| | B) | $55,000 |
| | C) | $44,000 |
| | D) | $0. The grant should be accounted for as an Other Financing Source, and not as a revenue. |
| | E) | None of the above |
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| 39.
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During 2007, the city of Mansfield purchased supplies costing $45,000. The city used $38,000 of the supplies during the year. Assuming that the Mansfield General Fund uses the consumption method to account for the supplies inventory, which of the following statements is true? |
| | A) | When Mansfield purchased the supplies, it should have debited Inventory of Supplies for $45,000. During the year, it should have debited Expenditures Control for $38,000, the amount of supplies used. |
| | B) | When Mansfield purchased the supplies, it should have debited Expenditures Control for $45,000. Assuming that the amount of supplies on hand at the end of the year is not material, no further journal entry would be needed during the year. |
| | C) | When Mansfield purchased the supplies, it should have debited Inventory of Supplies for $45,000. At the end of the year, it should have recorded an expenditure for $45,000. |
| | D) | Inventory of supplies cannot be reported on the General Fund's balance sheet because it is not an expendable asset. |
| | E) | Both B and D are true |
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| 40.
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During 2007, the city of Mansfield purchased supplies costing $45,000. The city used $38,000 of the supplies during the year. There was no inventory of supplies at the start of the year. Assuming that the Mansfield General Fund uses the purchases method to account for the supplies inventory, which of the following statements is true? |
| | A) | When Mansfield purchased the supplies, it should have debited Inventory of Supplies for $45,000. During the year, it should have debited Expenditures Control for $38,000, the amount of supplies used. |
| | B) | When Mansfield purchased the supplies, it should have debited Expenditures Control for $45,000. No further journal entry would be needed during the year. |
| | C) | When Mansfield purchased the supplies, it should have debited Inventory of Supplies for $45,000. At the end of the year, it should have recorded an expenditure for $45,000. |
| | D) | When Mansfield purchased the supplies, it should have debited Expenditures Control for $45,000. At the end of the year, it should have recorded the inventory on hand, $7,000, because the amount is material. |
| | E) | None of the above |
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