Chapter 4: The Governmental Fund Accounting Cycle Chapter 4: The Governmental Fund Accounting Cycle An Introduction to General and Special Revenue Funds An Introduction to General and Special Revenue Funds Multiple Choice
Multiple Choice
1. Accounting for a Spe cial Revenue Fund is most like the ac counting for which of the following?
a. the General Fund b. an Internal Service Fund
c. a ension !rust Fund d. an "nterprise Fund A
Annsswweerr:: aa
#. $hen should propert% ta& revenues be recogni'ed in the accounting records? a. when the budget is prepared
b. when the appropriations bill is signed into law c. when propert% ta&es are levied
d. when propert% ta&es are actuall% received in cash A
Annsswweerr:: cc
(. $hat is the difference between the terms budgetar% fund balance and unreserved fund balance?
a. budgetar% fund balance is reserved) unreserved fund balance is not reserved
b. budgetar% fund balance is permanent in nature) unreserved fund balance is temporar%
c. budgetar% fun d balance is the anti cipated change in fund bal ance as a result of adopting the budget ) unreserved fund balance is the actual difference between assets and liabilities
d. budgetar% fund balance can be appropriated) unreserved fund balance cannot
A
*. A local government alwa%s will have
+ne or more
a General Fund Special Revenue Funds
a. %es no b. no %es c. no no d. %es %es A Annsswweerr:: aa
,. $hat is the general rule for recogni'ing revenues in governmental funds? a. revenues should be recogni'ed when the budget is adopted
b. revenues should be recogni'ed when available and measurable c. revenues should be recogni'ed when collected in cash
d. revenues ma% be rec ogni'ed eit her whe n collected in cas h or whe n the budget is adopted- at the option of the entit%
A
Annsswweerr::
. $hich line item does notnot properl% belong in the balance sheet of a governmental fund?
a. short/term investments b. fi&ed assets
c. cash
d. accounts 0or vouchers pa%able A
Annsswweerr::
2. $hich of the following 3ournal entries is a budgetar% entr%? a. debit estimated revenues and cr edit appropriations b. debit e&penditures and credit cash
c. debit propert% ta&es receivable and credit propert% ta& revenues d. debit cash and credit propert% ta&es receivable
A
Annsswweerr:: aa
4. $hen a cit% borrows cash short/term in anticipation of the receipt of propert% ta& revenues- which account would it credit?
a. propert% ta&es receivable b. propert% ta& revenues
c. estimated other financing sources d. ta& anticipation notes pa%able A
Annsswweerr:: dd
closed- which of the following entries will be made to record this fact? a. a credit to 7nreserved fund balance
b. a debit to 7nreserved fund balance c. a credit to Appropriations
d. a debit to 8udgetar% fund balance A
Annsswweerr::
19. $hich of the following financial statements normall% are prepared for the General Fund?
operating balance cash flows
statement sheet statement
a. %es no %es
b. no %es %es
c. %es %es %es
d. %es %es no
A
Annsswweerr:: dd
11. "&penditures of a cit% or count%6s governmental funds include a. cash disbursements made to settle short/term liabilities b. depreciation of general fi&ed assets
c. decreases in fund net assets for operating purposes but not for capital asset ac:uisitions
d. decreases in fun d net asse ts for ope rating purposes- repa%ment of debt principal and interest- and capital asset ac:uisitions
A
Annsswweerr:: dd
1#. A village derives about , percent of it s General Fund rev enues from tr affic violation fines. ;iolators of the law have (9 da%s to appeal the fines. "&perience shows that the village ultimatel% collects on about 2,< of the violations. $hen should the village recogni'e these revenues in the General Fund?
a. when the budget is prepared
b. at the beginning of the %ear- based on an estimate of collections c. when the traffic violation tickets are issued
d. when the cash is collected A
Annsswweerr:: dd
1(. $hich line item do es notnot properl% appear in the Statement of Revenues-"&penditures- and =hanges in Fund 8alance 0>operating statement> of a governmental fund?
b. e&penditures//capital outla% c. propert% ta&es receivable d. beginning fund balance A
Annsswweerr:: cc
1*. If the 8udgetar% fund balance account was debited when the budget was recorded in the =it% of Ramville6s General Fund- then
a. appropriations e&ceed estimated revenues b. actual e&penditures e&ceed appropriations c. estimated revenues e&ceed appropriations d. appropriations e&ceed actual revenues A
Annsswweerr:: aa
1,. 7nder the modified accrual basis of accounting
a. e&penditures are recogni'ed when paid in cash i! i! not previousl% encumbered b. revenues are recogni'ed when earned
c. revenues are recogni'ed when the% become measurable and available d. encumbrances are e:uivalent to e&penditures
A
Annsswweerr:: cc
1. In governmental accounting-expenditures are a. e:ual to e&penses minus depreciation
b. incurred for operating purposes- capital ac:uisitions- and debt service c. e:ual to encumbrances plus appropriations
d. incurred to generate revenue in order to prom ote the well/being of the citi'ens
A
Annsswweerr::
12. $hich of the following accounts properl% would not appear in the General Fund6s closing entr% at fiscal %ear end?
a. revenues
b. unreserved fund balance c. ta&es receivable
d. e&penditures A
Annsswweerr:: cc
14. If the 7nreserved fund balance account of a Spe cial Revenue Fund has a debi t balance at the end of the fiscal %ear- it means that
a. revenues are less than e&penditures for the %ear b. actual revenues are less than estimated revenues
d. e&penditures consistentl% e&ceeded encumbrances A
Annsswweerr:: cc
15. $ithin a cit%6s Ge neral Fund- which source of rev enues is least likel% to be accrued in advance of receipt in cash?
a. building inspection fees b. propert% ta&esc. interest on investments
d. sales ta&es A
Annsswweerr:: aa
#9. A count% bor rows cash on a short/term basis. $hich of the f ollowing is t he proper account to be credited in this transaction?
a. ta& anticipation notes pa%able b. revenues from borrowing
c. appropriations//borrowed mone% d. unreserved fund balance
A
Annsswweerr:: aa
#1. $hich of the following financial statements normall% are pre pared for a Spec ial Revenue Fund?
operating balance cash flows
statement sheet statement
a. %es %es no
b. no %es %es
c. %es %es %es
d. %es no %es
A
Annsswweerr:: aa
##. !he accounting and financial reporting for the General Fund is least similar to that for aa. capital pro3ects fund b. debt service fund
c. pension trust fund d. special revenue fund A
Annsswweerr:: cc
#(. A favorable e&penditures variance signifies that- during the %ear-a. 7nreserved fund balance increased
b. actual spending was less than budgeted spending c. estimated revenues were less than actual revenues
d. total e&penditures did not e&ceed total encumbrances A
Annsswweerr::
#*. !he total amount of ta& es receivable from all ta &pa%ers within a gove rnment6s 3urisdiction will be posted to which t%pe of account?
a. a control account b. a contra accountc. a net assets account
d. a subsidiar% account A
Annsswweerr:: aa
#,. In governmental accounting- vouchers pa%able is mos t similar to wh ich of the following accounts used b% business enterprises?
a. contributed capital b. accounts pa%able c. dividends pa%able d. unearned revenues A Annsswweerr:: "rolems "rolems
#. 0ournal entries / basic events and transactions
repare entries to record the following events and transactions for !ropical !ownship for the %ear #995.
a. !he !ownship adopted a budget calling for appropriations of @(9-999. !he estimated revenues 0all prop ert% ta&es wer e @(*9-999.
b. !he !ownship sent propert% ta& bills amounting to @(*9-999 to propert% owners. c. ropert% owners paid @((,-999 to the !ownship.
d. A purchase order of @#,-999 was sent to a vendor of supplies. e. !he supplies ordered in transaction d. were received in good order
and the accompan%ing invoice of @#*-999 was approved.
Answer:Answer:
a. "stimated revenues / propert% ta&es (*9-999
Appropriations (9-999
b. ropert% ta&es receivable (*9-999
Revenues / propert% ta&es (*9-999
c. =ash ((,-999
ropert% ta&es receivable ((,-999
d. "ncumbrances #,-999
8udgetar% fund balance reserved for encumbrances #,-999
e. 8udgetar% fund balance reserved for encumbrances #,-999
"ncumbrances #,-999
"&penditures / supplies #*-999
;ouchers pa%able #*-999
#2. 0ournal entries / budgetar% and financial
repare 3ournal entries to record the following transactions for =osmotown for #995. !he !own records encumbrances onl% for its Supplies appropriation. a. =osmotown adopted the following budget for the %ear
Revenues:
ropert% ta&es @#2,-999
Bicenses and fees (,-999
Appropriations:
Salaries #,,-999
Supplies *9-999
Interest 1-,99
b. ropert% ta& bills amounting to @#2,-999 were sent to the propert% owners.
c. 8ecause propert% ta&es were not due to be rec eived for several months and the town needed cash to finance its activities- =osmotown borrowed @199-999 on ta& anticipation notes from a local bank.
d. =osmotown paid salaries in the amount of @2,-999.
e. !he town sent out tw o purchase orders for supplies purchase order A for @-999 and purchase order 8 for @,-999.
f. !he town rece ived @1(9 -999 from prop ert% owne rs in pa%ment of thei r propert% ta&es.
g. =osmotown repaid th e bank on its borrowing in tr ansaction c. !he amount paid was @191-999- which included interest of @1-999.
h. !he town collected @1,-999 for fishing licenses.
i. !he town received the supplies ordered on purchase order A in transaction e. All the supplies arrived in good condition and the invoic e for @-199 was approved for pa%ment.
3. !he town !reasurer paid the invoice in transaction i. for @-199. Answer:
Answer:
a. "stimated revenues / propert% ta&es #2,-999 "stimated revenues / licenses and fees (,-999
Appropriations salaries/ #,,-999
Appropriations supplies/ *9-999
Appropriations interest/ 1-,99
8udgetar% fund balance 1(-,99
b. ropert% ta&es receivable #2,-999
Revenues propert% / ta&es #2,-999
c. =ash!a& anticipation notes pa%able 199-999 199-999
d. "&penditures / salaries 2,-999
=ash 2,-999
e. "ncumbrances 11-999
8udgetar% fund balance reserved for encumbrances 11-999
f. =ash 1(9-999
ropert% ta&es receivable 1(9-999
g. !a& anticipation notes pa%able 199-999
"&penditures =ash interest/ 1-999 191-999
h. =ash 1,-999
Revenues licenses / and fees 1,-999
i. 8udgetar% fund balance reserved for encumbrances -999
"ncumbrances -999
"&penditures supplies/ -199
3. ;ouchers pa%able -199
=ash -199
#4. 0=alculating ending unreserved fund balance from selected information
resented below is information a Special Revenue Fund of !rinket =it% for fiscal #995. 8ased on this information- determine the amounts of
a. actual revenues for
b. actual e&penditures for #995- and
c. ending unreserved fund balance at the end of fiscal #995.
8eginning unreserved fund balance 0actual @ 19-999 8eginning budgetar% fund balance // debit 01,-999
!otal appropriation 199-999
!otal revenue variance // favorable 4-999 !otal e&penditure variance // favorable *-999 Answer:
Answer:
a. "stimated revenues C Appropriation less budgetar% fund balance C 199-999 / 1,-999 C 4,-999.
Actual revenues C "stimated revenues D favorable revenues variance C 4,-999 D 4-999 C 5(-999.
b. Actual e&penditures C Appropriations less favorable e&penditure variance C 199-999 / *-999 C 5-999.
c. Actual revenues C @ 5(-999
"&penditures C 5-999
Eecrease in unreserved fund balance 0(-999
8eginning unreserved fund balance 19-999
#5. 0reparing closing entries and financial sta tements
resented below is the ad3usted trial balance for the General Fund of the !ownship of Seans aven at une (9- #995- the end of the fiscal %ear. 8ased on this information- prepare- in good form
a. closing entries
b. the statement of revenues- e&penditures- and changes in fund balance for the %ear c. the balance sheet at une (9- #995.
T
Township o! ownship o! Sean#s $avenSean#s $aven General Fund General Fund Ad%usted Trial &alance Ad%usted Trial &alance
'une ()* +)), 'une ()* +)), =ash -#99@ !a&es receivable *9-999 Investments ,-999 ;ouchers pa%able (4-2,9
!a& anticipation notes pa%able 1#-2,9
7nreserved fund balance ,2-999
"stimated revenues 191-999
Appropriations 55-999
8udgetar% fund balance #-999
Revenues/ta&es 199-999 Revenues/other #-949 "&penditures/personal services 5*-299 "&penditures/supplies *-49 9 @ (11-,49 @ (11-,49 Answer: Answer: a. =losing entries Appropriations 55-999
8udgetar% fund balance #-999
"stimated revenues 191-999
Revenues/other #-949
"&penditures/personal services 5*-299
"&penditures/supplies *-49
7nreserved fund balance #-299
b. Statement of Revenues- "&penditures- and =hanges in Fund 8alance T
Township o! ownship o! Sean#s $avenSean#s $aven General Fund General Fund
Statement o! Revenues* -.penditures* and Changes in Fund &alance Statement o! Revenues* -.penditures* and Changes in Fund &alance
For the year ended 'une ()* +)), For the year ended 'une ()* +)), Revenues !a&es @199-999 +ther #-949 !otal revenues @19#-949 "&penditures ersonal services 5*-299 Supplies *-49 !otal e&penditures 55-(49
"&cess of revenues over 0under e&penditures #-299
Fund balance- beginning of %ear ,2-999
Fund balance- end of %ear ,5-299@
T
Township o! ownship o! Sean#s $avenSean#s $aven General Fund General Fund &alance Sheet &alance Sheet At 'une ()* +)), At 'une ()* +)), Assets =ash -#99@ !a&es receivable *9-999 Investments ,-999 !otal assets 111-#99@ Biabilities ;ouchers pa%able (4-2,9@
!a& anticipation notes pa%able 1#-2,9
!otal liabilities ,1-,99
Fund balance
7nreserved ,5-299
