A city's general fund has an outstanding payable to its electric utility, which is accounted for in an enterprise fund. The utility has a corresponding receivable from the general fund. In the city's government-wide statement of net position, which would be correct? a . The payable and the corresponding receivable would be eliminated in the consolidation process and thus would not be reported. b. The payable may be aggregated with payables to an internal service fund and reported as "payables to proprietary funds." c. The payable should be reported in the governmental activities column and the receivable in the business-type activities column. d. The payable and the receivable would each be reported in the "totals" column, but would not be reported in either the governmental activities column or the business-type activities column. 2. A city's general fund has an outstanding payable to its vehicle repair internal service fund, which has a corresponding receivable from the general fund. In the city's government-wide statements, which would be correct? a. The payable and the corresponding receivable would be eliminated in the consolidation process and thus would not be reported. b. The payable may be aggregated with payables to an enterprise fund and be reported as "payables to proprietary funds." c. The payable would be reported in the "governmental activities" column and the receivable in the "business-type activities" column. d. The payable and the receivable would each be reported in the "totals" column, but would not be reported in either the "governmental activities" column or the "business-type activities" column. 3. Which of the following projects is a state university most likely to finance with revenue bonds rather than general obligation bonds? a. A football stadium b. An outdoor swimming pool c. An intramural field house d. A boathouse for its rowing team 4. In what way would the statement of cash flows of a government-owned electric utility differ from that of a privately owned counterpart? a. It would not include a category for operating activities. b. It would have separate categories for cash flows from noncapital financing activities and cash flows from capital and related financing activities. c. It would not include a category for cash flows from investing activities. d. It would include a category for cash flows from other nonoperating activities. 5. A government decided to account for a vehicle repair service in an internal service fund rather than its general fund. In a year in which the repair service acquired an unusually large amount of repair equipment, the amount recorded as an expense in the internal service fund would be a. the same as if the repair service were accounted for in the general fund. b. greater than if the repair service were accounted for in the general fund because the general fund would not charge depreciation on the newly acquired assets. c. greater than if the repair service were accounted for in the general fund because the internal service fund would charge depreciation on the assets but the general fund would not. d. less than if the repair service were accounted for in the general fund because the general fund would have recognized the entire cost of the equipment in the year acquired as an expenditure rather than the amount billed by the internal service fund. 6. A school district's internal service fund has cash on hand at year-end of $2 million. On its governmentwide financial statements, this amount would be reported as an asset in the a. governmental activities and total columns. b. business-type activities and total columns. c. total column only. d. business-type activities column only. 7. A city makes an interest payment of $6 million on its utility fund revenue bonds that were issued to finance new sewer lines. In the utility fund statement of cash flows, the payment would be reflected as a cash flow from a. operating activities. b. noncapital financing activities. c. capital and related financing activities. d. investing activities. 8. A utility fund temporarily invests the proceeds from the issuance of revenue bonds in U.S. Treasury bills and receives interest of $300,000. In the utility fund statement of cash flows, the receipt would be reflected as a cash flow from a. operating activities. b. noncapital financing activities. c. capital and related financing activities. d. investing activities. 9. A city's transportation service, which is accounted for in an enterprise fund, has outstanding $10 million in revenue bonds. The bonds are also guaranteed by the city itself. These bonds should be reported as a liability in a. both the governmental fund statements and the proprietary fund statements, and in both the "business-type activities" column and the "governmental activities" column of the governmentwide statements. b. only the proprietary fund statements and the "business-type activities" column of the government-wide statements. c. only the governmental fund statements and the "governmental activities" column of the government-wide statements. d. only the proprietary fund statements. 10. A city enters into a public-private partnership with a private corporation. It transfers its tolled bridge to the corporation in exchange for an upfront payment of $50 million cash. The corporation will maintain the bridge and will have the right to all tolls for the next 50 years, after which time the bridge will revert back to the city. The city, however, will retain the right to approve any changes in the toll rates. At the time of transfer of the bridge, the city reported the bridge on its financial statements at a depreciated value of $8 million. At the time of transfer, the city should a. recognize revenue of $50 million. b. recognize a deferred inflow of resources of $50 million and should continue to report and depreciate the bridge as it did previously. c. report a gain on sale of $42 million. d. recognize a deferred inflow of resources of $50 million and a corresponding right-to-use asset of the same amount.
> JMH (a not-for-profit) Rehabilitation Center engaged in the following transactions during its most recent fiscal year: 1. Michael Vincent donated $625,000 to the hospital to help pay for the purchase of new physical rehabilitation equipment. 2. Albert Ol
> Review the Statement of Activities of Hamilton College for the year ended June 30, 20X0, which is presented in Table 2-11. The statement indicates that during the year net assets increased by $40,604,000. Suppose that you are a member of the college's bo
> Review the financial statements of Hamilton College in Chapter 2, and respond to the fo llowing questions: 1. What percentage of the college's total revenues (including nonoperating items and revenues of all funds) is attributable to tuition and fees (ne
> The initial value to be assigned to an asset is not always obvious. A city acquired general capital assets as follows: 1. It purchased new construction equipment. List price was $400,000, but the city was granted a 10 percent "government discount." The c
> In January 20X0, Kirkland University receives a pledge of $200,000 to be used exclusively to support research in a specialized area of communication disorders. The university's fiscal year ends on July 31. In December 20Xl (the following fiscal year), Ki
> A multi jund balance sheet can readily be recast so that it conforms with FASB standards. Recast the fund balance (net asset) section of the balance sheet so that it presents the fund balances in the two categories required by ASU 2014-09. Show the balan
> Review the financial statements of the March of Dimes for 2019 as presented in Table 12-8. 1. Comment as best you can ( even in the absence of guidelines as to what constitutes norms for comparable foundations) on the fiscal strength of the organization
> The footnote in the financial statements of The Welfare Foundation contain the following note titled " Promises to Give": Unconditional promises to give were as follows at December 31: The discount rates used on long-term promises to give were 3 percent
> In December 20X0, the Consumer Association of America (CAA), a not-for-profit research organization, received a $6 million grant from the Sporting Goods Manufacturers Association (SGMA) to develop a football helmet that will provide better protection aga
> In 20X0, the Northwest Ballet Association (NBA), a not-forprofit performing arts organization, undertook a major capital campaign to fund a new theater, expected to cost $10 million. It was quickly able to raise $6 million, all of which was donor restric
> Financial analysis of governments is not a static tool; rather, it changes as potential issues arise that may be of concern to analysts. Debt analysis, for example, traditionally focused on financial liabilities such as bonds and notes. More recently, ot
> The following information was taken from the ACFRs of two cities of approximately the same size in the same state. 1. Compare the financial condition of the two cities based on the following indicators: a. Per capita operating expenditures b. Per capita
> The data that follow were drawn from the city of Boulder, Colorado's ACFR. They are from two statistical-section schedules showing the mix of revenue and expenditures for a 10-year period. They include amounts only from the general fund, special revenue
> For each of the following indicate the fund (or funds), if any, in which you think the activity should be accounted for and reported. If you think the fund should be a fiduciary fund, then indicate the type of fund; if a governmental or proprietary fund,
> During 20Xl Luling Township engaged in the following transactions related to modernizing the bridge over the Luling River. The township accounts for long-term construction projects in a capital projects fund. • On July 1 it issued 10-year, 4 percent bond
> Upon the death of a police officer, Leff City establishes a trust fund to provide for the education of the officer's collegeage children. 1. In what type of fund should the resources contributed to the fund be recorded? 2. Prepare journal entries to reco
> The Westmont School District provides postemployment health care benefits through a cost-sharing plan administered through the State Teachers OPEE Plan (STOP). In its financial statements for its fiscal year ending May 31, 20Xl, STOP reported that the co
> An individual city employee is currently 50 years of age and anticipates retiring at age 65. Per mortality tables, she is expected to live an additional 18 years postretirement. Taking into account her current salary and anticipated increases, her antici
> The ACFR of North Orange included the statement of fiduciary net position for its employee pension plan presented here: 1. A note to the statement indicated that the plan net position was 75 percent of the North Orange (the employer) total pension liabil
> Lemon County permits employees to accumulate any sick leave that they do not take. If employees do not use accumulated sick leave, then they will be paid for those days upon retirement or termination (up to a maximum of 45 days). In 20Xl, employees earne
> Expenditures for vacations do not necessarily reflect the amounts the employees have earned. In 20Xl, employees of Pecos River County earned $5 million in vacation pay. They were paid for $4.2 million but deferred taking the balance of their earned vacat
> During its fiscal year ending June 30, 20X0, the Parkville Independent School District purchases a two-year insurance policy covering the period May l , 20X0, through April 30, 20X2. Annual premiums are $60,000. The policy specifies that the entire premi
> Tax abatements are reductions in taxes that result from an agreement between a government and a taxpayer, typically a corporation. In 20X0, Lionsgate Logistics struck a deal with the city of Des Moines to move its headquarters to a property within the ci
> The amount of revenue to be recognized from grants depends on the type of grant. The following relate to three grants that the town of College Hills received from the state during its fiscal year ending December 31, 20Xl. Prepare journal entries to recor
> Select one of the more recently established (and larger) capital projects funds (a major fund, if there is one).
> Grants are not necessarily recognized as revenue when they are awarded. Columbus City was awarded a state reimbursement grant of $150,000 to assist its adult literacy program. The following were significant events relating to the grant: • The city, which
> Property taxes are not necessarily recognized as revenue in the year collected. The fiscal year of Duchess County ends on December 31. Property taxes are due on March 31 of the year in which they are levied. 1. Prepare journal entries (excluding budgetar
> The Eaton School District engaged in the following transactions during its fiscal year ending August 31, 20Xl. • It established a purchasing department, which would be accounted for in a new internal service fund, to purchase supplies and distribute them
> The Waterville School District has an annual meeting with staff, students, and parents in the summer after the school year to review accomplishments in the school district and financials and address needs for the next school year. The talking points of t
> Different types of assets are accounted for in different ways. The government purchased or constructed the following assets. 1. A monument to honor the sailors who served in the U.S . Coast Guard. 2. Land to be incorporated into a national forest. 3. A t
> The Business Development Corporation (BDC) , a federal agency (fictitious), makes loans to high-tech companies that satisfy specified criteria. The loans are intended to encourage research and development and are made a t rates substantially below market
> The federal government, through its various government agencies, engaged in the following transactions involving revenues. 1. In the middle of its fiscal year, it rented l and to a tenant, another government agency. It signed a one year lease requiring m
> The left-hand column of the following table describes each of seven financial statements that the FASAB recommends agencies prepare. The right-hand column indicates the names of the seven statements. Match the description in the left-hand column with the
> Military hardware should be accounted for as a. Stewardship assets b. Heritage assets c. National defense assets d. General assets 2 . The Executive Office Building has historical significance yet is also used as functioning office space. The cost of the
> The federal government's annual financial statements are issued by a. The Department of the Treasury b. The Office of Management and Budget c. The Department of Commerce d. The Government Accountability Office 2. The Government Accountability Office is p
> In June 20Xl, Jason King completed his audit of a 20X0 grant that a city made to Field of Dreams, a private, not-for-profit organization that sponsors recreational programs for disadvantaged teens. In the course of his testing, King discovered that mater
> Please go to www.Guidestar.org, and download the Form 990 of three health-care organizations for 2018. Note that you will need to create a free account to access the forms: 1. Mental Health America of Greater Houston 2. Southern Illinois Hospital Service
> On June 30, 20X0, a county (government) hospital bought 3,000 shares of stock for $94,000 intending to hold the investment for its proposed expansion of its trauma center. The fair value of the stock on August 31, 20X0, the hospital's fiscal year-end, wa
> A not-for-profit hospital signs a contract with an insurance company in which the company agrees to pay it $6 million in capitation fees for the year July 1, 20X0, through June 30, 20Xl. Between July 1, 20X0, and December 31, 20Xl, the hospital provides
> Windom College, a not-for-profit institution, engaged in the following transactions during its fiscal year ending June 30, 20X0. Prepare appropriate journal entries, indicating the types of funds (by restrictiveness) in which they would be recorded. 1. T
> In June 20X0, a public university bills and collects $30 million in tuition for the summer semester that runs from June 1 through July 15. In addition, in May and June it bills $200 million for the fall semester that runs from September 1 through Decembe
> The objective of this exercise is to get you familiar with the audited financial statements and IRS Form 990 of a Nonprofit Entity, the American Cancer Society (www.cancer.org, click on "About Us," and click on "Financials and Governance") and obtain the
> Discovery Barn, a not-for-profit science center for children, received a contribution of $30,000 explicitly designated for the acquisition of computers. During the year it acquired $21,000 of computers, which it estimated to have a useful life of three y
> The Lung Association received a contribution of marketable securities that were to be placed in a permanent endowment fund. Neither donor stipulations nor applicable state law requires that capital gains or increases in value be added to the endowment pr
> A wealthy alumna donates $500,000 in marketable securities to her alma mater to establish a scholarship fund . Per the trust agreement, only the interest and dividends (including any gains in fair value) from the securities can be distributed to scholars
> For each of the following indicate the type of fiduciary fund in which it is most likely the fiduciary activity should be accounted for and reported. 1. Per a trust agreement a state maintains an investment pool in which governments within the state can
> What was the city's largest expenditure for the fiscal year? By how much did this increase or decrease since the prior year? Can you draw any inferences from this comparison as to the efficiency and effectiveness of the city in providing this service? If
> A city signs a three-year licensing agreement with a software company for use of a payroll management system in its electrical utility fund. Annual charges are $10,000 per year. It is the policy of the city to use a discount rate of 6 percent to value ri
> The accounting for BANs depends on events subsequent to year-end. In anticipation of issuing of long-term bonds, a state issues on May 1, 20Xl, $200 million of 60-day BANs to finance highway construction. It expects to roll over the BANs into long-term b
> What are the four main objectives of federal financial reporting as established by the FASAB?
> Government debts may be reported differently in governmental and government-wide statements. The Alpine school district engaged in the following transactions in its fiscal year ending August 31, 20Xl. By law, the district is required to establish a capit
> What should it use as its discount rate in determining its pension obligation?
> The Office of Management and Budget is responsible for granting agencies apportionments. What are apportionments?
> What is the primary role of the Treasury Department's Bureau of Fiscal Service?
> Into what two categories does the FASAB divide government assets? How are each of the two accounted for?
> What are the basic statements that an agency may have to prepare to be in compliance with FASAB standards?
> What are the key criteria of whether an entity should be accounted for as a "consolidation" entity or a "disclosure" entity?
> Why is the FASAB named an advisory board? What is the relationship between the FASAB and the GAO, the Treasury Department, and the OMB?
> What are tax expenditures, and how must they be reported upon in the federal government's consolidated financial report?
> If an agency makes a loan at a below market rate, what would be the nature of any expense recognized at the time of the loan? If it guaranteed a loan made by others, what would be the nature of any expense recognized at the time of the guarantee?
> Why does it matter whether Social Security is considered a pension plan or an entitlement program? How does the FASAB direct that Social Security be reported? What unique issue does the federal government face in calculating the actuarial value of its So
> Which of the following is true with respect to bankruptcy? a. Per the federal bankruptcy code, a municipality can be declared bankrupt but not insolvent. b. Many major cities have avoided bankruptcy by being placed under the control of financial control
> Suppose that you are the independent auditor for a local not-for-profit performing arts association that recently received a sizable endowment. The association's president has asked whether gains, both realized and unrealized, from the appreciation of en
> What measures might be of more value to donors than the fund-raising ratio?
> What are permanent funds used to account for? In light of the requirement that governmental funds can recognize revenues only when they are measurable and available, how can a permanent fund ever recognize revenue?
> As a general rule, when should a government recognize a fiduciary fund liability to the beneficiaries of the fund? More specifically when should a government that collects taxes on behalf of another government recognize the liability to the beneficiary g
> What is the rationale for the requirement that only resources held for the benefit of parties other than the government itself can be accounted for in a fiduciary fund?
> What are investment pools? Why might a government maintain an investment pool? On what basis are the assets measured and reported?
> In what two basic financial statements should a government report its fiduciary funds? On what basis of accounting should they be prepared?
> What is conduit debt? Who issues debt through these conduits? Why are governments required to report it only in notes to their financial statements, not on their balance sheets?
> Why are bond ratings of vital concern to bond issuers?
> What distinguishes moral obligation bonds from other types of debt? Why would one government assume a moral obligation for another government's bonds?
> Which of the following would be least likely to be classified as a city's general capital assets? a. Roads and bridges b. Electric utility lines c. Computers used by the police department d. Computers used by the department that collects the city's sale
> What special problems do governments face in measuring the income taxes associated with a particular year?
> What are the key distinguishing characteristics of fiduciary funds?
> What is meant by "combining statements"?
> Why may it be unclear whether a particular organization associated with the federal government should be considered a federal reporting entity? What are the key criteria as to whether an entity should be included in the Consolidated Financial Report (CPR
> What is meant by the unified budget? Why are Social Security receipts and disbursements said to be "off budget?"
> You are the auditor of a state. The state made a $10 million grant to a city. The grant reimburses the city for allowable costs incurred in hosting a meeting of international leaders. The meeting was held two weeks prior to the end of the state's fiscal
> According to the GASB, "Financial statements for governmental funds should be presented using the current financial resources measurement focus and the modified accrual basis of accounting." Financial resources are conventionally defined as "cash, invest
> The city of Carlasville imposes a one percent sales tax in addition to that levied by the state. The state, however, collects the tax on behalf of the city. The state typically does not notify the city of the amount of taxes collected in the fourth quart
> A separate column to report the variance between the final budget and actual amounts is encouraged but not required. Governments may also report the variance between original and final budget amounts. The implication is clear. The variance between the fi
> Central School District is awarded a $400,000 federal grant to implement and test a new way of teaching middle school math. The award stipulates that the district must provide a 20 percent match. a. In what fund-type ( e.g., general, special revenue, cap
> Did the government receive any funding for SNAP or any other Federal programs? Explain with details.
> Generally accepted accounting principles require governments to include in their annual reports a comparison of actual results with the budget for each governmental fund for which an annual budget has been adopted. This information is generally presented
> To encourage a private health care company to construct a nursing home, a city agrees to issue tax exempt bonds for the benefit of the company. The bonds will fund the construction of the facility. The city will hold title to the home for a period of 30
> A city enters into an 11 month lease with an option to renew the lease for additional 11 months up to 5 times. In your opinion does the lease qualify for the one-year exception and thereby be accounted for as an operating rather than a capital lease? Wou
> Per the GASB, training costs should be expensed as incurred for both internally generated computer software and subscription-based technology arrangements (SBITAs). They should not be capitalized as part of either the resultant computer software or the s
> As discussed in Chapter 4, governments must mark-tomarket their investments (including held-to-maturity debt securities). Suppose that a city has in its portfolio debt securities that it intends to hold to maturity. Interest rates increase. Therefore the
> As indicated in the chapter, the GASE takes a different position with respect to capitalization of interest during periods of construction than does the FASB. Inasmuch as there appears to be little difference in the nature of the transactions, especially
> The "In Practice" on page 261 notes that tax-exempt advance refundings involving debt redemptions are no longer allowed under U.S. tax law and that, as a result, the cost of debt issuance may go up for state and local governments. How might states and ci
> For each of the following indicate the amount of revenue that Beanville should recognize in its 20X2 (1) governmentwide statements and (2) governmental fund statements. Provide a brief justification or explanation for your responses. 1. The state in wh
> The general principles of revenue recognition are the same for both governmental and government-wide statements. For each of the following situations, indicate the amount of revenue that the government should recognize in an appropriate governmental fund
> For each of the following, indicate the fund, if any in which the government would account for the resources described. If a fiduciary, rather than a governmental fund, indicate the type of fund. Briefly justify your response. 1. A government contributes
> Were there any tax abatements disclosed for the year? If so, provide a brief description and the gross amount of taxes that were reduced during the reporting period.
> A state government, enters into an arrangement in which it will transfer to the Western Tollway Corporation (WTC) a recently constructed highway. The state reports the highway on its financial statements at its cost of $2 billion. Upon transfer, the stat
> A city entered into a contract with World Wide Construction Company (WWCC) to design, construct and operate a tunnel for a period of 30 years. Once the tunnel was completed, WWCC had complete responsibility for all aspects of tunnel operations, including
> Decommissioning costs are often nontrivial and must be recognized years in advance. A city constructed a power plant at a cost of $600 million. The facility has an estimated useful life of 50 years. At the end of the year in which the plant went on-line,
> Landfill costs must be reported as expenses during the periods of use-but only in enterprise funds. In 2X21, a city opens a municipal landfill, which it will account for in an enterprise fund. It estimates capacity to be 6 million cubic feet and usable l
> A lessor must report on its balance sheet both a receivable and the underlying asset. Bean County recently acquired a commercial office building at a cost $20 million, paid in cash. It estimates that the economic life of the building is 40 years (with no
