ACC – Exam 2 study Guide

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1. Which of the following funds typically record budgets?
2. What is the correct debit or credit for the following scenario: A contract was issued for the major part of work
to be done by a private contractor in the amount of $1,200,000 for a new County court house?
3. When taxes and/or special assessments are levied specifically for payment of interest and principal on longterm debt, those taxes are recognized:
4. Capital project funds have the following characteristics
5. An encumbrance in a capital project fund is created
6. Which of the following statements is false?
7. With respect to Capital Projects Funds, which of the following is correct?
8. If a trust is to be used for the benefit individuals, private organizations or other governments, the following
fund(s) should be used:
9. With respect to Permanent Funds, which of the following is not true?
10. When a government acquires general fixed assets under a capital lease agreement, the asset should be
recorded in the General Fund’s fund basis financial statements:
11. Which of the following is a common source of funding for capital projects?
12. Which of the following is true with respect to special assessment levies?
13. If the government is primarily or secondarily liable for the payment of debt principal and interest for a
special assessment project,:
14. Which of the following statements regarding serial bonds is false?
15. Which of the following projects would normally be accounted for in a capital projects fund?
16. General fixed assets that are acquired with governmental fund resources are reported as assets in the:
17. When a purchase order is issued under a Capital Projects fund, how should the transaction be recorded?
18. Which of the following lease criteria would not qualify a lease as a capital lease?
19. Which of the following lease criteria would not qualify a lease as a capital lease?
20. If taxes are levied specifically for payment of interest and principal on long-term debt, those taxes are:
21. Governmental funds, other than the General Fund, are considered major if:
Use the following for questions 22-30 On October 1, 2013, the City of Mizner issued $3,500,000 in 4%,
general obligation bonds at 101 for the purpose of constructing an addition to City Hall. The premium was
transferred to a debt service fund. A total of $3,475,000 was used to construct the addition, which was
completed prior to June 30, 2014. The remaining funds were transferred to the debt service fund. The bonds
were dated October 1, 2013, and paid interest on April 1 and October 1. The first of 20 annual principal
payments of $175,000 is due October 1, 2014. The fiscal year for Mizner is July 1-June 30.
22. In addition to a $3,500,000 liability in the government-wide Statement of Net Assets (or Net Position), how
would the bond sale be reported?
23. In addition to a capital asset in the government-wide Statement of Net Assets (or Net Position), how would
the construction costs of $3,475,000 be reported at year-end?
24. In addition to a capital asset in the government-wide Statement of Net Assets (or Net Position), how would
the construction costs of $3,475,000 be reported at year-end?
25. How would the government account for the unused bond proceeds?
27. Which of the following statements is true regarding proprietary funds?
28. Centralized purchasing, computer services, and janitorial services are examples of activities that are
commonly reported in what type of funds?
30. An example of an activity that would not normally be accounted for in an internal service fund would be:

31. Which financial statements are required for a proprietary fund?
32. Which of the following is correct with respect to Internal Service Funds?
33. The categories of Net Assets (or Net Position) for a proprietary fund are classified within which of the
following categories?
34. Restricted Net Assets (or Net Position) for a proprietary fund:
35. GASB Statement 34 requires enterprise funds to be used under which of the following circumstances?
36. When governments operate landfills as enterprise funds, which of the following is correct?
37. The Statement of Cash Flows for a proprietary fund would include which of the following?
39. Activities that produce goods or services to be provided to other departments or other governmental units
would be reported in which fund?
40. Which of the following is true of the Statement of Net Assets (or Net Position) for proprietary funds?
41. GASB requires the ____________ method to report cash flows from operating activities in the Statement of
Cash Flows.
42. An internal service fund provided services to a General Fund department. At the time of billing, the credit
entry in the internal service fund would be:
43. Revenue bonds sold by a water utility fund (which uses an enterprise fund), upon sale, would be recorded
as:
44. Capital assets of an enterprise fund should be reported in the:
45. Long-term liabilities of an enterprise fund should be reported in the:

46. How should customer deposits held for water meters that cannot be spent for operating purposes be
classified?
47. How are Fiduciary Funds presented in the Government-wide Financial Statements?
49. ______ funds are created when individuals or organizations contribute resources with the agreement that
principal and/or income will be used to benefit individuals or nongovernmental organizations.
50. ______ funds are created when individuals or organizations contribute resources with the agreement that the
income will be used to the citizenry or the government’s programs.
51. A fund that is used to account for assets held by a government acting as agent for one or more other
governments units or for individuals or private organizations is a(n):
52. A fund that is the result of an agreement between a contributor and a government that the principal and/or
income of trust assets is for the benefit of individuals, organizations, or other governments is a(n):
53. Which of the following is not an example of the function of an Agency Fund?
54. Which of the following is true regarding agency funds?
55. The City of Sycamore has investments in bonds. These bonds have an amortized cost of $2,996,000. At year
end, the financial press reports a market value of $3,002,000 for these bonds. The original cost of the bonds was
$2,992,000. The par value at maturity will be $3,000,000. The amount at which the investments would be
reported is:
57. The City of Springfield has three pension plans: a locally administered police plan for which it is trustee, a
statewide cost sharing plan, and a statewide agency plan. The City would include in its CAFR pension trust
fund financial statements for:

58. Which of the following is true regarding fiduciary funds?
59. Churchville County is trustee for a multi-government investment pool and has established an investment
trust fund. Included in the investment trust fund, for management purposes, are investments in the amount of
$15 million from the County’s General Fund, $3 million from the County’s special revenue funds, and $112
million from other governments. Which of the following would be true?
60. The tax agency fund of Eden County collected $2,000,000 for the Eden School District, $1,000,000 for the
Village of Edenton, $1,200,000 for the Eden Park District, and $700,000 for Eden County. County General
Fund employees handle the collections, and a 3 percent collection fee is charged all units except the county. The
total amount to be remitted (added) to the county General Fund would be:
61. James McHughes gave the following to the City of Carnesville in order to establish a private-purpose trust:
• Land – cost, $500,000; fair market value as of the date of the gift, $400,000.
• Securities – cost, $1,600,000; fair market value as of the date of the gift, $1,800,000.
The amount to be recorded as additions for gifts by the private-purpose trust fund would be:
62. Which of the following is true regarding pension accounting and reporting for state and local governments?
63. Clinton County maintains an investment trust fund for the investments of governments within its borders.
All the investments had determinable fair values. Which of the following is true regarding investment trust
funds and investments in general?
64. In an agency fund, assets are equal to:
65. The operations of agency funds will be included in which of the following statements?
66. Which type of pension plan is required to pay out a certain sum, generally based on a percentage of salary
upon retirement and the number of years of service?
67. Which of the following is not a required supplementary information schedule for pension pensions?
68. Which is true regarding the basis of accounting for fiduciary funds?
69. Escheat property is best described as which of the following?
70. Fund equity will not be found in which of the following funds?
71. A pension plan that is required to pay out only the amount that has been accumulated for each employee is a
________?
72. Which type of pension plan most commonly results in an unfunded actuarial liability?
73. Agency Funds are not included in the Government-wide Financial Statements because:
74. With respect to government-wide statement, which of the following statements is correct?
75. Which of the following funds would not be included in the government-wide financial statements
76. Which of the following would be included in the Equity section of the Statement of Net Assets (or Net
Position)?
77. In addition to a Statement of Net Assets (or Net Position), which of the following are government-wide
statements?
78. Which of the following is not a reconciliation required by GASB in a CAFR?
79. Which of the following is true regarding revenue recognition for property taxes, when reporting in the
government-wide statements?
80. When converting from fund basis reporting to government-wide reporting, which of the following would
require an adjustment?
81. Governmental fund-basis statements are prepared using the ________, and must be converted to the
________ to be incorporated in the government-wide statements.

82. When preparing government-wide financial statements, the modified accrual basis governmental funds are
adjusted for all of the following events except?
84. Which of the following statements is not correct with respect to the preparation of government-wide
statements?
85. A local government purchased a building and recorded the event by debiting Expenditures – Capital Outlay
and crediting Cash. What would be the worksheet entry to prepare the government-wide statements?
86. A local government recorded the sale of a capital asset at a gain by recording a debit to cash and credit to
proceeds of sale of capital asset. What is the worksheet entry when preparing the government-wide statements?
87. A local government recorded the sale of a capital asset at a gain by recording a debit to cash and credit to
proceeds of sale of capital asset. What is the worksheet entry when preparing the government-wide statements?
A. Debit to Proceeds of sale of capital asset and credit to Gain on sale of capital asset
B. Debit to Cash and credit to capital asset (net) and credit to Gain on sale of capital asset
C. Debit to Proceeds of sale of capital asset and credit to capital asset (net) and Gain on sale of capital asset
D. None of the above
88. A governmental fund Statement of Revenues, Expenditures, and Changes in Fund Balances reported
expenditures of $30 million, including capital outlay expenditures of $5 million. Capital assets for that
government cost $90 million, including land of $10 million. Depreciable assets are amortized over 20 years, on
average. The reconciliation from governmental changes in fund balances to governmental activities changes in
would reflect a(an):
89. The City of Charlotte reported property tax revenues in 2014 in the amount of $10 million. The deferred
property taxes reported in the General Fund’s balance sheet was $300,000 on December 31, 2013 and was
$375,000 on December 31, 2014. During 2014, $9,000,000 was collected. What amount should the city report
for Property Tax Revenue in its year ended December 31, 2014 government-wide Statement of Activities?
90. Which of the following is true regarding the government-wide statements?
91. Which of the following is true regarding the reporting of general capital assets by state and local
governments?
92. A government recorded transfers out of the General Fund to the debt service fund in the amount of $300,000
and to the enterprise fund in the amount of $600,000. The amount that would be shown as a transfer in the
governmental activities column of the Statement of Activities would be:
93. Which of the following is an example of a special-purpose government?
94. Special-purpose governments that are engaged in both governmental and business-type activities or in more
than one governmental activity are required to include all of the following in its financial statements except?
95. Assume a government is determined to be a special-purpose government engaged in business-type activities
only. Which of the following financial statements would be required?
96. Assume a government is a special-purpose government engaged in only one governmental activity. Which
financial statements would be required?
97. With respect to public colleges engaged in business-type activities, which of the following is not correct?
98. Depending upon the circumstances, in practice public colleges and report as special purpose entities
engaged in:
99. Depending upon the circumstances, in practice public colleges and report as special purpose entities
engaged in:
100. Which of the following is true with respect to public four-year higher education institutions (public
colleges)?
101. Public colleges and universities may choose to report as:
102. A public college had tuition and fees of $21,000,000. Scholarships, for which no services were required,
amounted to $1,600,000. Graduate assistantships, for which services were required, amounted to $2,500,000.
The amount to be reported by the public college as net tuition and fees would be:
103. Which of the following is true regarding the Statement of Cash Flows for a public college?

104. Public colleges and universities follow __________ guidelines while private colleges and universities
follow ________ guidelines
105. Which of the following groups would not be considered a component unit of a special-purpose
government, for the purposes of applying GASB Statement 39: Determining Whether Certain Organizations Are
Component Units?

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