Question

You will need the Village Officer's Handbook--Appendix A-1 as well as the financial statements for the year ended June 30, 2016 for the City of Detroit. Financial Statements can be found at www.detroitmi.gov    Type "CAFR" into the search box.

QUESTION 1

Using the government-wide financial statement, determine which statement is correct regarding the Recreation and Culture activity. What you expect should be based on the type of activity it is.

		This activity IS self-supporting, although I would not expect it to be.
		This activity IS self-supporting as I would expect it to be.
		This activity is NOT self-supporting, although I would expect it to be.
		This activity is NOT self-supporting and I would not expect it to be.

QUESTION 2

Using the government-wide financial statement, select the correct statement regarding the Sewer activity. What you expect should be based on the type of activity it is.

		This activity IS self-supporting, as I would expect it to be.
		This activity IS self-supporting, although I would not expect it to be.
		This activity is NOT self-supporting, although I would expect it to be.
		This activity is NOT self-supporting and I would not expect it to be.

QUESTION 3

The City of Detroit reports the budgetary comparison statement as:

		One of the fund statements for governmental funds.
		Required Supplemental Information (RSI).
		In the statistical section.
		In the notes to the financial statements.

QUESTION 4

Using the original budget for the General Fund, what journal entry would have been made in the General Journal? (Ignore subsidiary accounts). Form your answer as follows (DR = Debit and CR = Credit):

DR-Account Title $000
CR-Account Title $000

Please group your debit accounts and your credit accounts

QUESTION 5

Examine the revenue variances for the General fund and select the correct statement.

		There are both favorable and unfavorable variances, which is NOT typical for revenue variances.
		There are only favorable variances, which is typical for revenue variances.
		There are only unfavorable variances which is NOT typical for revenue variances.
		There are both favorable and unfavorable variances, which is typical for revenue variances.

QUESTION 6

Examine the expenditure variances for the General Fund and select the correct statement.

		The expenditure variances are all unfavorable which IS typical of expenditure variance.
		The expenditure variances are all favorable, which IS typical of expenditure variances.
		The expenditure variances are both favorable and unfavorable, which IS typical of expenditure variances.
		The expenditure variances are both favorable and unfavorable which is NOT typical of expenditure variances.

QUESTION 7

The "available appropriation" in the subsidiary ledger at the end of the year is the same amount as the variance in the budgetary comparison statement.

True

False

QUESTION 8

Suppose Detroit decides to add an occupancy tax to be collected by all local hotels. These revenues will be restricted by state law for the promotion of tourism. These tax revenues will be reported in the government-wide statement of activities as:

		General Revenues
		Program Revenues of the city's Recreation and Culture Department, which is assigned responsibility for promoting tourism.
		Either A or B, at the city's discretion.
		Neither A nor B. These revenues should be reported only in the special revenue fund.

QUESTION 9

Which of the following inflows to a governmental fund would be classified as an Other Financing Source?

		Sales taxes.
		Proceeds of bonds issued.
		Interfund Transfer In
		Both B and C.

QUESTION 10

Use Appendix A-1 of the Village Officer's Handbook (found in Module 2) to answer the following question.
Which of the following account numbers would most likely be used to report the receipt of swimming pool fees if a special revenue fund is used.

		A1--E-153-1
		B4--E-153-1
		B4--F-153-1
		A1--F-153-1

Answer 1

The city government of Detroit has spent a lot of money in recreation and culture and actively earns revenue out of these activity. The activity self is self-supporting. I expect the government to encourage more and more money to be allocated for these activity. This is a governmental activity.

The government also actively maintains and spends huge sum of money under sewage plan. These has come under the business type activities and hence is self-supporting in nature. Because this activity also earns money out of the sewage disposal process.   

The city of Detroit reports the budgetary comparison statement in the required supplementary information section in the form of changes in the fund balances for the last few fiscal years in a comparative.

The journal entry should be in the format as below:

Estimated revenues                                                                       Dr.

Estimated other financing resources                                       Dr.

Appropriated fund balance                                                         Dr.

Appropriations for expenditures

Appropriations for other financing uses

There are both favorable and unfavorable variances in the Revenue section which is a typical one since revenue generates out of several different activities for which there can be significantly lower to none certainty. In that case, variances from the actual and standard is likely to occur.

There are only favorable variances in the budgeted expenditures from that of the actuals which is a good sign. Only in an activity under recreational and cultural section faces negative variances and other than that, there were no significantly unfavorable variances.