Question

1) Which of the following is not a required disclosure about each major class of capital assets?

A. Beginning-of-year and end-of-year balances showing accumulated depreciation separate from historical cost.

B. Capital acquisitions and sales or other dispositions during the year showing the date and method of acquisition or disposition.

C. Depreciation expense for the current period with disclosure of the amounts charged to each function in the statement of activities.

D. Disclosures describing works of art or historical treasures that are not capitalized and explaining why they are not capitalized.

2) The City of Oak Park constructed a new storage facility using the city's own public works employees. Construction costs were incurred in the amount of $900,000, plus $25,000 in interest on short-term notes used to finance construction. What amount should be capitalized in the government-wide statements?

A. $900,000.

B. $925,000.

C. $875,000.

D. $0.

3) Equipment that had been acquired several years ago by a special revenue fund at a cost of $40,000 was sold for $15,000 cash. Accumulated depreciation of $30,000 existed at the time of the sale. The journal entry to be made in the governmental activities journal will include all of the following except:

     A. A debit to Cash for $15,000.

     B. A debit to Accumulated Depreciation for $30,000.

     C. A credit to Equipment for $40,000.

     D. A credit to Other Financing Sources for $5,000.

4) GASB standards require that general capital assets be recorded in the government-wide statements at:

A. Historical cost.

B. Fair value at the financial statement date.

C. Estimated cost at the financial statement date.

D. None of the options are correct.

5) Which of the following is not true for capital projects funds?

A. Capital projects funds use a Construction Work in Progress account to record costs until the project is completed.

B. Encumbrance accounting is generally used.

C. Capital projects funds use the modified accrual basis of accounting.

D. Capital projects funds have a project-life focus.

6) The liability for general obligation bonds should be recorded in the:

A. General Fund.

B. Capital projects fund.

C. Governmental activities journal.

D. Debt service fund.

7) Which of the following debt service funds would normally have the largest balance in its Fund Balance account?

A. Serial bond debt service fund.

B. Deferred serial bond debt service fund.

C. Irregular serial bond debt service fund.

D. Term bond debt service fund.

8) Which of the following is a true statement regarding in-substance defeasance of bonds?

A. The government must place cash or other assets in an irrevocable trust sufficient to pay all future interest and principal payments for the debt being defeased.

B. The government must agree to maintain sufficient cash and investment balances in its debt service fund to cover all interest and principal payments for the debt being defeased.

C. The government must pledge to transfer amounts to an escrow agent prior to the due date for each interest and principal payment for the debt being defeased.

D. The government must agree to maintain sufficient unrestricted cash and investments in its governmental funds to cover all interest and principal payments for the debt being defeased.

Answer 1

1. answer is option b) Capital acquisitions and sales or other dispositions during the year showing the date and method of acquisition or disposition.

explanation:

required disclosures for capital assets are:

Capital assets not being depreciated are disclosed separately from assets that are being depreciated

• General policy for capitalizing assets and for estimating the useful lives of depreciable assets

• Beginning-of-year and end-of-year balances showing accumulated depreciation separate from historical cost

• Capital acquisitions during the year

• Sales or other dispositions during the year

• Depreciation expense for the current period with disclosure of the amounts charged to each function in the statement of activities

• Disclosures describing works of art or historical treasures that are not capitalized and explaining why they are not capitalized. If capitalized, include in the disclosures described above.

Capital acquisitions during the year and Sales or other dispositions during the year are shown in the disclosures for capital assets but the method of acquisition or disposition is not shown.