1. Construction in Progress would be reported as an asset ina. a Capital Projects Fund.b. the General Fund.c. the General Capital Asset accounts.d. None of the above.

2. The General Fund is partially funding the construction of a new police station. 80% of the project is being financed; the General Funds’ share of the project is $1,000,000. The Capital Project Fund would report the General funds’ share as

a. a $1,000,000 other financing source.b. a $1,000,000 revenue.c. a $1,000,000 nonoperating revenue.d. a $1,000,000 other financing use.

3. Government A secured a $400,000 short-term loan from a local bank for interim financing for a governmental capital project. What would the journal entry be in the Capital Projects Fund to account for this transaction?

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a. Cash $400,000Other Financing Sources $400,000

b. Cash $400,000Notes Payable $400,000

c. Construction in Progress $400,000Other Financing Sources $400,000

d. Cash $400,000Revenues $400,000

e. No entry is required in the Capital Projects Fund as this is a financing agreement.

4. Government A had $7,000,000 of 5%, six month bond anticipation notes outstanding at the end of the fiscal year. As of this date, the government has completed all legal procedures and the notes will be re-financed to a term of ten years the following month. The BAN liability reported in the Capital Projects Fund as of the end of the fiscal year should be

a. $0b. $350,000c. $3,500,000d. $7,000,000

5. Which of the following accounts would appear in a Capital Projects Fund?a. Contracts payable--retained percentageb. Bonds payable issued to finance a projectc. Construction in progress d. Completed buildings

6. The town of Newport issued $1,500,000 of general obligation refunding bonds at a 2% premium. Bond issuance costs of $15,000 were incurred. The proceeds, net of the premium, are being used to refund the outstanding bonds. Debt Service Fund Expenditures will be debited for

a. $30,000b. $15,000c. $1,500,000d. $1,470,000 e. $1,455,000

7. If General Fund cash is transferred to a Debt Service Fund to provide resources to refund outstanding debt, the Debt Service Fund statement of revenues, expenditures, and changes in fund balance would report

a. an other financing source when the cash is received.b. an expenditure when the cash is used to refund the outstanding debt.c. a revenue.d. Both a and b.e. Both b and c.

8. A government has $3,000,000 of 6%, 10-year general obligation bonds outstanding. The bonds were issued on November 1, 20X8 to finance construction of a general capital asset. Interest is payable semiannually on October 31 and April 30. What amount of debt service expenditures should the government report for the year ended December 31, 20X8?

a. $0b. $30,000c. $90,000d. $180,000

9. A government retired $5,000,000 of outstanding general obligation bonds when due. The government used $3,000,000 of proceeds from new bonds issued to provide resources for retiring the old bonds. The other $2,000,000 had been accumulated from tax and interest revenues over the years that the old bonds were outstanding. The government should report this transaction in its Debt Service Fund as

a. Other financing uses of $5,000,000.b. Expenditures of $5,000,000.c. Other financing uses of $3,000,000 and expenditures of $2,000,000.d. Other financing uses of $2,000,000 and expenditures of $3,000,000.

10. Principal and interest expenditures on general long-term debt should be recognized in the period

a. that the costs are incurred.b. prior to the year in which they are due, i.e., when they become short-term debt.c. that they are legally due and payable.d. that they are paid.

11. A city recently ordered a new fire truck. The base cost of the truck is $250,000. In addition, the city will be paying $1,000 in delivery charges and $5,000 for necessary calibrations once it is delivered; and the city will also have the necessary logos added at a cost $2,500. The capitalizable cost of the fire truck in the General Fund will be

a. $250,000b. $251,000c. $256,000d. $258,500e. $0

12. The town of Nowhere purchased a new telecommunications system for the police department. The town entered into a capital lease to finance the system. In the year of acquisition, entries will be necessary in

a. the General Fund, Debt Service Fund, and General Capital Assets accounts.b. the Debt Service Fund, the General Capital Assets accounts, and the General

Long-Term Liabilities accounts.c. the General Fund.d. the General Capital Assets accounts and the General Long-Term Liabilities

accounts.e. the General Fund, the General Capital Assets accounts, and the General Long-

Term Liabilities accounts.

13. A county government sold two of its emergency vehicles for a total of $35,000. The vehicles had a collective net book value of $46,000 (total original cost = $150,000; accumulated depreciation = $104,000). The entry that would be made in the General Fund at the time of the transaction would be

dr cra. Cash $ 35,000

Capital Contribution $ 35,000b. Cash $ 35,000

Other Financing Sources – Sale of Capital Assets $ 35,000

c. Cash $ 35,000 Accumulated Depreciation 104,000 Loss on Sale of Capital Assets 11,000

Capital Assets – Vehicles $150,000d. Cash $ 35,000 Loss on Sale of Capital Assets 11,000

Other Financing Sources – Sale of Capital Assets $ 46,000

e. An entry is not necessary in the General Fund as this transaction only affects the General Capital Assets accounts.

14. New municipal building office equipment costs $400,000 and is being financed with a capital lease. If the government makes a $40,000 down payment, which of the following best describes the external financial reporting effects?

a. The General Fund statements will report expenditures of $400,000 and other financing sources of $360,000. The General Long-Term Liabilities accounts will report a liability of $360,000 and the General Capital Assets accounts will report an asset of $400,000.

b. The General Fund statements will report expenditures of $40,000 and other financing sources of $360,000. The General Long-Term Liabilities accounts will report a liability of $400,000 and the General Capital Assets accounts will report an asset of $360,000.

c. The General Fund statements will report a capital asset of $400,000 and a liability of $360,000.

d. The General Fund statements will report expenditures of $360,000 and other financing sources of $400,000. The General Long-Term Liabilities accounts will report a liability of $360,000 and the General Capital Assets accounts will report an asset of $360,000.

e. The General Fund statements will report expenditures and other financing sources of $40,000. The General Long-Term Liabilities accounts will report a liability of $360,000 and the General Capital Assets accounts will report an asset of $360,000.

15. Capital assets are potentially reported as assets on which of the following statements?a. General Fund balance sheetb. Proprietary Fund statement of net assetsc. Government-wide statement of net assetsd. All of the above.e. Items b and c only.

16. An Enterprise Fund would potentially include all of the following liabilities on the face of the statement of net assets except

a. notes payable.b. bonds payable.c. compensated absences.d. claims and judgments.e. All of the above could potentially be included on an Enterprise Fund’s statement

of net assets.

17. The Utility Enterprise Fund is in Year 2 of a three year construction project that is projected to cost $3,000,000. The fund incurred $300,000 of costs in Year 1 and $1,800,000 in Year 2. The fund will report

a. expenses of $300,000 in Year 1 and $1,800,000 in Year 2.b. total construction in progress (an asset) in Year 2 of $1,800,000.c. total construction in progress (an asset) in Year 2 of $2,100,000.d. expenditures of $300,000 in Year 1 and $1,800,000 in Year 2.e. None of the above.

18. A Proprietary Fund statement of cash flows reports cash flows from operating activities

a. Using the direct method.b. Using the indirect methodc. Equal to operating income plus depreciation--other adjustments are reported in the

noncapital financing activities sectiond. Using either the direct or the indirect method of presentation.

19. Refunding bonds were issued by an Enterprise Fund with a face value of $15,000,000 at a 1% discount. Issuance costs were $225,000. The entry to record the issuance of the refunding bonds would be

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a. Cash $14,625,000Expenditures 225,000Other Financing Uses – Discount 150,000

Other Financing Sources – Bonds $15,000,000b. Cash $14,625,000

Expenditures 225,000Other Financing Sources – Bonds $14,850,000

c. Cash $15,000,000Bonds Payable $15,000,000

d. Cash $14,625,000Unamortized Deferred Charges/Discount 375,000

Bonds Payable $15,000,000e. Cash $14,625,000

Expenditures 225,000Unamortized Discount 150,000

Bonds Payable $15,000,000

20. The Water Enterprise Fund customers are billed on a monthly basis. As of the end of the fiscal year, water valued at $3,956,000 was sold. The accounts receivable for the fund was $256,000 at the beginning of the year and was $326,000 at the end of the year. Given these facts, the revenue in the Water Enterprise Fund should be

a. $3,956,000b. $3,700,000c. $3,630,000d. $3,886,000

21. Internal Service Funds report a statement of net assets and a General Fund reports a balance sheet. Which of the following would potentially appear on each of these fund’s respective statements?

a. Inventoryb. Capital assets

c. Bonds payabled. All of the above would most likely appear on both statements.

22. Internal Service Funds may report each of the following equity classifications excepta. Net investment in capital assetsb. restricted net position.c. reserved fund balance.d. unrestricted net position.e. All of the above are proper equity classifications for an Internal Service Fund.

23. A Motor Pool Internal Service Fund purchased ten new vehicles for their fleet inventory. The fund entered into a capital lease. The capitalizable cost totaled $300,000 and there was a $50,000 down payment. The entry to record the transaction in the Internal Service Fund would be

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a. Vehicles $300,000Expenditures 50,000

Other Financing Source – Capital Lease $300,000Cash 50,000

b. Expenditures $300,000Other Financing Source – Capital Lease $250,000Cash 50,000

c. Vehicles $300,000Other Financing Sources – Capital Lease $250,000Cash 50,000

d. Vehicles $300,000Capital Lease Payable $250,000Cash 50,000

e. Vehicles $250,000Expenditures 50,000

Capital Lease Payable $250,000Cash 50,000

24. The General Fund paid $ 4,000 to the Internal Service Fund for services rendered. Which of the following statements accurately reflects the reporting effects of the transaction?

a. The Internal Service Fund will report revenues of $ 4,000.b. The Internal Service Fund will report a cash flow from operating activities on its

statement of cash flows.c. The Internal Service will report a transfer in of $ 4,000.d. Both items a and b.e. Both items b and c.

25. A municipality’s Central Garage Internal Service Fund had total billings for $8,000 for the month. Of the 40 vehicles serviced, 20 were police vehicles, 10 were water department vehicles, and 10 were wastewater department vehicles. What would the journal entry be to account for this transaction?

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a. Accounts Receivable $ 8,000Transfer from Other Funds $ 8,000

b. Accounts Receivable $ 8,000Charges for Services Revenue $ 8,000

c. Due from General Fund $ 4,000Due from Water Fund 2,000Due from Wastewater Fund 2,000

Charges for Services Revenue $ 8,000d. Due from General Fund $ 4,000

Due from Water Fund 2,000Due from Wastewater Fund 2,000

Transfer from Other Funds $ 8,000e. None of the above.

26. The principal of a Private-Purpose Trust Funda. must be nonspendable in nature.b. must be spendable in nature.c. must never fall below a pre-determined threshold that is determined by generally

accepted accounting principles.d. may be spendable or nonspendable in nature.

27. A Pension Trust Fund will be reported in the government-wide financial statements within

a. the governmental activities column.b. the business-type activities column.c. the discrete component unit presentations.d. None of the above. The Pension Trust Fund is not reported at the government-

wide level.

28. The local school board received a bequest of $1,000,000 to establish a scholarship fund for graduating students. The scholarship is accounted for in a Private-Purpose Trust Fund. The fund would report

a. additions of $1,000,000.b. revenues of $1,000,000.c. a transfer of $1,000,000.d. accounts payable of $1,000,000.

29. The municipalities for whom the county collects property taxes paid $ 5,000 in administrative fees to county to cover collection costs. The county will report

a. revenues of $ 5,000 in the General Fund.b. revenues of $ 5,000 in the Agency Fund.c. additions of $ 5,000 in the Agency Fund.d. other financing sources of $ 5,000 in the General Fund.e. other financing sources of $ 5,000 in the Agency Fund.

30. At year end, a county tax agency fund’s only asset was $500,000 in cash. The cash was collected on behalf of the following entities:

County---$300,000School district---$150,000Fire district---$50,000In the county basic financial statements, the tax Agency Fund should report what amount of assets and liabilities?

a. $200,000b. $300,000c. $500,000.d. None of the above. The amounts would be reported as net assets.

Answer Key

1 c

2 a

3 b

4 a

5 a

6 b

7 d

8 a

9 c

10 c

11 e

12 e

13 b

14 a

15 e

16 e

17 c

18 a

19 d

20 a

21 a

22 c

23 d

24 d

25 c

26 d

27 d

28 a

29 a

30 a