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Exam 1 Gov Acc
Chapter 2 examples
| Question | Answer |
|---|---|
| To construct a new office building for use by various departments | governmental, capital projects fund |
| to pay salaries of personnel who maintain state parks | governmental, general fund |
| to accumulate resources in a trust fund to pay pension benefits for its employees | fiduciary, pension fund |
| to collect sales taxes for local governments who "piggy-back" their sales taxes on top of the state sales tax | fiduciary, custodial fund |
| to operate a central printing department that prints forms and reports for all state departments | proprietary, internal service fund |
| Modified accrual, current financial resources | governmental |
| accrual basis, economic resources | propietary, fuduciary |
| the proceeds of a federal grant received to assist in financing the construction of a police training facility | capital projects |
| Receipts from a special tax levied, after approval by the citizenry, to pay the principal and interest on general obligation bonds issued to finance construction of an office building | debt service fund |
| Receipts from a special tax on gasoline to be used, pursuant to law, solely to finance the annual costs of fixing potholes | special revenue fund |
| The bi-weekly payroll of the police officers, fire fighters, and trash collectors | general fund |
| A city-owned water utility sent bills to the city for water provided to city departments | enterprise fund |
| (2)The city’s mass transit facility received an operating subsidy from the city and a construction grant from the federal government | enterprise fund and general fund |
| The city sent out property tax bills to finance day-to-day city operating activities. | general fund |
| The city sold bonds to construct new roads—a major capital project. | capital projects fund |
| The city used tax resources to pay for new police cars. (The city classifies the purchase of all cars as “minor capital items,” to be paid from tax resources rather than the sale of bonds) | general fund |
| The city paid principal and interest on a bond issue from resources accumulated for that purpose. | debt service fund |
| (2) The city’s centralized printing facility billed the city’s Tax Department for printing tax forms | internal service fund and general fund |
| The city levied a special hotel tax dedicated to beautifying its downtown shopping area | special revenue fund |
| “This is the general operating fund of the City. Substantially all tax revenues, Federal and State Aid (except aid for capital projects) and other operating revenues are accounted for in [this fund].” | general fund |
| “This fund . . . accounts for resources used to construct or acquire fixed assets and make capital improvements.” | captial project funds |
| “This fund, required by State legislation . . . into which payments of real estate taxes and other revenues are deposited in advance of debt service payment dates. Debt service on all City . . . bonds is paid from this fund.” | debt service fund |
| These funds account for assets held on behalf of the City’s employees to pay pension benefits. | pension trust fund |
| TF Capital outlays are never made from the General Fund. | False |
| TF Special Revenue Funds are used if the law restricts one or more specific sources of revenue, rather than general tax revenues, for specific purposes. | True |
| TF Special Revenue Funds cannot be used if a portion of the revenues are derived from transfers from the General Fund. | False |
| TF Capital Projects Funds are used to account for and report on all capital assets, whether they are financed from the proceeds of general obligation bonds or from revenue bonds sold by proprietary funds. | False- capital assets financied by P funds and accounted for in a proprietary fund |
| TF Debt Service Funds are used to accumulate resources for paying debt service in the current year, but not in future years. | False- current and future years |
| TF (gov funds) Capital assets are recognized as assets and depreciated over their estimated useful lives. | False- recorded as expenditure and not capitalized and depreciated |
| TF (gov funds) Repayments of bond principal are recorded as expenditures. | True |
| TF (gov funds) Liabilities for employee vacation days earned are not accrued unless they are required to be liquidated with current financial resources. | True |
| TF (gov funds) As a general rule, property taxes are recognized as revenue in the year for which the taxes are levied, regardless of when they are expected to be collected | False- prop tax revenues recognized to the extent they are measurable and available |
| TF (prop funds) Enterprise Funds are used when a governmental entity sells products or services primarily to external parties (such as the general public) for a fee or user charge. | True |
| TF (prop funds) An Enterprise Fund may not be used if the entity, such as a provider of mass transit services, receives subsidies from the General Fund. | False- used when one of the three criteria is met |
| TF (prop funds) To ascertain the amount of capital assets acquired by an Enterprise Fund during the year, you should read the statement of revenue, expenses, and changes in net position. | False- read statement of cash flow |
| TF (prop funds) When Enterprise Funds are used, expenses are accrued only if they are expected to be paid within 60 days after the end of the year | False- expenses accrued if applicable to the current year |
| TF (prop funds) When Enterprise Funds are used, revenues are recognized in the period they are earned, even if cash has not been received. | True |
| TF (fid funds) Governments may access the resources of fiduciary funds to help support their own programs. | False- no access to funds to support program |
| TF (fid funds) When a government sponsors an Investment Trust Fund, the portion that belongs to other governments is reported as assets of the Fund, but the portion belonging to the sponsoring government is not. | True |
| Friendly paid $600,000 in salaries during the year. In addition, during the last pay period, Friendly’s employees earned $5,000 by December 31, but that amount was not paid until the first week of January, 2027. | Gov: 605,000 Ent: 605,000 |
| Friendly used the proceeds of long-term bonds to buy a sanitation truck. The truck was delivered on July 1, 2026, and immediately placed into service. The truck cost $100,000 and had an estimated useful life of 10 years. | Gov: 100,000 Ent: 5,000 |
| Friendly had agreed to pay off the $100,000 used to buy the sanitation truck over a 5-year period, starting December 31, 2026. On that date, Friendly paid the first installment on the debt, $10,000 in principal and $3,000 in interest. | Gov: 13,000 Ent: 3,000 |
| An invoice in the amount of $26,000 for electricity services for the month of December was received and paid in January, 2027 | Gov: 26,000 Ent: 26,000 |
| The amount owed to employees for vacation and sick leave increased from $720,000 to $765,000 during the year. Employees are permitted to receive payment for unused vacation and sick leave days when they retire | Gov: 0 Ent: 45,000 |
| At December 31, 2026 interest accrued on outstanding long-term debt amounted to $63,000. The interest was due to be paid on May 1, 2027. | Gov: 0 Ent: 63,000 |
| Services are provided to the general public, and the costs of providing the services are financed by user charges | enterprise fund |
| Resources are accumulated to pay principal and interest on general long-term debt. | debt service fund |
| Salaries are paid to police officers, fire fighters, and other personnel of the operating departments. | general fund |
| Goods or services are furnished to other segments of the government on a user charge basis. | internal service fund |
| Specific revenue sources are dedicated to a particular purpose other than capital projects or debt service | special service fund |
| Expenditures are made by the city’s streets department | general fund |
| (2)An “operating income” figure is computed. | general fund and enterprise fund |
| Property taxes were received directly by the fund used to accumulate resources to pay bond principal and interest. | debt service fund |
| The city received its share of a state sales tax that is legally required to be used solely to finance library operations. | special revenue fund |
| The city sent property tax bills to homeowners to help pay for day-to-day operating costs. | general fund |
| The city paid for five fire engines, using resources accumulated in a fund to pay for capital assets. | capital project fund |
| The city received a grant from the state to build an addition to the city hall. | capital project fund |
| The city received the proceeds of general obligation bonds to finance the construction of a new police station. | capital project fund |
| The mayor was paid his monthly salary | general fund |
| Expenditures for the day-to-day operations of the Police Department were recorded. | general fund |
| Parks admissions fees, dedicated for use in day-to-day maintenance of the city park system, were collected. | special revenue fund |
| The city workers were paid their weekly salaries | general fund |
| The city paid a contractor who had completed a report on the potential for improving police deployment as a way to reduce the crime rate. | general fund |
| A federal grant was received to help pay for the cost of constructing the new city hall | capital service fund |
| The city received a donation from a taxpayer with the stipulation that it be invested and kept in perpetuity, so that the income from the investments could be used to buy library books | permanent fund |
| The city received income from the investments made in the previous activity | special revenue fund |
| (2)The fund that finances the city’s day-to-day activities makes a payment to the trust fund that invests money pending payment of pensions to city employees. | General fund, pension trust fund |
| (2)The city’s electric utility fund sends bills to the fund that serves as a central purchasing, storage, and supply agency for all city departments. | Internal service fund, enterprise fund |
| (2) The fund that operates a central motor pool for all village departments on a cost-reimbursement basis sends a bill to several departments for services. | internal service fund, general fund |
| (2)After completing a large capital project, the city had $75,000 left in the fund. As required by city charter, the fund transferred the $75,000 to the fund that accumulates resources to pay off the bonds sold to finance the capital project | Capital project fund, debt service fund |
| (2) To reduce the need for borrowing, the city transferred $500,000 from the fund that pays for day-to-day operating expenditures to the fund that accumulates resources to pay for acquiring capital assets. | general fund, capital project fund |
| (2) A city ordinance decreed that all parking fines, wherever collected, be placed in a separate fund. fines covered virtually all operating expenditures, the fund that finances day-to-day operating expenditures transferred $30,000 to the separate fund | general fund, special revenue fund |
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omckenna52
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