Question: What is the exposure to risk associated

> Explain the accounting for funds received by an organization acting as an agent, a trustee, or an intermediary, rather than as a donor or done. What might be the reasoning for the differences?

> Differentiate between public support and revenues as sources of assets for private not-for-profit organizations. What benefit is there in accounting for these differently?

> The FASB requires for-profit entities to classify their investments as trading, available-for-sale, or held-to-maturity. However, it does not require not-for-profit entities to do the same. What might be the reasoning for this difference in requirements?

> How is it helpful for a private not-for-profit organization to account for current funds as restricted or unrestricted?

> How are inter fund transactions reported?

> What benefits are derived from including the management’s discussion and analysis in state and local governmental financial reports? What information is required to be included in the MD&A?

> The chief operating decision maker of a publicly traded company has defined segments around four product/service groups. Various revenues, profits or losses, and assets associated with the segments are as follows: Determine which segments are conside

> What are major funds? Describe major fund reporting.

> Describe the purpose of each of the financial statements required under GASB Statement No. 34.

> Compare the basis of accounting that is used to report governmental activities versus business-type activities.

> Describe two major types of inter fund transfers. Under what circumstances is each used?

> When a debt service fund receives resources, it might credit Revenues or Other Financing Sources. Under what circumstances would each of these credits be used?

> If a capital projects fund has authority to continue operations over several fiscal periods, why is it desirable to close its records at the end of each period?

> Describe the difference between accounting for governmental funds and proprietary funds.

> Why are fixed assets, acquired with proceeds from general obligation bond issues, not permanently accounted for in a capital projects fund?

> (Appendix) What is the source of the 13 basic governmental accounting principles, and what benefit is there to studying these principles?

> Why do some transactions require an entry in a fund and another in an account group? What impact would there be if a journal entry were made only in the fund or only in the account group?

> A colleague of yours has been reviewing the second-quarter income statements for a number of companies and is questioning a number of the expense items included in the statements. For each of the following independent questions, provide a written respons

> How does the use of an encumbrance system aid in accounting for governmental entities?

> What advantage is gained by categorizing fund balances first into non spendable and then allocating the remaining fund balance into restricted, committed, assigned, and unassigned?

> Why are budgets crucial in accounting for governmental entities? If appropriations were not included in fund accounting, what impact would this exclusion have on the financial statements?

> Name three advantages gained by government reporting through the use of the three different fund types and the account groups. Explain why this method of reporting is advantageous.

> GASB Statement No. 34 requires reporting using both the financial resources measurement focus and the economic resources measurement focus. How do these two focuses differ, and what impact do they have on the presentation of financial information? Why wo

> In the liquidation of a partnership, why might a partner be concerned that a fellow partner has a deficit net capital balance, and how might such a deficit be eliminated?

> The liquidation of a partnership can be a complex and time-consuming process. What basic guidelines should be followed in order to ensure that the process is proper?

> If an individual were to acquire an interest in a partnership from the partnership entity itself, how would one calculate the suggested value of the acquired interest?

> A partnership is considering selling a 30% interest in the partnership to an incoming partner for 30% of the existing capital balances. What concerns might you have with this proposal?

> Generally speaking, what events or activities would normally result in a partner’s capital account being debited?

> Techno Builders has acquired a 70% interest in the equity of a foreign company, Pre fabco, whose functional currency is the FC. Although Pre fabco began operations in June 2012 when 1 FC equaled $1.95, Techno did not acquire its interest until March 31,

> If the income of a partnership is not sufficient enough to satisfy all of the provisions of the partnership’s profit-sharing agreement, how should this deficiency be handled?

> Under what circumstances might a salary or bonus be more appropriate than interest on capital balances as a means of allocating profits?

> A major issue faced by people who are starting their own business is the form of organization they should select. What are some major characteristics of a partnership that might influence their decision?

> Assume that a pretax operating loss was reported for the third quarter of the current year and that prior quarters reported pretax income that was taxed at an effective tax rate of 30%. What are the likely explanations as to why a tax benefit was not rec

> Why isn’t the total operating profit of all reportable segments normally equal to the consolidated operating profit?

> What factors are necessary for determining the estimated annual effective income tax rate?

> What are the benefits of viewing an interim period as an integral part of a larger annual period rather than as a separate distinct period?

> Explain why functional currency should be remeasured, rather than translated, when a foreign entity’s functional currency is highly inflationary.

> Assume that a U.S. company has a foreign subsidiary whose functional currency is the U.S. dollar. Explain how exchange rates between the foreign currency and the dollar would have to change in order to result in a current-year remeasurement loss and how

> Explain how a German subsidiary’s year-end balance in retained earnings is expressed in dollars assuming that the euro is the functional currency.

> Baxter Industries, Inc., is a U.S. company that has a wholly owned subsidiary. The subsidiary maintains its book and records in a foreign currency (FC) and the majority of its local expenses such as payroll, utilities, rent, etc., are paid in FC. However

> Assume that a U.S. company has a French subsidiary whose functional currency is the euro. Explain why the translation adjustment is not included as a component of net income on the consolidated income statement.

> A foreign company maintains its books and records in its domestic currency. Identify several factors that might suggest that the domestic currency is not the entity’s functional currency.

> A company is forecasting the purchase of inventory from an overseas vendor with payment to be made in a foreign currency (FC). Assume an option were used as a hedging instrument for this forecasted transaction. Explain how changes in the time value of th

> Explain how a U.S. company’s commitment to purchase inventory with settlement in foreign currency (FC) might become less attractive over time and how adverse effects on earnings could be reduced.

> A U.S. company purchases inventory from a foreign vendor, and purchases are denominated in the foreign currency (FC). The U.S. dollar is expected to weaken against the FC. Explain how a forward contract might be employed as a hedge against exchange rate

> If the U.S. dollar was expected to strengthen relative to a foreign currency (FC), what effect might this have on a U.S. exporter?

> Using an example, explain how an interest swap works.

> Why might an option be preferred over a futures contract?

> A regional bakery is forecasting a major purchase of flour and is considering the use of a cash flow hedge. Explain how a cash flow hedge affects operating income currently and in the future as well as how such amounts are calculated.

> Dontelli Enterprises began operations on July 1, 2012, as a manufacturer of heat sensitive valves used in the plumbing industry. Effective at the beginning of 2014, Platco, an American company, acquired an 80% interest in Dontelli paying 400,000 FC. Of t

> Explain how both the intrinsic value and the time value are measured for a forward contract to sell and for a put option.

> What are the objectives of the International Accounting Standards Committee Foundation, and does the FASB support those objectives?

> Identify several environmental factors that may explain why accounting principles differ among countries.

> Rose Corporation was unable to service its outstanding debts. The company is considered to be experiencing significant financial difficulties. In an attempt to avoid filing for bankruptcy, it took the following measures: a. Patents with book value of $14

> On January 1, 2014, Fabco borrowed $5,000,000 from First Bank of Newburg. The loan had a term of five years with the principal amount due at the end of the fifth year. Interest is at an annual rate of 6% with interest being paid semiannually on June 30 a

> Early in May of last year, Nancy Fable was diagnosed with a terminal illness, and doctors gave her one more year to live. Aside from a prior year $6,000,000 gift to the city of Macon, Georgia, she had not done any other gifting. She made the following gi

> Walter Campbell was a very giving person all of his life. His surviving children speak frequently of his generosity not only toward his deceased wife but also to many beyond his immediate family. Unfortunately, Walter’s will have proved to be more genero

> Spencer Cook died on July 18 of the current year, leaving a gross estate of $8,600,000. Claims to be settled against that estate included funeral, administrative, and medical expenses of $180,000 and other debts of $210,000. Spencer’s wife Sara has a con

> At the time of Robert Granger’s death, his estate consisted of the following assets and liabilities measured at fair market value: Assets Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

> James and Susan Wagner have assets with fair market values of $12,700,000 and $4,800,000, respectively. James has been diagnosed with a terminal illness and is expected to pass away within the current year. James wants to minimize his estate taxes, and a

> Champos Corporation is a foreign corporation that was formed on June 30, 2015. On July 1, 2016, Magnum Ventures, a U.S. venture capital firm, paid $700,000 to acquire a 30% interest in the equity of Champos. At the time of the acquisition, Champos had ne

> Using the data in Problem 19-8 and the following additional information, prepare a statement of financial position for Excel Private College. Debit Credit Cash 255,000 625,000 185,000 175,000 300,000 1,450,000 3,025,000 Accounts Receivable (net) Con

> The following events occurred as part of the operations of Kronke Private University for the year 2018 (all amounts are in 000’s): a. To construct a new business building, the university floated at par a $20,000,000, 8% serial bond issued on July 1. Inte

> The statement of financial position of Washbud Private University as of the end of its fiscal year, June 30, 2018, is as follows: The following transactions occurred during the fiscal year ended June 30, 2019 (all numbers are in 000’

> Record the following transactions. Identify each as a contribution, agency, or an exchange transaction, and prepare any appropriate entries. 1. Private University coordinated its annual special event with the opening of the alumni weekend. Tickets to the

> Select the best answer for each of the following multiple-choice items dealing with universities: 1. Abbott Public University’s unrestricted current fund comprised the following: Assets. . . . . . . . . . . . . . . . . . . . . . . . .

> Using data from Problem 19-14 and the following additional information, prepare a reconciliation of change in net assets to net cash provided by operating activities that would accompany Lakeside Hospital’s statement of cash flows for the year ended Dece

> You are provided with a summarized version of the cash account of Lakeside Hospital, a not-for-profit organization for 2018. Required Prepare a statement of cash flows, using the direct method, for the year ended December 31, 2018. Cash Account Deb

> The June 30, 2018, adjusted trial balances of Bayshore Community Health Care Association follow: Required 1. Prepare a statement of activities for the year ended June 30, 2018. 2. Prepare a statement of financial position as of June 30, 2018. Bays

> Select the best answer for each of the following multiple-choice items dealing with health care organizations. 1. Hospital financial resources are required by a bond indenture to be set aside to finance construction of a new pediatrics facility. In which

> Select the best answer for each of the following multiple-choice items dealing with hospitals: 1. In June 2018, Park Hospital purchased medicines from Jove Pharmaceutical Company at a cost of $2,000. However, Jove notified Park that the invoice was being

> On June 30, 2015, the shareholders’ equity of Fabinet, a foreign corporation, was 10,500,000 FC. At that time, Newcore, a U.S. corporation, acquired 40% in Fabinet by paying $3,120,000 when 1 FC was equal to $0.60. Equipment, with a fair market value tha

> Select the best answer for each of the following multiple-choice items. (Nos. 2–10 are AICPA adapted.) 1. Which of the following is required as part of the complete set of financial statements for a private college or university? a. Statement of changes

> We Care, a VHWO, conducts two programs: Adult Services and Education. It has the typical supporting services of management and fund raising. The condensed trial balances after allocable expenses have been assigned are presented as follows: We Care Conde

> Outreach Clinic, a VHWO, conducts two programs: Alcohol and Drug Abuse and Outreach to Teens. It has the typical supporting services of management and fund raising. Expense accounts from the pre allocation trial balances as of December 31, 2019, are as f

> Thirty years ago, a group of civic-minded merchants in Mayfair organized the ‘‘Committee of 100’’ for the purpose of establishing the Mayfair Sports Club, a not-for-profit sports org

> Carleton Agency, a VHWO, conducts two programs: Medical Services and Community Information Services. It had the following transactions during the year ended June 30, 2019, shown on next page. 1. Received the following contributions: Unrestricted pledge

> The following selected events relate to the 2019 activities of Fall Nursing Home, Inc., a not-for-profit agency: a. Gross patient service revenue totaled $2,200,000. The provision for uncollectible accounts was estimated at $92,000. The allowance for con

> Select the best answer for each of the following multiple-choice questions: 1. A VHWO receives a donation that is restricted to its endowment and another donation that is restricted to use in acquiring a child care center. How should these donations be r

> Select the best answer for each of the following multiple-choice items. (Nos. 2–4 are AICPA adapted.) 1. Super Seniors is a not-for-profit organization that provides services to senior citizens. Super employs a full-time staff of 10 people at an annual c

> From the expense accounts information and allocation schedule shown in Problem 18-8, prepare a statement of functional expenses for We Care for the year ended December 31, 2019.

> Select the best answer for each of the following multiple-choice items. Items (1) through (3) are based on the following: The Fox Point Humane Society, a VHWO caring for lost animals, had the following financial inflows and outflows for the year ended De

> Lakey International is a foreign corporation that maintains its books of record in foreign currency (FC), although its functional currency is the U.S. dollar. Lakey originally began operations on July 1, 2012, by issuing no par common stock in the amount

> Assume that a U.S. company has made three purchases of inventory from three different foreign vendors. One of the purchases is denominated in U.S. dollars, and the other two purchases are denominated in foreign currency, FC-A and FC-B, respectively. Furt

> From the following information, prepare a statement of net position for the city of Lucas as of June 30, 2019. Cash and cash equivalents, governmental activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 280,000 Cash and cash equivalen

> Using the information from Problem 17-6, illustrate and explain the adjustments necessary to convert to a government-wide statement of activities, assuming all expenditures are for capital assets and other finance sources are the result of issuance of ge

> The pre closing, year-end trial balance for a capital projects fund of the city of Rochester as of December 31, 2019, follows: Required 1. Prepare closing entries as of December 31, 2019. 2. Prepare the year-end statement of revenues, expenditures, and

> Define a financial reporting entity. Give an example of a primary government. Define and give an example of a component unit. Explain the two methods of reporting the primary government and component units in the financial reporting entity and when each

> Based on the following very limited information, indicate whether and how the city should report its related entity. 1. Its school district, although not a legally separate government, is managed by a school board elected by city residents. The system is

> The Urban Development Authority (UDA) was created as a separate legal entity by an act of the state legislature and ‘‘activated’’ by action of the city council to plan and develop the downtown area of the city and to attract new businesses and residents.

> Under the reporting model required by GASB Statement No. 34, fund statements are required for governmental, proprietary, and fiduciary funds. Government-wide statements include the statement of net position and the statement of activities. Required 1. E

> Go to the Web site featuring the financial statements of Minneapolis, Minnesota, at http://www.ci.minneapolis. mn.us/finance/reports/CAFR/index.htm. Required Provide brief answers to the following: 1. The financial section includes the basic financial s

> Select the best answer to the following multiple-choice questions: 1. In the statement of activities, a. all expenses are subtracted from all revenues to get net income. b. the net program expense (revenue) for major functions and programs of the primary

> Palto County elects not to purchase commercial insurance. Instead, it sets aside resources for potential claims in an internal service ‘‘self-insurance’’ fund. During the year, the fund recognized $4 million for claims filed during the year. Of this amou

> Brico Enterprises, a U.S. corporation, acquired an 80% interest in Bandar Distributors in June 2012 when 1 FC equaled $1.62. Bandar is a foreign corporation whose functional currency is the FC. The condensed pre closing comparative trial balance for Band

> The pre closing, year-end trial balance for a capital projects fund of the city of Clark as of December 31, 2019, follows: Required 1. Prepare closing entries as of December 31, 2019, assuming that all inflows and outflows are designated assigned. 2. P

> The following information pertains to Palmer Township’s construction and financing of a new administration center: Estimated total cost of project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. $9,000,000 Project financin

> Mountain View’s citizens authorized the construction of a new library. As a result of this project, the city had the following transactions during 2018: a. On January 3, 2018, a $600,000 serial bond issue having a stated interest rate of 8% was authorize

> (Nos. 4, 5, and 8 are AICPA adapted.) 1. The following revenues were among those reported by Tosa Township in 2018: Net rental revenue (after depreciation) from a parking garage owned by Tosa . . . . . . $ 40,000 Interest earned on investments held for

> The following information relates to Dell City, whose first fiscal year ended December 31, 2019. Assume Dell has only the long-term debt as specified below and only the funds necessitated by the following information. 1. General fund: a. There were n