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					ACCY 161 – Fall 2008                           Exam #1                                September 30th

                                               KEY
1.    Fiscal accountability is found in:
     a. the governmental-wide financial statements
     b. the governmental fund financial statements
     c. all the fund financial statements
     d. both a. and b.
     e. both a. and c.
2.    The modified accrual basis of accounting is used in:
     a. the governmental fund financial statements
     b. all the fund financial statements
     c. only in the general fund financial statements
     d. none of the above
3.    The measurement focus that should be used in preparing fund financial statements is the
     a. fund accounting measurement focus
     b. current financial resources measurement focus
     c. economic financial resources measurement focus
     d. none of the above
4.    Which of the following funds is a governmental fund-type?
     a. Private-purpose trust fund.
     b. Internal service fund.
     c. Permanent fund.
     d. Enterprise fund.
5.    Which of the following is not a characteristic of a fund as defined by GASB standards?
     a. An accounting entity.
     b. A segregated quantity of cash and other financial resources on deposit with a designated
         trustee.
     c. A fiscal entity.
     d. All are characteristics of a fund
6.    The correct term for the liabilities in a governmental fund statement would be?
     a. Current liabilities.
     b. Fund liabilities.
     c. Legal liabilities.
     d. All are correct
7.    The accounting system used by a state or local government must make it possible
     a. To prepare consolidated accrual basis statements for the government as a whole.
     b. To prepare financial statements as required by the Financial Accounting Standards Board.
     c. To present fairly the financial position and results of financial operations of the government
         as a whole, as well as fund financial activity in conformity with GAAP, and to demonstrate
         compliance with finance-related legal and contractual provisions.
     d. All of the above.
8.    The cornerstone of governmental accounting includes:
     a. reliability
     b. budgetary control
     c. accountability
     d. both b. and c.
     e. a. and b. and c. are all correct
9.   Special purpose governments provide a wide range of services to their residents, such as:
     a. public safety
     b. cultural and recreation
     c. health and welfare

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ACCY 161 – Fall 2008                          Exam #1                                September 30th

   d. all the above
   e. none of the above

10. Fiscal accountability includes:
    a. whether or not the government has raised and spend fund in accordance with a approved budget
    b. compliance with laws and regulations
    c. operational efficiency
    d. both whether or not the government has raised and spend fund in accordance with a
        approved budget and compliance with laws and regulations
    e. whether or not the government has raised and spend fund in accordance with a approved budget
        and compliance with laws and regulations and operational efficiency
11. For governmental accounting and reporting, the reporting entity consists of:
    a. the primary government only
    b. the primary government and component units
    c. the primary government and component units and other smaller units within the geographical
        boundaries of the primary government.
    d. as directed by the state legislation that established the primary government.
    e. none of the above describe the reporting entity.
12. The MD&A refers to:
    a. only the government-wide financial statements due to its long-term nature
    b. only the various fund financial statement
    c. both the fund financial statements and the government-wide financial statements
    d. more that just the fund financial statements and the government-wide financial statements
13. All unmatured long-term liabilities of the government should be accounted for in:
    a. the general fund
    b. the governmental fund financial statements
    c. the governmental-wide financial statements
    d. both the general fund and the governmental fund statements.
    e. the general fund, the governmental fund statements and the government-wide statement.
14. The accounting system used by a state or local governmental unit must make it possible
    a. to prepare consolidated accrual basis statements for the governmental unit as a whole.
    b. to prepare financial statements as required by the Financial Accounting Standards Board.
    c. to present fairly the financial position and results of financial operations of the government
        as a whole, as well as fund financial activity in conformity with GAAP, and to demonstrate
        compliance with finance-related legal and contractual provisions.
    d. all of the above.
15. The measurement focus and basis of accounting of special revenue fund are most similar to
    a. governmental funds and the fiduciary fund
    b. proprietary funds.
    c. both the general fund and the permanent fund
    d. none of the above.
16. Interfund transfers and debt issue proceeds received by the General Fund would be recorded as
    a. other financing sources.
    b. other proceeds
    c. other financing activities
    d. would not be recorded by the General Fund.
17. Which of the following is not a budgetary account?
    a. Encumbrances
    b. Reserve for Encumbrances.
    c. Appropriations.
    d. Estimated Revenues.
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ACCY 161 – Fall 2008                            Exam #1                                  September 30th

    e. All are budgetary accounts
18. When the expenditure budget for the General Fund is recorded, the required journal entry will include
    a. a debit to Estimated Revenues.
    b. a debit to Encumbrances.
    c. a credit to Appropriations.
    d. Both a debit to Estimated Revenues and a credit to Appropriations.
19. The Expenditures control account of a governmental unit is debited when
    a. The budget is recorded.
    b. Supplies are ordered.
    c. Supplies previously encumbered are received.
    d. The invoice is paid.
20. When supplies ordered for use in an activity accounted for in the General Fund of a governmental unit
    are received at an actual price that is more than the estimated price on the purchase order, the
    Encumbrance account is
    a. Debited for the estimated price on the purchase order.
    b. Credited for the estimated price on the purchase order.
    c. Debited for the actual price for the supplies received.
    d. Credited for the actual price for the supplies received.
    e. None of the above
21. Which of the following steps in the acquisition of goods and services by an activity accounted for by
    the General Fund occurs first?
    a. Disbursement.
    b. Encumbrance.
    c. Expenditure
    d. Expense.
22. A tax is assessed to each parcel of property to fund a new park as a result of a recent election. These
    funds would be most properly accounted by
    a. the general fund
    b. a permanent fund
    c. a special revenue fund
    d. a trust fund
    e. any of these funds could be appropriate
23. Long-term assets like vehicles would be accounted for with
    a. the current financial resources focus
    b. fiscal accountability
    c. economic resources focus
    d. both the current financial resources focus and fiscal accountability
    e. all of these would be used to account for long-term assets
24. The Permanent Fund is used for:
    a. all trust funds
    b. only governmental trust funds
    c. public-purpose trust funds
    d. holding funds for investment purposes only
    e. none of the above
25. An example of other financing sources would be
    a. Grant funds from another governmental agency
    b. Proceeds from the borrowings
    c. Transfers from other funds
    d. Both transfers from other funds and proceeds from borrowings
    e. All of these are other financing sources
26. Fixed assets are found in the:
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ACCY 161 – Fall 2008                           Exam #1                                  September 30th

    a. Fund financial statements
    b. Government-wide financial statements
    c. Only in the govenmental fund financial statements
    d. Both a. and b. are correct
    e. Both a. and c. are correct.
27. Aggregate view of the financial results is found in the:
    a. Fund financial statements
    b. Government-wide financial statements
    c. Both a. and b. are correct after implementation of GASB 34
28. Estimated Revenues account normally has a:
    a. debit balance
    b. credit balance
    c. can be either a debit or a credit balance
29. A payment in lieu of taxes
    a. occurs when the full property tax assessment is not applicable
    b. is the same as an interfund transfer
    c. is between the different fund types
    d. all the above are correct
30. Property taxes revenue is recognized:
    a. first as a receivable
    b. when the bills are sent
    c. when the cash received as with other revenue
    d. none of the above are correcy
31. An encumbrace represents:
    a. an accounting liability of the governmental entity
    b. an offset to the appropriations
    c. an offset to the fund balance
    d. bof b. and c. are correct
    e. a. and b. are correct
32. Which of the following best describes the purpose behind the other financial sources/uses category?
    a. The category is used to distinguish interfund activity from transactions and events involving par-
        ties outside the financial reporting entity.
    b. The category is used to distinguish program revenues from general revenues.
    c. The category is used to isolate certain nonroutine inflows and outflows that might otherwise
        distort revenue and expenditure trend analysis.
    d. Other financial sources are equivalent to gains and other financing uses are equivalent to losses.
33. When the budget of a government is adopted and Estimated Revenues exceed Appropriations, the ex-
    cess is
    a. Credited to Fund Balance.
    b. Debited to Fund Balance.
    c. Debited to Reserve for Encumbrances.
    d. Credited to Reserve for Encumbrances.
34. The encumbrances control account of a city is decreased when
    a. Goods are ordered: No; Goods are received: No
    b. Goods are ordered: Yes; Goods are received: No
    c. Goods are ordered: Yes; Goods are received: Yes
    d. Goods are ordered: No; Goods are received: Yes
35. Which of the following will decrease the fund balance of a government at the end of the fiscal year?
    a. Appropriations are more than expenditures and reserve for encumbrances.
    b. Appropriations are more than expenditures and encumbrances.
    c. Appropriations are less than estimated revenues.
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ACCY 161 – Fall 2008                             Exam #1                                September 30th

   d. Appropriations are less than expenditures and encumbrances
Part II: Problem (10 points).

The following transactions occurred for the Sanitation Department for the City of Vanna. The Sanitation
Department is part of the general governmental fund. Complete the ledger as we did in class.
                                              Transactions
 1. An appropriation for the current year was approved by the city council for $20,000.
 2. The department is partially funded by a property tax and the estimated amount for the current year is
    $15,000.
 3. The department also charges for services and the budgeted amount for the current year is $7,000
 4. A purchase order for equipment was issued for $10,000.
 5. Of this amount in #2, (the $10,000) a partial shipment was received for $4,500 of the goods that had
    been ordered and this amount was the same as the amount on invoice.
 6. $4,000 of the property taxes we received.
 7. The invoices from item #5 were paid in full.
 8. Payroll of $1,000 was paid.
 9. Another purchase order for $500 was issued.
 10. Goods were received from outstanding purchase orders for $300 and the invoice amount was also
     $200.
 11. The purchase order for $500 was cancelled.

Part #1. Post the above transactions on governmental funds basis only (not for the government-wide ba-
sis) in the journal form provided below. Use the item number as the reference number.

                                                                                   Fund
    #            Use Appropriate Account Descriptions
                                                                         Debit             Credit
1       Fund Balance                                                  20000
              Appropriations                                                           20000
2       Prop. Tax Rec                                                 15000
               Actual Revenue                                                          15000
3       Estimated Revenue                                             7000
               Fund Balance                                                            7000
4       Encumbrances                                                  10000
               Reserve for Encumbrances                                                10000
5       Reserve for Encumbrances                                      4500
               Encumbrances                                                            4500
        Expenditures                                                  4500
               Vouchers Payable                                                        4500
6       Cash                                                          4000
               Prop. Tax Rec                                                           4000
7       Vouchers Payable                                              4500
               Cash                                                                    4500
8       Expenditures                                                  1000
               Vouchers Payable - Payroll                                              1000


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ACCY 161 – Fall 2008                             Exam #1                                 September 30th

                                                                                     Fund
     #             Use Appropriate Account Descriptions
                                                                             Debit           Credit
9        Encumbrances                                                  500
                Reserve for Encumbrances                                               500
10       Reserve for Encumbrances                                      300
                Encumbrances                                                           300
         Expenditures                                                  200
                Vouchers Payable                                                       200
11       Reserve for Encumbrances                                      500
                Encumbrances                                                           500

 Part #2. Complete the Appropriations – Expenditures – Encumbrances Ledger below to reflect these
 transactions – the one you just used for the journal entries. Use the item numbers above as your reference
 in the “Ref” column. Reconcile the amounts.
           Appropriations – Expenditures – Encumbrances Ledger: Sanitation Department
                                       Encumbrances                  Expenditures        Appropriations
 Ref         Description
                                   Dr         Cr        Open         Dr      Balance    Credit     Available
1        Appropriations                                                                    20000 20000
4        PO’s Issued             10000              10000                                         10000
5        Good Rec’d                      4500       5500           4500 4500                      10000
8        Payroll                                                   1000 5500                      9000
9        PO’s Issued               500              6000                  5500                    8500
10       Good Rec’d                      300        5700            200 5700                      8600
11       Cancel PO’s                     500        6200                  5700                    8100


         Reconciliation
         Encumbrances             6200
         Expenditures             5700
         Available Approp.        8100
         Total Approp.           20000




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ACCY 161 – Fall 2008                        Exam #1                                September 30th

Part III – Fill-In Questions 10 at two points each. Complete each of the following with what you
think is the best answer. Try to be legible in your answer.

1. The two types of revenue found on the government-wide statements are Program
     revenue and GENERAL revenue.
2. The general fund use the       FINANCIAL              resouces measurement focus.
3. The character classisfication is found on the         FUND      financial statements.
4. An example of budgetary account would be APPROPRIATIONS, ESTIMATED
     REVENUES, ENCUMBRANCES, ESTIMATED OTHER SOURCES AND
     USES
5. Operational accountability has to do with THE LONG-TERM AND SHORT-TERM
     FINANCIAL POSITION OF THE GOVERNMENTAL ENTITY AND THE
     COST OF PROVIDING SERVICES TO THE PUBLIC ALL ON AN ENTITY-
     WIDE BASIS.
6. The difference between an interfund loan and an interfund transfer is that AN
     INTERFUND LOAN IS TO BE PAID BACK AND A INTERFUND TRANSFER
     DOES NOT HAVE TO BE BACK. .
7. Discrete presentation has to do with financial reporting on COMPONENT UNITS
8. Budgetary accounting is limited to the GOVERNMENTAL funds.
9.    INTERPERIOD EQUITY                   refers to the extent to which current period
     revenues are adequate to pay for current period services.
10. Expenses are found in the GOVERNMENT-WIDE statements but not in the
     FUND statements.




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