Question

1.A town transfers cash of 60,000 from its general fund to a debt service fund. What does the town report in its government-wide financial statement?

a. No reporting is made

b. Other Financing Sources increase by $60,000; Other Financing Uses increase by $60,000.

c. Revenues increase by $60,000; Expenditures increase by $60,000.

d.Revenues increase by $60,000; Expenses increase by $60,000.

2.A country transfers cash of 60000 from its general fund to a debt service fund. What is report a country’s fund financial statements?

a. No reporting is made

b. Other Financing Sources increase by $60,000; Other Financing Uses increase by $60,000.

c. Revenues increase by $60,000; Expenditures increase by $60,000.

d.Revenues increase by $60,000; Expenses increase by $60,000.

3.A city transfers cash of $20,000 from its general fund to an enterprise fund to pay for work performed by the enterprise fund for the school system. How does the city report this transfer on its government-wide financial statements?

a. No reporting is made.

b. Other Financing Sources increase by $20,000. Other Financing Uses increase by $20,000.

c. Revenues increase by $20,000. Expenditures increase by $20,000.

d. Revenues increase by $20,000. Expenses increase by $20,000.

4.A city transfers cash of $20,000 from its general fund to an enterprise fund to pay for work performed by the enterprise fund for the school system. What is reported on the fund financial statements?

a. No reporting is made.

b. Other Financing Sources increase by $20,000. Other Financing Uses increase by $20,000.

c. Revenues increase by $20,000. Expenditures increase by $20,000.

d. Revenues increase by $20,000. Expenses increase by $20,000.

5.City government officials are analyzing a complicated financial transaction. A GASB Implementation Guide seems to provide one reporting answer and a GASB Concepts Statement seems to provide a different answer. What reporting is most appropriate?

a. The government can use either method and still be in conformity with GAAP.

b. Government officials should follow the guidance provided by the GASB Implementation Guide.

c. The city’s financial statements must be in conformity with the GASB Concepts Statement.

d. The city’s accountants should seek some type of compromise that takes both of these pronouncements into consideration.

6.Reynolds County has three large trucks with a total net book value of $600,000 and remaining lives of six years with no expected residual value. County officials lease the trucks to the City of Webster on January 1, 2020, for six years. Based on a negotiated annual implicit interest rate of 5 percent, the parties agree on annual payments of $112,581 beginning immediately and each January 1 thereafter. For both governments, the trucks relate to activities maintained with the General Fund.

A What is the total amount of expenditures that Webster report on its fund financial statements for the governmental funds for 2020?

B.What amount of depreciation expense will Reynolds report on government-wide financial statements for 2020?

C. What amount of deferred lease revenue will Reynolds report on its statement of net position as of December31,2020, assuming that country recognizes revenue on a straight-line method?

7. A statement of activities shows semblances in the labeled?

a. Current and women

b.Temporary and permanent

c.Without donor restrictions and with donor restrictions

d. Contributed funds and funds from exchange transactions

8.The Stanton Company conveys $23,000 in cash to a private not-for -profit entity. The money must be used for a designed purpose.This conveyance is viewed as a conditional contribution. Which of the following is recorded by the private not-for-profit entity

a. A liability

b. No journal entry is made.

c. Contributed revenue reported within net assets with donor restrictions.

d. Contributed revenue reported within net assets without donor restrictions.

9.A local private not-for-profit entity receives a large monetary pledge. Accountants are attempting to determine if the contribution is conditional. They are assessing the possible existence of a barrier that has to be overcome. Which of the following is not an indication of a barrier of this type?

a. Measurable performance related barrier

b. Stipulation limiting discretion by the recipient on the conduct of an activity

c. Requirement preventing the money from being spent until a specific date in the future

d. Stipulation that ties into the agreement

10. During the year ended December 31, 2020, Anderson Hospital (operated as a private not-for-profit entity) received and incurred the following:

Fair value of donated medicines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 54,000

Fair value of donated services (replaced salaried employees) . . . . . . . . . . . . 38,000

Fair value of donated services (not replace salaried employees) . . . . . . 11,000

Regular charges to patients(not charity care) . . . . . . . . . . . . . . . . . . . . . . . . . 176,000

Charity care charges . . . . . . . .. . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210,000

Provision for bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,000

How should this private not-for-profit report each of these balances?

Answer 1

1.(The transfer occurred entirely within the Government Activities and created no net impact on the total amounts reported.)

2.

b. Other Financing Sources increase by $60,000. Other Financing Uses increase by $60,000.

3.

D. (This transaction was the same as might have occurred with an outside party and is accounted for in the same manner.)​

​​​​​​4.

C. (This transaction was the same as might have occurred with an outside party and is accounted for in the same manner.)

5.

B .   (GASB Implementation Guides have a higher level of authority than does GASB Concepts Statements and should be followed. These implementation guides are classified as Category B authoritative literature. GASB Concepts Statements are classified as non authoritative.)

6.

B. (Because both parties have the same cash flows and the same interest rate, the present value will be $600,000 for both the lessor and the lessee. The life of the asset is six-years so amortization is $600,000/6 years or $100,000 per year. The first payment reduces the $600,000 liability by $112,581 down to $487,419. At a 5 percent annual rate, interest expense $24,371. Total expense is $124,371.)

8.

A. (Money has been conveyed to the NFP but the contribution is conditional. Because the NFP may have to return the money unless it is able to overcome the barrier associated with the gift, a liability is recognized.)

9.

C. (C is a time restriction on the use of the money. It is not a barrier that the NFP must overcome in order to retain the money.)