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ACG 3501 Study Guide - Midterm Guide: Financial Statement, Title Search, Finance Lease

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coralsardine730
6 Apr 2017
School
UCF
Department
Accounting General
Course
ACG 3501
Professor
Lynda Dennis

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Document Summary

In the case of a betterment, the asset account can be credited for the original cost of the part replaced and then debited for the new cost. A roof repair should not be capitalized even if it uses more durable material to provide a better roof. Resource inflows are recorded as other financing sources in the capital projects fund and as liabilities in governmental activities. Resource outflows are recorded as expenditures in the capital projects fund and as construction work in progress in governmental activities. A capital project financed through general obligation debt should be. Accounted for in a capital projects fund. In a _______ ________ _______ , a government transfers the right and obligations of an asset to another legally separate gov t or private sector entity. The city of portage is building a new police station. They have set up a capital projects fund to account for the expenses of the new building.

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Related Questions

1. Which standard issued by the Governmental AccountingStandards Board in 1999 requires two distinct sets of financialstatements for state and local governments?

A) GASB Statement No. 32
B) GASB Statement No. 33
C) GASB Statement No. 34
D) GASB Statement No. 35
E) GASB Statement No. 36

2. Which group of governmental financial statements reports allrevenues and all costs of providing services each year?

A) GAAP-Based Financial Statements
B) Fund-Based Financial Statements
C) Cost-Based Financial Statements
D) Government-Wide Financial Statements
E) General Fund Financial Statements

3. Proprietary fundsare

A) Funds used to account for the activities of a government thatare carried out primarily to provide services to citizens
B) Funds used to account for a government's ongoing organizationsand activities that are similar to those operated by for-profitorganizations
C) Funds used to account for monies held by the government in atrustee capacity
D) Funds used to account for all financial resources except thoserequired to be accounted for in another fund
E) Funds used to account for revenues that have been legallyrestricted as to expenditure

4. Fiduciary fundsare

A) Funds used to account for the activities of a government thatare carried out primarily to provide services to citizens
B) Funds used to account for a government's ongoing organizationsand activities that are similar to those operated by for-profitorganizations
C) Funds used to account for monies held by the government in atrustee capacity
D) Funds used to account for all financial resources except thoserequired to be accounted for in another fund
E) Funds used to account for revenues that have been legallyrestricted as to expenditure.

5. The term "current financial resources" refers to

A) Those assets that can quickly be converted into cash
B) Monetary assets that are available to meet the government'sneeds
C) The government's current assets and current liabilities
D) The current value of all net assets owned by the governmentalunit
E) Financial resources used to provide electricity to localcitizens

6. Which group of financial statements is prepared using the"modified accrual accounting" approach?

A) GAAP-Based Financial Statements
B) Fund-Based Financial Statements
C) Cost-Based Financial Statements
D) Government-Wide Financial Statements
E) General Purpose Financial Statements

7. Under modified accrual accounting, when should anexpenditure to recognize interest on long-term debt berecorded?

A) At the end of each accounting period
B) When payment is due within one fiscal year
C) When payment is due
D) When cash is available to pay the interest
E) When the interest is incurred

8. Revenue from property taxesshould be recorded in the General Fund

A) when received
B) when there is an enforceable legal claim
C) when they are available for recognition
D) in the period for which they are required or permitted to beused
E) in the period in which the tax bills are mailed

9. A city received a grant of$5,000,000 from a private agency. The money was to be used to builda new city library. In which fund should the money be recorded forthe Fund-Based Financial Statements?

A) The General Fund
B) An Expendable Trust Fund
C) A Capital Projects Fund
D) An Agency Fund
E) A Permanent Fund

10. For government-wide financialstatements, what account is credited when a piece of equipment isleased on a capital lease?

A) Equipment - Capital Lease
B) Encumbrances - Long Term
C) Encumbrances - Lease Obligations
D) Capital Lease Obligation
E) The lease is not recorded

11. Jones College, a publicinstitution of higher education, must prepare financialstatements

A) As if the college was an enterprise fund
B) Following the same rules as state and local governments
C) According to GAAP
D) As if the college was a fiduciary fund
E) In the same manner as private colleges anduniversities

The City of Pfeiffer starts the year of 2015 with the General Fund and an enterprise fund. The General Fund has two activities: education and parks/recreation. For convenience, assume that the General Fund holds $123,000 cash and a new school building costing $1 million. The city utilizes straight-line depreciation. The building has a 20-year life and no salvage value. The enterprise fund has $62,000 cash and a new $600,000 civic auditorium with a 30-year life and no salvage value. The enterprise fund monitors just one activity, the rental of the civic auditorium for entertainment and other cultural affairs.

The following transactions for the city take place during 2015. Assume that the city’s fiscal year ends on December 31.

a.

Decides to build a municipal park and transfers $70,000 into a capital projects fund and immediately expends $20,000 for a piece of land. The creation of this fund and this transfer were made by the highest level of government authority.
b.

Borrows $110,000 cash on a long-term bond for use in creating the new municipal park.
c.

Assesses property taxes on the first day of the year. The assessment, which is immediately enforceable, totals $600,000. Of this amount, $510,000 will be collected during 2015 and another $50,000 is expected in the first month of 2016. The remainder is expected about halfway through 2016.
d.

Constructs a building in the park in (b) for $80,000 cash so that local citizens can play basketball and other sports. It is put into service on July 1 and should last 10 years with no salvage value.
e.

Builds a sidewalk around the new park for $10,000 cash and puts it into service on July 1. It should last for 10 years, but the city plans to keep it up to a predetermined quality level so that it will last almost indefinitely.
f.

Opens the park and charges an entrance fee of only a token amount so that it records the park, therefore, in the General Fund. Collections during this first year total $8,000.
g.

Buys a new parking deck for $200,000, paying $20,000 cash and signing a long-term note for the rest. The parking deck, which is to go into operation on July 1, is across the street from the civic auditorium and is considered part of that activity. It has a 20-year life and no salvage value.
h.

Receives a $100,000 cash grant for the city school system that must be spent for school lunches for the poor. Appropriate spending of these funds is viewed as an eligibility requirement of this grant. During the current year, $37,000 of the amount received was properly spent.
i.

Charges students in the school system a total fee of $6,000 for books and the like. Of this amount, 90 percent is collected during 2015 with the remainder expected to be collected in the first few weeks of 2016.
j.

Buys school supplies for $22,000 cash and uses $17,000 of them. The General Fund uses the purchases method.
k.

Receives a painting by a local artist to be displayed in the local school. It qualifies as a work of art, and officials have chosen not to capitalize it. The painting has a value of $80,000. It is viewed as inexhaustible.
l.

Transfers $20,000 cash from the General Fund to the Enterprise Fund as a capital contribution.
m. Orders a school bus for $99,000.
n.

Receives the school bus and pays an actual cost of $102,000. The bus is put into operation on October 1 and should last for five years with no salvage value.
o.

Pays salaries of $240,000 to school teachers. In addition, owes and will pay $30,000 during the first two weeks of 2016. Vacations worth $23,000 have also been earned but will not be taken until July 2016.
p.

Pays salaries of $42,000 to city auditorium workers. In addition, owes and will pay $3,000 in the first two weeks of 2016. Vacations worth $5,000 have also been earned but will not be taken until July 2016.
q.

Charges customers $130,000 for the rental of the civic auditorium. Of this balance, collected $110,000 in cash and will collect the remainder in April 2016.
r. Pays $9,000 maintenance charges for the building and sidewalk in (d) and (e).
s.

Pays $14,000 on the bond in (b) on the last day of 2015: $5,000 principal and $9,000 interest.
t.

Accrues interest of $13,000 on the note in (g) as of the end of 2015, an amount that it will
pay in June 2016.
u.

Assumes that a museum that operates within the city is a component unit that will be discretely presented. The museum reports to city officials that it had $42,000 of direct expenses this past year and $50,000 in revenues from admission charges. The only assets that it had at year-end were cash of $24,000, building (net of depreciation) of $300,000, and a long-term liability of $210,000.

Prepare the 2015 fund financial statements for the governmental funds and the proprietary funds. A statement of cash flows is not required. Assume that “available” is defined as within 60 days and that all funds are major. The General Fund is used for debt repayment. Assume that major funds are labeled as “Special Revenue Fund” and “Capital Projects Fund”. (Amounts to be deducted should be indicated by a minus sign.)