Chapter 18 Test Bank AN INTRODUCTION TO ACCOUNTING FOR STATE AND LOCAL GOVERNMENTAL UNITS
Multple Ch!"e #uest!ns LO1 1$
Be%!re the esta&lsh'ent !% the G!(ern'ental Stan Stan*a *ar* r*s s B!ar B!ar*+ *+ ,h" ,h"h h !r)a !r)an n-a -at t!n !n *e(e *e(el! l!pe pe* * )!(ern'ents/ a$ &$ "$ *$
LO1 0$
Fnan"al Fnan"al A""!unt A""!untn) n) Stan*ar* Stan*ar*s s B!ar* state'en state'ents$ ts$ GASB GASB sta state te'e 'ent nts$ s$ EITF$ A""!untan A""!untants ts 'ust e4er" e4er"se se 5u*)'ent 5u*)'ent &e"ause &e"ause there there ,as n! stru"ture* !r)an-at!n %!r )!(ern'ental GAA.$
The The ke7 ke7 %!"u %!"us s !% !% )!( )!(er ern' n'en ent t %un %un* * a"" a""!u !unt ntn n) ) "!n "!n"e "ern rns s a$ &$ "$ *$
LO0 $
The Fnan" Fnan"al al A""!unt A""!untn) n) Stan*ar Stan*ar*s *s B!ar*$ B!ar*$ The Fnan"al Fnan"al A""!untn A""!untn) ) F!un*at F!un*at!n$ !n$ The Nat!nal Nat!nal C!un" C!un"l l !n G!(ern'e G!(ern'ental ntal A""!un A""!untn)$ tn)$ There There ,as n! stru"ture* stru"ture* !r)an-a !r)an-at!n t!n %!r )!(ern' )!(ern'ental ental GAA. GAA. &e%!re the GASB$
hat hat GAA. GAA. pr!n pr!n!u !un" n"e' e'en ents ts take take pre" pre"e* e*en en"e "e %!r %!r an au* au*t! t!r r un*e un*er r SAS 23/ a$ &$ "$ *$
LO0 6$
A""!untn) GAA. GAA. %!r %!r
"apta "aptal l e4pen* e4pen*tu tures res$ $ nter)!(e nter)!(ern'e rn'ental ntal trans%er trans%ers s %r!' the )eneral )eneral %un*$ %un*$ n"!'e n"!'e 'easur 'easure'e e'ent$ nt$ the %l!, %l!, !% !% "urrent "urrent %nan" %nan"al al res!ur" res!ur"es$ es$
hen hen (eh (eh"l "les es 'p! 'p!un un*e *e* * &7 &7 the the "t7 "t7 p!l p!l"e "e are are s!l s!l*+ *+ the the "as "ash h )!es nt! ,h"h %un*/ a$ &$ "$ *$
The The The The The The
)en )ener eral al %un* %un*$ $ *e&t *e&t ser( ser("e "e %un*$ %un*$ %*u" %*u"a ar7 r7 %un %un*$ *$ pr!pr pr!preta etar7 r7 %un*$ %un*$
90::3 .ears!n E*u"at!n+ In"$ pu&lshn) as .rent"e ;all 18<1
LO0 =$
Bu*)ete* auth!rt7 %!r e4pen*tures that pr!(*e le)slat(e "!ntr!l !(er e4pen*tures are re%erre* t! as
a$ &$ "$ *$ LO0 2$
appr!prat!ns$ all!t'ents$ all!"at!ns$ en"u'&ran"es
Be"ause a %un* s an a""!untn) entt7+ ea"h %un* has I$ ts !,n a""!untn) e>uat!n$ II$ ts !,n 5!urnals+ le*)ers+ an* !ther a""!untn) re"!r*s$ III$ ts !,n separate au*t!r$ a$ &$ "$ *$
LO6 ?$
I !nl7$ II !nl7$ I an* II$ I+ II an* III$
One !% the re>ure* pr!pretar7 %un* %nan"al state'ents s a a$ state'ent !% &$ state'ent !% earnn)s$ "$ state'ent !% *$ state'ent !% &alan"e$
LO6 8$
a"t(t7 "han)es$ re(enues+ e4pen*tures+ an* "han)es n %un*
Un*er the '!*%e* a""rual &ass !% a""!untn)+ re(enues are re"!)n-e* n the per!* a$ &$ "$ *$
LO 3$
"ash %l!,s$ re(enues+ e4penses+ an* "han)es n retane*
,hen ,hen ,hen ,hen
the rele(ant ser("e s *!ne$ the7 are "!lle"te*$ the enterprse "ust!'er s &lle*$ &e"!'e &!th 'easura&le an* a(ala&le$
Un*er GASB 66+ ,h"h !% the %!ll!,n) s an e4"han)e transa"t!n/ a$ hen the h!'e !,ner pa7s pr!pert7 ta4es &$ hen a un(erst7 re"e(es a %e*eral )rant %!r 'ana)n) resear"h$ "$ hen an a>uat" "enter re"e(es "ash %!r a )r!up s,'$ *$ hen an e'pl!7er *e*u"ts '!ne7 %!r state ta4 ,thh!l*n)$
90::3 .ears!n E*u"at!n+ In"$ pu&lshn) as .rent"e ;all 18<0
LO 1:$
h"h %un* ,!ul* '!st lkel7 rep!rt *epre"at!n e4pense/ a$ &$ "$ *$
LO 11$
h"h t7pe !% %un* s use* t! a""!unt %!r a )!(ern'ent a"t(t7 that sells )!!*s !r ser("es ether s!lel7 !r al'!st s!lel7 t! e4ternal "ust!'ers/ a$ &$ "$ *$
LO 10$
A te'p!rar7 %un*$ A )eneral %un*$ An a)en"7 %un*$ An enterprse %un*$
Central-e* *ata pr!"essn)+ "entral '!t!r p!!ls an* )ara)es+ "entral-e* rsk<%nan"n) a"t(tes+ an* "entral st!res t7p"all7 ,!ul* &e a""!unte* %!r usn) ,hat t7pe !% %un*/ a$ &$ "$ *$
LO 16$
An nter)!(ern'ental ser("e %un*$ An enterprse %un*$ A "aptal pr!5e"ts %un*$ A *e&t ser("e %un*$
An a)en"7 %un*$ An enterprse %un*$ An nternal ser("e %un*$ A trust %un*$
The '!*%e* a""rual &ass !% a""!untn) s use* %!r a$ &$ "$ *$
LO 1$
)!(ern'ental %un*s$ pr!pretar7 %un*s$ nternal ser("e %un*s$ &!th a an* "$
G!!*t'e Ct7 'akes a le(7 !n ts sea%r!nt &usnesses %!r a retann) ,all$ h"h !% the %!ll!,n) %un*s ,ll ha(e transa"t!ns/ a$ &$ "$ *$
A A A A
)eneral "aptal spe"al "aptal
%un*$ pr!5e"ts an* )eneral %un*$ re(enue %un*$ pr!5e"ts an* spe"al re(enue %un*$
90::3 .ears!n E*u"at!n+ In"$ pu&lshn) as .rent"e ;all 18<6
LO= 1=$
M!t!r %uel ta4es are a$ &$ "$ *$
LO= 12$
A &u*)et n )!(ern'ent a""!untn) a$ &$ "$ *$
LO= 1?$
*er(e* ta4 re(enues$ 'p!se* n!n e4"han)e re(enues$ )!(ern'ent<'an*ate* n!ne4"han)e transa"t!ns$ (!luntar7 n!ne4"han)e transa"t!ns$
!nl7 apples t! the )eneral %un*$ s a )u*elne %!r )!(ern'ent 'ana)e'ent$ has the %!r"e !% la,$ !nl7 apples t! pr!pretar7 %un*s$
A "!'p!nent unt a$ re>ures *s"rete CAFR presentat!n !% the pr'ar7 )!(ern'ent$ &$ *!es n!t appear n CAFR unless t s a pr!pretar7 %un* !% a pr'ar7 )!(ern'ent$ "$ a"t(tes are hel* resp!ns&le t! a pr'ar7 )!(ern'ent$ *$ a"t(tes ,ll &e %nan"all7 a""!unta&le t! a pr'ar7 )!(ern'ent e(en th!u)h t s a le)all7 separate !r)an-at!n$
LO2 18$
G!(ern'ent<,*e %nan"al state'ents n"lu*e a a$ &alan"e sheet+ an n"!'e state'ent+ an* %l!,s$ &$ state'ent !% net assets+ a state'ent !% state'ent !% "ash %l!,s$ "$ state'ent !% net assets an* a state'ent *$ state'ent !% a"t(tes an* a state'ent
LO2 13$
a state'ent !% "ash a"t(tes+ an* a !% a"t(tes$ !% "ash %l!,s$
A comprehensive annual financial report has the %!ll!,n) three 'a5!r se"t!ns
a$ ntr!*u"t!r7+ %nan"al+ an* 'ana)e'ent@s *s"uss!n an* anal7ss$ &$ ntr!*u"t!r7+ %nan"al+ an* statst"al$ "$ trans'ttal+ %nan"al+ an* statst"al$ *$ trans'ttal+ %nan"al+ an* 'ana)e'ent@s *s"uss!n an* anal7ss$
90::3 .ears!n E*u"at!n+ In"$ pu&lshn) as .rent"e ;all 18<
LO2 0:$
G!(ern'ent<,*e %nan"al state'ents e4"lu*e the a$ &$ "$ *$
)eneral %un*$ %*u"ar7 %un*s$ pr!pretar7 %un*s$ spe"al re(enue %un*s$
90::3 .ears!n E*u"at!n+ In"$ pu&lshn) as .rent"e ;all 18<=
LO6 E4er"se 1 The %!ll!,n) are transa"t!ns %!r the "t7 !% N!(!$ a$ &$ "$ *$ !% e$
B!rr!,e* 1:+::: &7 ssun) a three<'!nth n!te$ .a* 0+::: %!r e>up'ent$ Ser("es %!r 0=: ,ere &lle* an* "!lle"te*$ Issue* )eneral !&l)at!n &!n*s+ par (alue !% =+:::+ at 1:1 1:1 par (alue t! %nan"e "!nstru"t!n !% a &ul*n)$ In"urre* an* pa* "!nstru"t!n "!sts !% 0+=:: !n the &ul*n)$
Re>ure* 1$ Anal7-e the a&!(e transa"t!ns &7 usn) the a""!untn) e>uat!n %!r a )!(ern'ental %un*$
LO6 E4er"se 0 The %!ll!,n) are transa"t!ns %!r the "t7 !% N!(!$ a$ &$ "$ *$ !% e$
B!rr!,e* 1:+::: &7 ssun) a three<'!nth n!te$ .a* 0+::: %!r e>up'ent$ Ser("es %!r 0=: ,ere &lle* an* "!lle"te*$ Issue* )eneral !&l)at!n &!n*s+ par (alue !% =+:::+ at 1:1 1:1 par (alue t! %nan"e "!nstru"t!n !% a &ul*n)$ In"urre* an* pa* "!nstru"t!n "!sts !% 0+=:: !n the &ul*n)$
Re>ure* 1$ Anal7-e the a&!(e transa"t!ns &7 usn) the a""!untn) e>uat!n %!r a pr!pretar7 %un*$
90::3 .ears!n E*u"at!n+ In"$ pu&lshn) as .rent"e ;all 18<2
LO6 E4er"se 6
The %!ll!,n) are transa"t!ns %!r the "t7 !% O-$ a$ B!rr!,e* 1:+::: &7 ssun) a t,!<7ear n!te$ &$ Issue* a pur"hase !r*er t! a (en*!r %!r e>up'ent ,!rth 6+:::$ "$ L"enses %!r 6=: ,ere &lle* !n a""!unt$ *$ Re"e(e* a =+::: "aptal )rant %r!' an!ther )!(ern'ental %un*$ e$ A""rue* e'pl!7ee salar7 "!sts !% 6+=::$
Re>ure* 1$ Anal7-e the a&!(e transa"t!ns &7 usn) the a""!untn) e>uat!n %!r a )!(ern'ental %un*$
LO6 E4er"se The %!ll!,n) are transa"t!ns %!r the "t7 !% O-$ a$ B!rr!,e* 1:+::: &7 ssun) a t,!<7ear n!te$ &$ Issue* a pur"hase !r*er t! a (en*!r %!r e>up'ent ,!rth 6+:::$ "$ L"enses %!r 6=: ,ere &lle* !n a""!unt$ *$ Re"e(e* a =+::: "aptal )rant %r!' an!ther )!(ern'ental %un*$ e$ A""rue* e'pl!7ee salar7 "!sts !% 6+=::$
Re>ure* 1$ Anal7-e the a&!(e transa"t!ns &7 usn) the a""!untn) e>uat!n %!r a pr!pretar7 %un*$
90::3 .ears!n E*u"at!n+ In"$ pu&lshn) as .rent"e ;all 18
LO E4er"se = F!r ea"h !% the %!ll!,n) %un*s an* enttes Internal Ser("e Fun* In(est'ent Trust Fun* De&t Ser("e Fun* Spe"al Re(enue Fun* Re>ure* 1$ I*ent%7 the %nan"al state'ents an*!r s"he*ules re>ure* t! &e presente*$ 0$ State the re>ure* &ass !% a""!untn)$
LO E4er"se 2 F!r ea"h !% the %!ll!,n) %un*s an* enttes Captal .r!5e"ts Fun* .ens!n Trust Fun* .er'anent Fun* .r!pretar7 Fun* Re>ure* 1$ I*ent%7 the %nan"al state'ents an*!r s"he*ules re>ure* t! &e presente*$ 0$ State the re>ure* &ass !% a""!untn)$
LO E4er"se ? F!r ea"h !% the %!ll!,n) e(ents !r transa"t!ns+ *ent%7 the %un* !r %un*s that ,ll &e a%%e"te*$ 1$ A "t7 )!(ern'ent pr!(*es ele"tr"t7 ser("es t! res*ents %!r a %ee$ 0$ A prntn) sh!p ,as esta&lshe* t! han*le the prntn) nee*s !% a "!unt7 )!(ern'ent$ 6$ A phlanthr!pst *!nates 1 'll!n %!r a 'e'!ral$ $ A state )!(ern'ent "!lle"ts sales ta4es !n &ehal% !% the state an* %!r s!'e !% ts "!untes an* 'un"paltes$ =$ Interest s pa* !n a state )!(ern'ent@s )eneral !&l)at!n &!n*s$
90::3 .ears!n E*u"at!n+ In"$ pu&lshn) as .rent"e ;all 18<8
LO E4er"se 8 F!r ea"h !% the %!ll!,n) e(ents !r transa"t!ns+ *ent%7 the %un* !r %un*s that ,ll &e a%%e"te*$ 1$ A "t7 )!(ern'ent "har)es a %ee %!r the use !% the 'un"pal )!l% "!urse$ 0$ Interest s pa* !n state )!(ern'ent re(enue &!n*s$ 6$ A '!t!r p!!l ,as esta&lshe* t! han*le the (eh"le nee*s !% a "!unt7 )!(ern'ent$ $ A "!unt7 )!(ern'ent re"e(es a lar)e "!ntr&ut!n spe"%7n) that n"!'e %r!' the "!ntr&ut!n &e *str&ute* ea"h 7ear t! three "t7 l&rares ,thn the "!unt7$ The prn"pal s t! re'an nta"t n*e%ntel7$ =$ A state )!(ern'ent a">ures the use !% )eneral %4e* assets &7 entern) nt! a "aptal lease "!ntra"t$
LO E4er"se 3 F!r ea"h !% the %!ll!,n) e(ents !r transa"t!ns+ *ent%7 the %un* !r %un*s that ,ll &e a%%e"te*$ 1$ A "entral pur"hasn) *epart'ent ,as esta&lshe* t! han*le all the pur"hasn) nee*s !% a "!unt7 )!(ern'ent$ 0$ A "!unt7 )!(ern'ent le(es real pr!pert7 ta4es !n &ehal% !% the "!unt7 an* ts 'un"paltes$ 6$ A "!unt7 )!(ern'ent re"e(es a lar)e "!ntr&ut!n spe"%7n) that n"!'e %r!' the "!ntr&ut!n &e *str&ute* ea"h 7ear t! the "!unt7 -!!$ The prn"pal s t! re'an nta"t n*e%ntel7$ $ A "!unt7 )!(ern'ent esta&lshes an n(est'ent p!!l t! 'ana)e the "ash an* 'arketa&le se"urtes !% the "!unt7 an* part"patn) 'un"paltes =$ A "t7 )!(ern'ent pa7s the %nal "!ntra"t retane* per"enta)e %!r a ne, %re stat!n$
90::3 .ears!n E*u"at!n+ In"$ pu&lshn) as .rent"e ;all 18<3
LO2 E4er"se 1: Lst the %nan"al state'ents an*!r s"he*ules re>ure* t! &e presente* %!r ea"h !% the %!ll!,n) %un*s an* enttes as ,ell as the re>ure* &ass !% a""!untn)$ 1$ 0$ 6$ $
A)en"7 Fun* General Fun* .r(ate
90::3 .ears!n E*u"at!n+ In"$ pu&lshn) as .rent"e ;all 18<1:
SOLUTIONS Multple Ch!"e #uest!ns 1$
"
0$
&
6$
*
$
a
=$
a
2$
"
?$
a
8$
*
3$
"
1:$
&
11$
*
10$
"
16$
a
1$
*
1=$
a
12$
"
1?$
*
18$
"
13$
&
0:$
&
90::3 .ears!n E*u"at!n+ In"$ pu&lshn) as .rent"e ;all 18<11
E4er"se 1 G!(ern'ental %un* e>uat!n Current assets Current la<es Fun* &alan"e
a 1:+:::
& <0+:::
" 0=:
* =+:=:
e <0+=::
<0+:::
0=:
=+:=:
<0+=::
& <0+::: 0+:::
" 0=:
* =+:=:
e <0+=:: 0+=::
1:+:::
E4er"se 0 .r!pretar7 %un* e>uat!n Current assets N!n"urrent assets Current la<es N!n"urrent la<es Net Assets
a 1:+:::
1:+::: =+:=: 0=:
E4er"se 6 G!(ern'ental %un* e>uat!n Current assets Current la<es Fun* &alan"e
a 1:+:::
& : :
1:+:::
:
" 6=:
* =+:::
e 6+=::
6=:
=+:::
" 6=:
* =+:::
<6+=::
E4er"se .r!pretar7 %un* e>uat!n Current assets N!n"urrent assets Current la<es N!n"urrent la<es Net assets
a 1:+:::
1:+:::
& : : :
: :
e
6=::
6=:
=+:::
90::3 .ears!n E*u"at!n+ In"$ pu&lshn) as .rent"e ;all 18<10
<6+=::
E4er"se = 1$
0$
6$
$
Balan"e Sheet an* State'ent !% Re(enues+ E4pen*tures+ an* Chan)es n Fun* Balan"es$ All state'ents are prepare* !n the '!*%e* a""rual &ass$ Balan"e Sheet an* State'ent !% Re(enues+ E4pen*tures+ an* Chan)es n Fun* Balan"es$ All state'ents are prepare* !n the '!*%e* a""rual &ass$ State'ent !% F*u"ar7 .lan Net Assets an* State'ent !% Chan)es n F*u"ar7 .lan Net Assets$ All state'ents are prepare* !n the a""rual &ass$ State'ent !% Net Assets+ State'ent !% Re(enues+ E4penses+ an* Chan)es n Net Assets an* a State'ent !% Cash Fl!,s *re"t 'eth!* !nl7$ All state'ents are prepare* !n the a""rual &ass$
E4er"se 2 1$
0$
6$
$
Balan"e Sheet an* State'ent !% Re(enues+ E4pen*tures+ an* Chan)es n Fun* Balan"es$ All state'ents are prepare* !n the '!*%e* a""rual &ass$ Balan"e Sheet an* State'ent !% Re(enues+ E4pen*tures+ an* Chan)es n Fun* Balan"es$ All state'ents are prepare* !n the '!*%e* a""rual &ass$ State'ent !% F*u"ar7 In(est'ent Net Assets an* State'ent !% Chan)es n F*u"ar7 In(est'ent Net Assets$ All state'ents are prepare* !n the a""rual &ass$ State'ent !% Net Assets+ State'ent !% Re(enues+ E4penses+ an* Chan)es n Net Assets an* a State'ent !% Cash Fl!,s *re"t 'eth!* !nl7$ All state'ents are prepare* !n the a""rual &ass$
E4er"se ? 1$ Enterprse Fun* 0$ Internal Ser("e Fun* 6$ .er'anent Fun* $ General Fun* an* A)en"7 Fun* =$ De&t Ser("e Fun*
E4er"se 8 1$ 0$ 6$ $ =$
Enterprse Fun* De&t Ser("e Fun* Internal Ser("e Fun* F*u"ar7 .r(ate
90::3 .ears!n E*u"at!n+ In"$ pu&lshn) as .rent"e ;all 18<16
E4er"se 3 1$ Internal Ser("e Fun* 0$ General Fun* an* A)en"7 Fun* 6$ .er'anent Fun* $ F*u"ar7 In(est'ent Trust Fun* =$ Captal .r!5e"ts Fun*
E4er"se 1: 1$
State'ent !% F*u"ar7 Net Assets an* State'ent !% Chan)es n F*u"ar7 Net Assets$ All state'ents are prepare* !n the a""rual &ass$ 0$ Balan"e Sheet+ State'ent !% Re(enues+ E4pen*tures+ an* Chan)es n Fun* Balan"es an* a Bu*)etar7 C!'pars!n S"he*ule$ All state'ents are prepare* !n the '!*%e* a""rual &ass$ 6$ State'ent !% F*u"ar7 Net Assets an* State'ent !% Chan)es n F*u"ar7 Net Assets$ All state'ents are prepare* !n the a""rual &ass$ $ State'ent !% Net Assets an* State'ent !% A"t(tes$ All state'ents are prepare* !n the a""rual &ass$
90::3 .ears!n E*u"at!n+ In"$ pu&lshn) as .rent"e ;all 18<1
