1. Howard City should use a capital projects fund to account for: a Proceeds of a capital grant to finance a new civic center that will not provide services primarily on a user-charge basis b Construction of sewer lines by the water and sewer utility to be financed by user costs c The accumulation of resources to retire bonds issued to construct the town hall d Construction of an addition to the airport terminal owned by the Howard City Municipal Airport, an enterprise fund 2. When a capital projects fund is dissolved by paying any remaining assets to another fund, the decrease in fund balance is a (an): a Expenditure b Operating transfer c Residual equity transfer d Reimbursement 3. Which of the following items would be least likely to appear in the account titles of a capital projects fund? a Due from federal government (for grant) b Due from general fund c Proceeds from bond issue d Construction in progress 4. Three financial statements may be required to present the results of operations and financial position of a special revenue fund. Which of the following is not one of these required statements? a Statement of cash flows b Statement of revenues, expenditures, and changes in fund balance c Statement of revenues, expenditures, and changes in fund balance—budget and actual d Balance sheet 5. Assets financed through a capital projects fund should be capitalized in the government-wide financial statements: a Only when construction is completed b On the basis of expenditures to date in Construction in Progress c On the basis of expenditures and encumbrances to date in Construction in Progress d On the basis of amounts paid to date in Construction in Progress
> Distinguish between the various types of interfund activity.
> What is an appropriation? How can budgetary approval be arranged to give the legislative body maximum control over the budget? How can it be arranged to give the executive maximum flexibility?
> Are interfund transfers expenditures or expenses? Explain.
> How does the accounting treatment of a nine-month note payable differ from the accounting treatment of a five-year note payable within a governmental fund? Why?
> Use the information in P 23-3 to prepare a charge–discharge statement for the estate of George Wilson for the period March 1, 2015 through April 30, 2015. Information from P 23-3 George Wilson dies on March 1, 2015, leaving a valid will. The will reads
> What types of revenue do governments have? How do nonexchange transactions differ from exchange transactions?
> What does measurement focus mean? What two focuses are used in governmental accounting? Which fund types use each?
> What is the modified accrual basis of accounting? Which funds utilize the modified accrual basis of accounting?
> Why aren’t fixed assets recorded in the accounts of a general fund? Where are they recorded?
> What are the simplified and complete accounting equations for a proprietary fund?
> 1. Internal service funds are reported: a With governmental funds on the fund financial statements b With governmental activities on the government-wide statement of net position c With proprietary funds on the government-wide statement of net position d
> Three wealthy friends, Tom, Grant, and Karen, each decided to donate $5,000,000 to the not-for-profit organization of their choice. Each donation was made on May 21, 2016. Prepare the entries required for each of the recipient organizations under the fol
> 1. A nongovernmental VHWO receives $20,000 of unconditional promises to give with no donor-imposed restrictions. Of this amount, $14,000 is due during the current period and $6,000 is due in the next period. The organization estimates that 3 percent of t
> Comparative adjusted trial balances for the motor pool of Douwe County at June 30, 2016, and June 30, 2017, are as follows: REQUIRED: Prepare fund financial statements for the motor pool for the year ended June 30, 2017. (The statement of cash flows is
> The following transactions relate to the Fiedler County Utility Plant, a newly established municipal facility financed with debt secured solely by net revenue from fees and charges to external users. 1. The general fund made a $30,000,000 contribution to
> The City of Thomasville established an internal service fund to provide printing services to all city offices and departments. The following transactions related to the fund took place in 2016: 1. On January 15, the general fund transferred equipment wit
> What is the purpose of a capital projects fund? Are all general fixed assets of a governmental unit acquired through capital projects funds? Explain.
> What are the special requirements for the presentation of financial statements for a firm that is operating under Chapter 11 Bankruptcy protection?
> Jimmy Olson died on June 15, 2015, at the age of 75, after a brief illness. Jimmy is survived by his wife, Lois, and two adult sons, Clark and Kent. Jimmy left a valid will, requesting that Clark serve as executor of his estate. Jimmy’s
> Caleb County had a beginning cash balance in its enterprise fund of $714,525. During the year, the following transactions affecting cash flows occurred: 1. Acquired equity investments totaling $165,000 for cash 2. Receipts from sales of goods or services
> The City of Meringen operates a central garage through an internal service fund to provide garage space and repairs for all city-owned and operated vehicles. The central garage fund was established by a contribution of $200,000 from the general fund, whe
> On July 1, 2016, Duchy County receives a $500,000 contribution from the local chapter of Homeless No More. A trust agreement specifying that the income from the contribution be distributed each May 15 to the downtown homeless shelter accompanies the cont
> On January 1, 2016, J. G. Monee created a student aid trust fund to which he donated a building with a fair value of $400,000 (his cost was $250,000), bonds having a market value of $500,000, and $100,000 cash. The trust agreement stipulated that princip
> The City of Laramee established a tax agency fund to collect property taxes for the City of Laramee, Bloomer County, and Bloomer School District. Total tax levies of the three governmental units were $200,000 for 2016, of which $60,000 was for the City o
> 1. Charges for services are a major source of revenue for: a A debt service fund b A trust fund c An enterprise fund d A capital projects fund 2. A city provides initial financing for its enterprise fund with the stipulation that the amount advanced be
> For an enterprise fund, note how each of the following transactions affects (a) net investment in capital assets (net of related debt), (b) restricted net position, and (c) unrestricted net position. (Record N/A if there is no effect on the net position
> What is the role of a subsidiary ledger in a governmental entity?
> Assume that supplies on hand at the beginning of the year amount to $60,000 and that supply purchases during the year are $400,000. Supplies on hand at year-end are $40,000, and the consumption basis of accounting for supplies is used. What adjusting ent
> For each of the following events or transactions, prepare the necessary journal entry or entries, and identify the fund or funds that will be affected. 1. A governmental unit collects fees totaling $4,500 at the municipal pool. The fees are charged to re
> You have been hired as trustee for the testamentary trust created by the will of Tom Josephson. The trust is created on June 30, 2015. (Use the information provided in P 23-6 and P 23-7.) The trust initially invests the proceeds from the estate in a chec
> How are capital leases recorded in governmental funds?
> Which funds may be used to account for the activities of a general governmental special assessment construction project with long-term financing? Explain.
> How do special assessment levies differ from general tax levies?
> The Town of Lilehammar has $3,000,000 of 6 percent bonds outstanding. Interest on the general obligation, general government indebtedness is payable semiannually each March 31 and September 30. December 31 is the fiscal year-end. Record the following tra
> The following information regarding the fiscal year ended December 31, 2016, was drawn from the accounts and records of the Volendam County general fund: Revenues and Other Asset Inflows Taxes.............................................................
> The following information was abstracted from the accounts of the general fund of the City of Lahti after the books had been closed for the fiscal year ended June 30, 2016: ADDITIONAL INFORMATION: The budget for the fiscal year ended June 30, 2016, pro
> The following summary of transactions was taken from the accounts of the Oslo School District general fund before the books had been closed for the fiscal year ended June 30, 2016: ADDITIONAL INFORMATION: 1. The estimated taxes receivable for the year
> The postclosing trial balance for the City of Fort Collins governmental funds at June 30, 2016, shows the following ledger account balances: ADDITIONAL INFORMATION: 1. During the year, Fort Collins purchased $9,000 in equipment, which was not depreciat
> The unsecured creditors of Dan filed a petition under Chapter 7 of the bankruptcy act on July 1, 2016, to force Dan into bankruptcy. The court order for relief was granted on July 10, at which time an interim trustee was appointed to supervise liquidatio
> The Town of Tyler approved the following general fund budget for the fiscal year July 1, 2016, to June 30, 2017: TOWN OF TYLER GENERAL FUND BUDGET SUMMARY FOR THE YEAR JULY 1, 2016 TO JUNE 30, 2017 Revenue Sources Taxes..................................
> Use the information in P 23-6 to prepare a charge–discharge statement for the estate of Tom Josephson for the period May 16, 2015 through June 30, 2015. Information from P 23-6 Tom Josephson dies on May 16, 2015, leaving a valid will. The will reads as
> Prepare journal entries to record the following grant-related transactions of an enterprise fund activity. Explain how these transactions should be reported in the enterprise fund’s financial statements, including the statement of cash flows. 1. Received
> List three items that might appear on the reconciliation between the governmental fund balance sheet and the government-wide statement of net position. List three items that might appear on the reconciliation between the governmental fund operating state
> The preclosing account balances of the general fund of the City of Batavia on June 30, 2017, were as follows: Debits Cash........................................................................................................ $80,000 Taxes receivable—de
> The unadjusted trial balance for the general fund of the City of Orchard Park at December 31, 2016, is as follows: Supplies on hand at December 31, 2016, are $3,000. The $50,000 encumbrance relates to equipment ordered November 28 for the Department of
> The City of Catalina authorized the construction of a new recreation center at a total cost of $1,000,000 on June 15, 2016. On the same date, the city approved a $1,000,000, 8 percent, 10-year general obligation serial bond issue to finance the project.
> In a special election held on May 1, 2016, the voters of the City of Cerone approved a $10,000,000 issue of 6 percent general obligation bonds maturing in 20 years. The proceeds of this sale will be used to help finance the construction of a new civic ce
> On June 15, 2016, Malmo City authorizes the issuance of $500,000 par of 6 percent serial bonds to be issued on July 1, 2016, and to mature in annual serials of $100,000 beginning on July 1, 2017. The proceeds of the bond issue are to be used to finance a
> The City of Stockholm authorized construction of a $600,000 addition to the municipal building in September 2016. The addition will be financed by $200,000 from the general fund and a $400,000 serial bond issue to be sold in April 2017. REQUIRED: Prepar
> 1. The accounts “estimated revenues” and “appropriations” appear in the trial balance of the general fund. These accounts indicate: a The use of cash-basis accounting b The use of accrual-basis accounting c The formal use of budgetary accounts d The info
> Tom Josephson dies on May 16, 2015, leaving a valid will. The will reads as follows: I leave my automobile to my niece, Pat. I leave my stock investment accounts to my niece, Sue. I leave income on my estate to the local humane society. Estate expenses a
> You serve as the executor for the estate of Matthew Troy. Matthew’s will provides that all remaining assets other than specific items in the will pass to his longtime friend Melanie Matthews. The following transactions occur during October and November 2
> You serve as the executor for the estate of John Seagull. The following transactions occur during June 2015: a John’s estate included a municipal bond with a fair value of $1,000,000. On the date of death, there was $8,800 of accrued but unpaid interest.
> What are encumbrances, and how does encumbrance accounting help control expenditures?
> How is a conversion worksheet used? Why is it necessary?
> What is included on a budgetary comparison schedule? Is such a schedule required to be included in a CAFR?
> How can you determine whether or not a governmental fund should be considered major?
> How does a permanent fund differ from a special revenue fund? A private-purpose trust fund?
> The Village of Lester had appropriations of $250,000 for the current fiscal year. If $175,000 worth of items has been ordered but only $150,000 of the $175,000 has been received, what amount can city officials order prior to year-end? What happens if the
> The balance sheet of Sco appeared as follows on March 1, 2016, when an interim trustee was appointed by the U.S. trustee to assume control of Sco’s estate in a Chapter 7 case. ADDITIONAL INFORMATION: 1. Creditors failed to elect a tru
> 1. Bankruptcy Insolvency means: a Book value of assets is greater than liabilities b Fair value of assets is less than liabilities c Inability to meet financial obligations as they come due d Liabilities are greater than book value of assets 2. Aside fr
> What is the opportunity cost of having excessive amounts of liquid funds?
> Travis has invested $3,000 in a three month CD at 4%. How much will Travis have when the CD matures?
> Lisa is depositing $2,500 in a six month CD that pays 4.25% interest. How much interest will she accrue if she holds the CD until maturity?
> Teresa has just opened a NOW account that pays 3.5% interest. If she maintains a minimum balance of $500 for the next 12 months, how much interest will she earn?
> Recall that the Sampsons have resolved to save a total of $800 per month. Dave and Sharon notice that their local bank offers the certificates of deposit listed in the following table; they now need to determine which CDs will best suit their savings goa
> Recall that the Sampsons have resolved to save a total of $800 per month. Dave and Sharon notice that their local bank offers the certificates of deposit listed in the following table; they now need to determine which CDs will best suit their savings goa
> Mary’s last bank statement showed an ending balance of $168.51. This month, she deposited $600.00 in her account and withdrew a total of $239.00. Furthermore, Mary wrote a total of five checks, two of which have cleared. The two checks that have cleared
> Recall that the Sampsons have resolved to save a total of $800 per month. Dave and Sharon notice that their local bank offers the certificates of deposit listed in the following table; they now need to determine which CDs will best suit their savings goa
> What is the likely impact of increased government borrowing on market rates of interest?
> How is the risk premium calculated?
> When making banking decisions, why should you be concerned about current interest rates?
> Steve just received his first paycheck and wants to open a checking account. There are five banks in his hometown. What factors should Steve consider when choosing a bank?
> What is the difference between a debit card and a credit card?
> Why do some investors pursue higher-risk investments when their income falls during economic downturns? What is wrong with this strategy?
> Describe and compare the three types of depository institutions.
> When would you use a traveler’s check? What are the advantages of using traveler’s checks?
> List and describe some of the banking services offered by financial institutions.
> What is a financial conglomerate? List some services financial conglomerates provide. Give some examples of financial conglomerates.
> What is the risk premium of Metallica Financial Company’s 2-year interest rate of 12% given your local FDIC-insured bank only offers a 5% return for 2-year CDs? Why is Metallica offering a higher interest rate?
> List the advantages of paying your bills online.
> What is the difference between a cashier’s check and a money order?
> What is check float? How has check float changed due to electronic banking?
> Why is it important to reconcile your account balance every month?
> Why is a high-risk premium an advantage for the investor? Why is a low-risk premium an advantage for an investor?
> Explain why a weak economy may cause the risk premium to rise.
> Briefly discuss conditions that can cause a shift in the demand for funds and a change in the interest rate.
> What is monetary policy? What organization controls monetary policy in the United States?
> What is the term structure of interest rates? Why is this concept important to an investor?
> In considering investments with different degrees of risk, what two factors will influence an investor’s decision? What is an appropriate investment for an individual who needs funds in a short period of time for necessities?
> What effect would a general change in current interest rates have on you as a depositor or borrower?
> Where do financial institutions obtain funds for making loans? How are the interest rates for loans determined? Are the interest rates the same for all borrowers? Why or why not?
> List and describe the four main types of nondepository financial institutions.
> What is a risk premium? Who might take advantage of it?
> What is a risk-free rate? Give an example of an investment with a risk-free rate. Why is there no risk?
> Mike, a recent college graduate, opened a checking account with a local bank. He asked numerous questions before deciding on this bank, including inquiring about checking account fees and annual credit card fees. When Mike returns from his first internat
> Casey has $1,000 to invest in a certificate of deposit. Her local bank offers her 2.5% on a 12-month FDIC-insured CD. A nonfinancial institution offers her 5.2% on a 12-month CD. What is the risk premium? What else must Casey consider in choosing betwee
> Name some special services that banks provide. How might you make use of them?
> Paul has an account at St. Jerome Bank. He does not track his checking account balance in a checkbook register. Yesterday evening, he placed two checks in the mail for $156.66 and $238.94. Paul accesses his account online and finds that his balance is $5
> Randy, a student, has $500 to deposit in a new checking account, but Randy knows he will not be able to maintain a minimum balance. He will not use an ATM card, but will write a large number of checks. Randy is trying to choose between the unlimited chec
