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In: Accounting

For each of the following, indicate whether the statement is true or false and include a...

For each of the following, indicate whether the statement is true or false and include a brief explanation for your answer.

a.A pension trust fund appears in the government-wide financial statements but not in the fund financial statements.

b.Permanent funds are included as one of the governmental funds.

c.A fire department placed orders of $20,000 for equipment. The equipment is received but at a cost of $20,800. In compliance with requirements for fund financial statements, an encumbrance of $20,000 was recorded when the order was placed, and an expenditure of $20,800 was recorded when the order was received.

d.The government reported a landfill as an enterprise fund. At the end of Year 1, the government estimated that the landfill will cost $800,000 to clean up when it is eventually full. Currently, it is 12 percent filled. At the end of Year 2, the estimation was changed to $860,000 when it was 20 percent filled. No payments are due for several years. Fund financial statements for Year 2 should report a $76,000 expense.

e.A city reports a landfill in the general fund. At the end of Year 1, the government anticipated the landfill would cost $900,000 to clean up when it is full and reported that it was 11 percent filled. At the end of Year 2, the estimates were changed to $850,000 and 20 percent filled. No payments are due for several years. Government-wide financial statements for Year 2 should report a $71,000 expense.

f.A lease for a computer (that has a 6-year life) is signed on January 1, Year 1, with six annual payments of $10,000. The police department will use the computer. The first payment is to be made immediately. The present value of the $60,000 in cash flows is $39,000 based on a 10 percent rate. Fund financial statements for Year 1 should report total expenditures of $10,000.

g.An agency fund has neither revenues nor expenditures but reports expenses.

h.A lease for a computer (that has a 6-year life) is signed on January 1, Year 1, with six annual payments of $10,000. The computer is to be used by the police department. The first payment is to be made immediately. The present value of the $60,000 in cash flows is $39,000 based on a 10 percent rate. Government-wide financial statements for Year 1 should report expenses of $9,400.

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ekkarill92 answered 1 year ago
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