How should rainy day funds be reported?
> What accounting problem arises if an internal service fund is operated at a significant profit? What accounting problem arises if an internal service fund is operated at a significant loss?
> The Town of Thomaston has a Solid Waste Landfill Enterprise Fund with the following trial balance as of January 1, 2017, the first day of the fiscal year. During the year, the following transactions and events occurred: 1. Citizens and trash companies
> The City of Evansville operated a summer camp program for at-risk youth. Businesses and nonprofit organizations sponsor one or more youth by paying the registration fee for program participants. The following Schedule of Cash Receipts and Disbursements s
> The Town of Frostbite self-insures for some of its liability claims and purchases insurance for others. In an effort to consolidate its risk management activities, the Town recently decided to establish an internal service fund, the Risk Management Fund.
> Describe the “hierarchy of GAAP” for state and local governments.
> The Village of Burksville, which has a fiscal year July 1 to June 30, sold $2,000,000 in 5 percent tax-supported bonds at par to construct an addition to its police station. The bonds were dated and issued on July 1, 2016. Interest is payable semiannuall
> The Village of Hawksbill issued $4,000,000 in 5 percent general obligation, tax-supported bonds on July 1, 2016, at 101. A fiscal agent is not used. Resources for principal and interest payments are to come from the General Fund. Interest payment dates a
> a. Armstrong County established a County Office Building Construction Fund to account for a project that was expected to take less than one year to complete. The County’s fiscal year ends on June 30. 1. On July 1, 2016, bonds were sold at par in the amo
> A citizen group raised funds to establish an endowment for the Eastville City Library. Under the terms of the trust agreement, the principal must be maintained, but the earnings of the fund are to be used to purchase database and periodical subscriptions
> The citizens of Spencer County approved the issuance of $2,000,000 in 6 percent general obligation bonds to finance the construction of a courthouse annex. A capital projects fund was established for that purpose. The preclosing trial balance of the cour
> A government has outstanding bonds payable. Interest is payable on a date other than the fiscal year-end. What is the appropriate method of accounting for interest accruals by debt service funds?
> What are the major sources of funds for capital project and debt service funds, and how are the sources classified in the Statement of Revenues, Expenditures, and Changes in Fund Balance?
> A concerned citizen provides resources and establishes a trust with the local government. What factors should be considered in determining in which fund to report the trust activities?
> The City of Sharpesburg received a gift of $1,000,000 from a local resident on June 1, 2017, and signed an agreement that the funds would be invested permanently and that the income would be used to maintain the city wildlife preserve and nature center.
> The following transactions relate to Newport City’s special revenue fund. 1. In 2017, Newport City created a special revenue fund to help fund the 911 emergency call center. The center is to be funded through a legally restricted tax on cellular phones.
> What is the definition of a government as agreed upon by the FASB and GASB?
> Lincoln County’s General Fund had two interfund transactions: 1. The General Fund paid $320,000 to the Housing and Urban Development Fund, a special revenue fund that is supported by grants from the federal government on a cost reimbursement basis. The
> The following transactions relate to the General Fund of the City of Buffalo Falls for the year ended December 31, 2017: 1. Beginning balances were: Cash, $90,000; Taxes Receivable, $185,000; Accounts Payable, $50,000; and Fund Balance, $225,000. 2. Th
> The following information was abstracted from the accounts of the General Fund of the City of Rome after the books had been closed for the fiscal year ended June 30, 2017. There were no transfers into the General Fund, but there was one transfer out. P
> Prepare journal entries in the General Fund of the Brownville School District. a. The District had outstanding encumbrances of $11,200 for band instruments from the previous year. It is the District’s policy to re-establish those encumbrances in the s
> The Town of Quincy’s fiscal year ends on June 30. The following data relate to the property tax levy for the fiscal year ended June 30, 2017. Prepare journal entries for each of the dates as indicated. a. The balance in Deferred Inflows—Property Taxes
> On January 1, 2017, the first day of its fiscal year, Carter City received notification that a federal grant in the amount of $560,000 was approved. The grant was restricted for the payment of wages to teenagers for summer employment. The terms of the gr
> The Village of Seaside Pines prepared the following General Fund Trial Balance as of December 31, 2017, the last day of its fiscal year. Control accounts are used for budgetary entries. 1. Prepare the closing entries for December 31. (It is not necess
> Assume at the beginning of 2017 the Village of Ashlawn Street and Highway Fund (a special revenue fund) has cash of $136,000 offset by assigned fund balance in the same amount. 1. During the year, the State notified the Village that $500,000 for the St
> The City of South Dundee budget for the fiscal year ended June 30, 2017, included an appropriation for the police department in the amount of $8,700,000. During the month of July 2016, the following transactions occurred (in summary): Purchase orders
> Distinguish between the (1) GAAP basis and (2) budgetary basis of reporting for the General Fund.
> Identify and briefly describe the three organizations that set standards for state and local governments, the federal government, and nongovernmental not-for-profit organizations.
> a. Outline revenue recognition criteria under modified accrual accounting. Include specific requirements for property tax revenue. b. Outline expenditure recognition criteria under modified accrual accounting.
> a. Distinguish between (1) Exchange (2) Non exchange transactions. b. Identify and describe the four eligibility requirements for a government to recognize revenue in a non-exchange transaction. c. GASB classifies non-exchange transactions into four
> Presented below are account balances for Monterey Hospital. In addition, cash transactions for the year ended December 31, 2017, are summarized in the T-account. The hospital issued $600,000 of long-term debt during the year and purchased $307,000 of
> As of January 1, 2017, the trial balance for Haven Hospital was as follows: During the fiscal year ended December 31, 2017, the following transactions occurred: 1. Patient service revenue amounted to $20,990,000, all recorded on account. Contractual a
> The Association of Women in Government established an Educational Foundation to raise money to support scholarship and other education initiatives. The Educational Foundation is a private not-for-profit. Members of the Association of Women in Government
> Jefferson Animal Rescue is a private not-for-profit clinic and shelter for abandoned domesticated animals, chiefly dogs and cats. At the end of 2016, the organization had the following account balances: The following took place during 2017: 1. Additio
> The fund-basis financial statements of Cherokee Library District (a special purpose government engaged only in governmental activities) have been completed for the year 2017 and appear in the second and third tabs of the Excel spreadsheet provided with t
> The fund-basis financial statements of the City of Cottonwood have been completed for the year 2017 and appear in the first tab of the Excel spreadsheet provided with this exercise. In addition, the government-wide Statement of Net Position from the prev
> The fund-basis financial statements of Jefferson County have been completed for the year 2017 and appear in the first tab of the Excel spreadsheet provided with this exercise. The following information is also available: a. Capital Assets Capital ass
> A successful businessman in the community has contacted the Moose County Board of Commissioners about donating income-producing securities to the County to support a particular activity. Under the agreement, the County would be required to maintain the p
> Identify and describe the five environmental differences between governments and for-profit business enterprises as identified in the Governmental Accounting Standards Board’s Why Governmental Accounting and Financial Reporting Is—and Should Be—Different
> In December 2016, the Hamilton County Board of Commissioners established the Hamilton County OPEB Trust Fund. Retired employees of Hamilton County can participate in postemployment benefits through the Trust. The Trust is a single-employer defined benefi
> Rural County is an agricultural community located hundreds of miles from any metropolitan center. The County established a Television Reception Improvement Fund to serve the public interest by constructing and operating television translator stations. TV
> Jefferson County operates a centralized motor pool to service county vehicles. At the end of 2016, the Motor Pool Internal Service Fund had the following account balances: The following events took place during 2017: 1. Additional supplies were purch
> The Town of McHenry has $10,000,000 in general obligation bonds outstanding and maintains a single debt service fund for all debt service transactions. On July 1, 2017, a current refunding took place in which $10,000,000 in new general obligation bonds w
> Using the information from Exercise 14–6, prepare a schedule showing the status of the appropriation at the end of the first quarter. Data from Exercise 14-6: Assume a federal agency has the following events: 1. Receives a warrant from the Treasury n
> Distinguish between private and public sector organization.
> What bodies are responsible for establishing accounting standards for the federal government and its agencies?
> What are the required financial statements of a federal agency?
> Jefferson County established a capital project fund in 2016 to build low income housing with the transfer of $100,000 from the General Fund. A portion of that was expended on engineering studies in 2016. The following transactions occurred during 2017:
> For each of the summarized transactions for the Village of Sycamore General Fund, prepare the general ledger journal entries. a. The budget was formally adopted, providing for estimated revenues of $1,070,000 and appropriations of $996,000. b. Revenues
> Prepare budgetary entries, using general ledger control accounts only, for each of the following unrelated situations: a. Anticipated revenues are $11.1 million; anticipated expenditures and encumbrances are $9.7 million. b. Anticipated revenues are $9
> The City of Oxbow General Fund has the following net resources at year-end: $250,000 unexpended proceeds of a state grant required by law to be used for health education. $10,000 of prepaid insurance. $600,000 rainy day fund approved by city council fo
> The town council of Riverside estimated revenues for 2017 to be $685,000 from property taxes and $165,000 from business licenses. The appropriations budget from the council was as follows: General government…………...$370,000 Parks and recreation……………..11
> Following are transactions and events of the General Fund of the City of Springfield for the fiscal year ended December 31, 2017. 1. Estimated revenues (legally budgeted) Property taxes………&aci
> The Budgetary Comparison Schedule for the City of Vienna appears below. Several items of information are missing (denoted with “?”). Required: a. Determine the missing amounts. b. During the year, the City made a
> Appearing below is the subsidiary ledger for the public safety department of the City of Boone. After the first month of the year, five entries have been made to the ledger. Describe the most likely event that led to each of the postings (items 1â
> The following General Fund information is available for the preparation of the financial statements for the city of Eastern Shores for the year ended September 30, 2017: Revenues: Property taxes………………………………..…$27,020
> The following information is available for the preparation of the governmentwide financial statements for the city of Northern Pines for the year ended June 30, 2017: Expenses: General government………………………………………………………. $ 9,700,000 Pu
> The City of Grafton’s records reflected the following budget and actual data for the General Fund for the fiscal year ended June 30, 2017. 1. Estimated revenues: Taxes (Property)……………………………$3,213,000 Licenses and permits…………………………. 790,000 Intergovernm
> Describe the net position classification appearing on the government-wide Statement of Net Position.
> Describe how the cash flow statement of an enterprise fund differs in format from the cash flow statements of private sector organizations such as commercial businesses.
> Describe the test for determining whether a governmental fund is a major fund. Describe the test for determining whether an enterprise fund is a major fund.
> With regard to the Comprehensive Annual Financial Report (CAFR): a. What are the three major sections? b. List the government-wide statements. Indicate the measurement focus and basis of accounting used for the government-wide statements. c. List th
> With regard to GASB rules for the financial reporting entity, answer the following: a. Define the financial reporting entity. b. Define and give an example of a primary government. c. Define and give an example of a component unit. d. Define and des
> Use the CAFR information for the City of Salem (Illustrations 2-2 through 2–16) to find the following items. Each item will appear in two separate financial statements. In your answer indicate both financial statements that contained th
> The following water and sewer fund information is available for the preparation of the financial statements for the City of Western Sands for the year ended December 31, 2017: Operating revenues—charges for services ……..$18,087,000
> For each of the items below, identify which fund(s) would be used to account for the item and provide a justification for your answer. a. A city government issued general obligation bonds to finance the construction of a new jail. b. A tax of $1.00 pe
> Assume the Federal Interstate Commission began the fiscal year with the following account balances: 1. Congress passed a spending bill providing $16,000,000 to fund the agency’s operations for the year. 2. During the first quarter th
> The Budgetary Comparison Schedule for the City of Salem appears in Illustration 2-16. Assume the general and subsidiary ledgers for the General Fund were lost after a water pipe burst. You are charged with reproducing the journal entries that took place
> The Mosquito Abatement Commission is a newly organized federal agency with three primary programs: coordinating state government abatement functions, conducting research on mosquito abatement, and promoting abatement through public education. The followi
> Assume a federal agency has the following events: 1. Receives a warrant from the Treasury notifying the agency of appropriations of $3,600,000. 2. OMB apportions one-fourth of the appropriation for the first quarter of the year. 3. The director of th
> The 2012 financial statements of the Internal Revenue Service are available at: http://www.gao.gov/products/GAO-16-146 Use these to answer the following questions: a. Statement of Net Cost 1. What are the IRS’s two largest programs based on net cost?
> The 2015 financial statements of the U.S. government are available at: https://www.fiscal.treasury.gov/fsreports/rpt/finrep/fr/fr_index.htm Use these to answer the following questions: a. Statement of Net Cost 1. What are the three largest government
> What are the required financial statements of the U.S. government?
> With respect to the Single Audit Act of 1984 and amendment of 1996 relating to state and local governments and not-for-profit organizations: a. Distinguish between major and nonmajor programs. b. List the criteria used to determine whether an entity is
> You have been assigned the task of writing the audit report for the City of X. The scope includes the basic financial statements, although the report is attached to a complete Comprehensive Annual Financial Report. a. Write the opinion paragraph. b. D
> With regard to the Government Auditing Standards: a. Differentiate among the different types of professional engagements. b. Assume you are auditing a city that has a summer youth employment program. List some factors you might investigate in terms of
> Presented below are financial statements (except cash flows) for two not-for-profit organizations. Neither organization has any permanently restricted net assets. a. Calculate the following ratios: Program expense. Fund-raising efficiency. Wor
> Presented below are the computed amounts of ratios for the Village of Riverside example appearing in the chapter. * Population and property values are disclosed in the statistical section of the CAFR. a. Using the financial statements prov
> The state government established a capital project fund in 2016 to build new highways. The fund is supported by a 5 percent tax on diesel fuel sales in the state. The tax is collected by private gas stations and remitted in the following month to the Sta
> Identify the three categories of users of governmental financial statements and describe the information needs of each.
> Describe the purpose of ratio analysis. What is common size analysis?
> What is the role of a bond-rating agency?
> With regard to service efforts and accomplishments reporting, define the following terms: a. Service efforts. b. Service accomplishments. c. Inputs. d. Outputs. e. Outcomes. f. Efficiency measures. g. Cost-outcome measures.
> You and a few friends have decided to establish a not-for-profit organization in your community to help provide shelter and food to the homeless and transients. Outline the steps you would take to obtain tax-exempt status, avoid paying unrelated business
> With regard to unrelated business income tax (UBIT), answer the following questions: a. Which four conditions will automatically exempt entities from UBIT? b. What are some exceptions to UBIT provided by legislation? c. How is UBIT computed? What ded
> With regard to filing requirements for 501(c) (3) organizations: List the three types of Form 990 and indicate the size of the tax-exempt organization to use for each.
> With regard to tax-exempt organizations: a. Define a 501(c)(3) organization. b. Define a public charity
> A local government has five federal grants. Expenditures amounted to $3,000,000 during the year, as follows: Describe how you, as an auditor, would determine major programs for audit, assuming (a) The local government is not a low-risk auditee, and
> St. Joseph’s Hospital began operations in December 2016 and had patient service revenues totaling $950,000 (based on customary rates) for the month. Of this, $120,000 is billed to patients, representing their insurance deductibles and co-payments. The ba
> The state government administers a special revenue fund, the Fish and Game Fund. By legislation, revenue in this fund can be used only for the purpose of protection, propagation, and restoration of sport fish and game resources and the expenses of admini
> Record the following transactions on the books of Hope Hospital, which follows FASB (not-for-profit) and AICPA standards. The year is 2017. 1. Hope received $32,000 in cash from pledges made in the previous year that were unrestricted as to purpose but
> During 2017, the following transactions were recorded by the Port Hudson Community Hospital, a private sector not-for-profit institution. 1. Gross charges for patient services, all charged to Patient Accounts Receivable, amounted to $1,800,000. Contract
> With regard to accounting for private not-for-profit health care entities, do the following: a. Outline the accounting required, under FASB guidance, for a (n): (1) Endowment gift received in cash. (2) Pledge received in one year, unrestricted as to
> Briefly describe the following items related to financial reporting by (a) Private not-for-profit health care entities. (b) Government-owned health care entities. (c) Commercial health care entities: (1) Source of Category A and B GAAP. (2) Residual e
> For each of the following items, indicate where it would appear in the Statement of Operations for a private not-for-profit hospital: 1. The premium from a capitation agreement, whereby a hospital agrees to provide services to members of an HMO for a pr
> Describe the accounting treatment by hospitals and health care organizations for property, plant, and equipment acquisitions using each of the following: a. Unrestricted resources. b. Temporarily restricted resources.
> Describe the accounting treatment by hospitals and health care organizations for each of the following: a. Charity care. b. Uncollectible accounts. c. Contractual adjustments.
> Southeastern College began the year with endowment investments of $1,200,000 and $700,000 of restricted cash designated by a donor for capital additions. 1. During the year an additional $500,000 donation was received for capital additions. These funds,
> Eastern University had the following transactions at the beginning of its academic year: 1. Student tuition and fees were billed in the amount of $7,000,000. Of that amount, $4,500,000 was collected in cash. 2. Pell Grants in the amount of $2,000,000 w
> New City College reported deferred revenues of $482,000 as of July 1, 2016, the first day of its fiscal year. Record the following transactions related to student tuition and fees and related scholarship allowances for New City College for the year ended
> Jefferson County’s General Fund began the year 2017 with the following account balances: During 2017, Jefferson experienced the following transactions: 1. The budget was passed by the County Commission, providing estimated revenues o
