Governmental Fund acct F6 M6

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Henderson State University *

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3063

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Accounting

Date

Jan 9, 2024

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docx

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Uploaded by LieutenantGalaxyKangaroo40

Which funds would most appropriately use the current financial resources measurement focus and mo accounting in their fund financial statements? Governmental Proprietary Fiduciary. A Yes o Yes B No ves. ves - B ves. nNo nNo o. ves ves. ves. Explanation Choice "C" is correct. Governmental funds use the current financial resources measurement focus a of accounting in their fund financial statements. Proprietary and fiduciary funds use the economic res focus and accrual basis of accounting. Choices A", "B", and "D" are incorrect, per the explanation above. The economic resources measurement focus and accrual basis of accounting would be most appropr the fund financial statements? A. General fund B. Permanent fund C. Internal service fund D. Capial projects fund Explanation Choice "C™ is correct. The internal service fund's fund financial statement would be prepared using | measurement focus and the accrual basis of accounting. The governmental funds, which include th fund, and capital projects fund, would be prepared using the current financial resources measurem: accrual basis of accounting. Choices “A", “B”, and "D, are incorrect, per the explanation above.

The primary emphasis in accounting and reporting for governmental funds is on: A. Source, use, and balance of current financial resources. B. Income determination. C. Capital maintenance. D. Transfers relating to proprietary activities. Explanation Choice "A" is correct. The measurement focus prescribed by GASB standards for all governmental f financial resources” focus which measures sources, uses, and balances of current financial resour Choice "B" is incorrect. Income determination (i.e., proft measurement) is not a concern of the goverr is no profit motive. Choice "C" is incorrect. Capital maintenance (ie., preserving capital or assets) is not the primary emp funds, but rather in the proprietary funds. Choice D" is incorrect. Transfers relating to proprietary activities is not the primary emphasis of gove accounting and reporting. At December 31, Year 1, the following balances were due from the state government to Clare City Captalprojects $300,000 Custodial and trust 100,000 Enterprise. 30,000 In Clare's December 21, Year 1, financial statements, what amount should be reported in governms A. 100,000 5. s120,000 c. s300,000 D. s420,000 Explanation Choice “C” is correct. The amount to be reported in governmental funds (GRaSPP) would include capital projects fund (the “P” in GRaSPP). Choice “A" is incorrect. The $100,000 amount related to custodial and trust would be reported in Choice "B~ is incorrect. The $20,000 due to the enterprise fund would be reported in propristary Choice "D” is incorrect. Each of the three amounts totaling S480,000 would be reported in a diffe

The city of Cobb has two trust funds for the benefit of the city's library, trust fund A and trust fund B. On fund A can be expended and both the principal and interest from trust fund B can be expended. How sh each trust fund? Trustrung A Trust fund & A. Permanent Permanent © B. Permanent Special revenue C. Specialrevenue Permanent D. Specialrevenue Special revenue Explana n Choice “B" is correct. Trust fund A, whose expenditures are limited to earnings, is accounted for in a ¢ trust fund B, which is fully expendable, is accounted for in a special revenue fund. Special revenue an account for restricted governmental fund resources. Special revenue funds are expendable (may be e permanent funds are nonexpendable (legally restricted to the extent that income and not principal may purpose). What basis of accounting Should be used when preparing a governmental funds statement of revenu in fund balances? A. Accrual basis of accounting. B. Modified accrual basis of accounting. C. Modified cash basis of accounting. D. Cash basis of accounting Explanation Choice "B~ is correct. Governmental (GRaSPP) funds use the modified accrual basis of accounting current resources measurement focus to measure and present transactions. Choice "A" is incorrect. Proprietary and fiduciary funds (SE CIPPOE) use the accrual basis of accol economic resources measurement focus to measure and present transactions. Choice "C™ is incorrect. The modified cash basis of accounting is not appropriate for GAAP present funds or any other type of fund. Choice "D" is incorrect. The cash basis of accounting is not appropriate for GAAP presentations of other type of fund.

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A local governmental unit could have funds using which of the following accounting bases? Accrusi basis Modified sccrusi besis A o Yes 5. nNo No c. Yes No o. ves. ves Explanation Choice "D" is correct. Yes - Yes. A local governmental unit could have funds using both the “accrual basis™ and the “modified accrual governmental funds (GRASPP) are required to use modified accrual, while the proprietary and fiducs required to use the accrual basis. Which of the following bases of accounting is required to be used in the government-wide financial stateme A. Modified cash basis for both governmental activities and business-type activities B. Modified accrual basis for both governmental activities and business-type activities C. Accrual basis for business-type activities and modified accrual basis for governmental activities. D. Accrual basis for both governmental activities and business-type activities. Explanation Choice "D is correct. Government-wide financial statements aggregate information for all governmental ar activities. These statements must be prepared using the economic resources measurement focus and the accounting for both types of activities. Choice "A” is incorrect. The modified cash basis of accounting is not applicable to either governmental or | activities prepared within the government-wide financial statements. Choice "B" is incorrect. Independent governmental fund statements are prepared with the modified accrua but the government-wide presentation requires full accrual for both governmental and business-type activ Choice "C" is incorrect. Governmental activities are reflected on the government-wide financial statements

The governmental fund measurement focus is on the determination of: Current Financial Financial Income Position Resources A ves Yes Yes B No ves o S e Mo ves Yes D. ves Mo ves Explanation Choice "C" is correct. Measurement focus for a governmental fund contemplates measurement of the resources and resulting financial postion. Income determination is a focus of the proprietary and fiduch measurement focus identifies what transactions should be recorded and how they should be reportec funds, the statement of revenues and expenditures should report resources received and consumed (current financial resources focus). The balance sheet shows available resources and current obligat focus). A permanent fund of a municipalty would have the same measurement focus as a(an): A. General Fund. B. internal Service Fund C. Custodial Fund. D. investment Trust Fund Explana RULE: The fund structure used for governmental accounting separates funds into three generic grou by a distinctive measurement focus and basis of accounting Group Governmental Proprietary Fiduciary Fung GRasPP se cPPOE Basis of Accounting Modified Accrual Accrual Measurement Focus Current Financial Resources Economic Resources

Under the modified accrual basis of accounting for a governmental uni, revenues should be recognized in th wehich they: A. Are eared and become measurable. B. Are collected C. Become available and measurable. D. Become available and earned. Explanation Choice "C™ is correct. Under the “modified accrual basis™ of accounting for a governmental uni, revenues s for the accounting period in which they “become available and measurable.” Which of the following items is recognized for governmental activities in the government-wide statem: Statement of revenues, expenditures, and changes in fund balance for governmental funds? A. Transfers between governmental funds. B. Property tax revenue for an amount deferred because it was not avaiable. C. A state grant awarded and received for road repairs that were completed this fiscal year. D. Salaries payable at the end of the current year that will be paid at the beginning of the subse Explanation Choice “B” is correct. Property tax revenues that are measurable but not available at year end are r of resources in governmental fund presentations and not recognized as revenues consistent with accounting. Government-wide financial statements are presented on the full accrual basis of accou property tax revenue regardiess of availabilty. Worksheet entries used to prepare the government- would eliminate the deferred inflow and recognize revenue. Choice “A" is incorrect. Transfers between governmental funds would be recognized on the gover sStatements but eliminated and not recognized on the government-wide financial statements. Choice "C” is incorrect. A state grant received and expended for road repairs in the current year w revenues on both the government-wide financial statements and the governmental fund financial st Choice "D” is incorrect. Salaries payable is a current liabiity that would be fully recognized on both financial statements and the governmental fund financial statements.

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Which of the following funds of a governmental unt uses the same basis of accounting as the speci A, internalservice B. Capital projects C. Private purpose trust D. Enterprise Explanation Choice "B~ is correct. Capital projects are accounted for using the same basis of accounting as th governmental funds, identified in the GRaSPP mnemonic, use the modified accrual basis of accoun and Capital Projects funds are included in this group. Which of the following is a governmental fund that uses the current financial resources measuren A. Enterprise fund. B. internal service fund. C. Special revenue fund. D. Private-purpose trust fund. Explanation Choice “C” is correct. Special revenue fund. The current financial resources measurement focu governmental funds. Governmental funds are identified by the GRSPP mnemonic and defined as General Special Revenue Debt Service Capital Projects. Permanent

Which of the following funds of a governmental unit uses the modified accrual basis of accounting A. Internal service funds. B. Enterprise funds. C. Special revenue funds. D. Private purpose trust funds. Explanation Choice “C™ is correct. Special revenue funds are governmental funds, which use the modified ac Choice A" is incorrect. Internal service funds are proprietary funds, which use the full accrual & Choice “B" is incorrect. Enterprise funds are proprietary funds, which use the full accrual basis Choice "D~ is incorrect. Private purpose trust funds are fiduciary funds, which use the full accru The modified accrual basis of accounting shouk! be used for which of the following funds for purposes c statements? A. Capital projects fund. B. Enterprise fund. C. Pension trust fund. D. Proprietary fund Explanation Choice "A" is correct. The capital projects fund uses the modified accrual basis of accounting. The cap GRaSPP fund which uses the modified accrual basis of accounting. Proprietary funds (SE) and fiduciar the full accrual basis of accounting. Choice “B” is incorrect. Enterprise funds are proprietary (SE) funds and use the full accrual basis of ac Choice “C” is incorrect. Pension trust funds are fiduciary (CIPPOE) funds and use the full accrual basis Choice "D~ is incorrect. Proprietary funds include both enterprise funds and internal service funds whic basis of accounting.

Sig City used the following funds for financial reporting purposes: « General fund « Internal service fund « Airport enterprise fund « Pension trust fund - Capital projects fund - Special revenue fund « Debt service fund How many of Sig's funds use the accrual basis of accounting? A Two. < B Three. c. Four D. Five. Explanation Choice “B" is correct. Three of Sig City's reported funds would use the accrual basis of accounting: the the Airport enterprise fund, and the Pension trust fund. We remember the basis of accounting used by the GRaSPP SE CIPPOE mnemonic and apply it to Sig City as follows: Governmental Proprietary. Fiduciary GRasSPP SE CIPPOE Modified Accrual Accrual Accrual General Internal Service Pension Trust Special Revenue Airport Enterprise Debt Service Capital Projects Funds which complete the mnemonic but are not used by Sig City include: Permanent Custodial Investment Trust Private Purpose Trust Choices A", and "D" are incorrect per above.

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