AFA 615 Chapter Notes - Chapter 4: Accrual, Withholding Tax, Order Of Newfoundland And Labrador

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2 Jul 2016

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Document Summary

Ch 4: accounting for governmental operating activities- illustrative transactions and financial statements. Most operating activities or transactions affect both the general fund and governmental activities at the government wide level but in different ways. Other activities such as recording depreciation expense or accruing interest on general long-term debt, affect only the government wide financial statements. Purchase orders for certain supplies and contracts for services were placed with outside vendors in the amount of ,090. The amounts chargeable to specific appropriations of 2017 are debited to detail accounts in the encumbrances subsidiary ledger. Assume that only a portion of the supplies and contract with outside vendors were filled or completed during the year at an actual cost of ,700, for which the estimated cost had been ,415. In addition to the supplies the general fund purchased a new copier during the year. The copier was received at an actual cost of ,550.

Related Questions

12. For the purpose of government-wide financial statements, thecost of cleaning up a government-owned landfill and closing thelandfill

A) Is not recognized until the costs are actually incurred
B) Is accrued and amortized over the expected useful life of thelandfill
C) Is accrued on a pro-rated basis each period based on how fullthe landfill is
D) Is accrued in full at the time the costs become estimable
E) Is treated as an encumbrance at the time it become estimable andas an expenditure when it is actually paid

13. Drye Township has received adonation of a rare painting worth $1,000,000. For Drye'sgovernment-wide financial statements, three criteria must be metbefore Drye can opt not to recognize the painting as an asset.Which of the following is not one of the three criteria?(1.) Thepainting is held for public exhibition, education, or research infurtherance of public service, rather than financial gain.(2.) Thepainting is scheduled to be sold immediately at auction.(3.) Thepainting is protected, kept unencumbered, cared for, andpreserved.

A) Item 1 is not one of the three criteria
B) Item 2 is not one of the three criteria
C) Item 3 is not one of the three criteria
D) All three items are required criteria
E) None of the three items are required criteria

14. Which of the following is nota criterion of a capital lease?

A) The lease transfers ownership of the property to the lesseeby the end of the lease term
B) The present value of the minimum lease payments equals orexceeds 90 percent of the fair value of the leased property, net oflessor's investment tax credit
C) The lease contains an option to purchase the leased property ata bargain price
D) The lease contains an option to renew
E) The lease term is equal to or greater than 75 percent of theestimated economic life of the leased property

15. Which statement is falseregarding the government-wide Statement of Net Assets?

A) The purpose of the Statement of Net Assets is to report theeconomic resources of the government as a whole
B) Assets are reported excluding capital assets
C) Capital assets are reported net of depreciation
D) Investments are reported at fair value rather than historicalcost
E) Business-type activities include Enterprise Funds

16. Which statement is falseregarding the Balance Sheet for Fund-Based Statements?

A) The Balance Sheet for Fund-Based Statements measures onlycurrent financial resources of the governmental entity
B) The Balance Sheet for Fund-Based Statements uses the modifiedaccrual method for timing purposes
C) Capital assets are not reported on the Balance Sheet forFund-Based Statements
D) The Balance Sheet for Fund-Based Statements measures onlylong-term financial resources of the governmental entity
E) Long-term debts are not reported on the Balance Sheet forFund-Based Statements

17. The city operates a publicpool where each person is assessed a $2 entrance fee. Which fund ismost appropriate to record these revenues?

A) General Fund
B) Enterprise Fund
C) Special Revenue Fund
D) Internal Service Fund
E) Capital Projects Fund

18. Which of the following typesof health care organizations follow FASB Accounting StandardsCodification for GAAP?

	Investor-Owned Health Care Enterprises	Not-for-Profit Organizations	Governmental Health Care Organizations
A)	Yes	Yes	No
B)	Yes	Yes	Yes
C)	No	No	Yes
D)	Yes	No	Yes
E)	Yes	No	No

A) Entry A
B) Entry B
C) Entry C
D) Entry D
E) Entry E

19. In accruing patient chargesfor the current month, which one of the following accounts should ahospital credit?

A) Accounts Payable
B) Deferred Revenue
C) Unearned Revenue
D) Patient Service Revenues
E) Accounts Receivable

20. Which account would becredited in recording a gift of medicine to a nursing home from anoutside party?

A) Nonoperating Gain - Contributions
B) Contractual Adjustments
C) Patient Service Revenues
D) Drugs and Medicines
E) Nonoperating Revenues - Contribution

21. Unconditional transfers ofcash or other resources to an entity in a voluntary nonreciprocaltransaction is the GAAP definition for

A) miscellaneous revenues
B) contributions
C) unconditional promises to give
D) exchange transactions
E) pledges

22. On a statement of functionalexpenses for a voluntary health and welfare organization, how areexpenses classified?

A) Health services expenses and operating expenses
B) Program services expenses and administrative servicesexpenses
C) Program services expenses and supporting services expenses
D) Operating expenses and supporting services expenses
E) Operating expenses and administrative expenses

peachlion740

During its %uFB01scal year ending August 31,2012, the

Eaton School District engaged in thefollowing

transactions:

It established a purchasing department, tobe

accounted for in a new internal service fundto

purchase supplies and distribute them tooper-

ating units. To provide working capital forthe

new department, it transferred $1.7 millionfrom

its general fund to the internal servicefund.

During the year, operating departments thatare

accounted for in the general fund acquiredsup-

plies from the internal service fund, forwhich

they were billed $300,000. Of this amount,the

government transferred $200,000 from thegen-

eral fund to the internal service fund,expecting

to transfer the balance in the following%uFB01scal

year. The supplies had cost the purchasingde-

partment $190,000. During 2012, theoperating

departments used only $220,000 of thesupplies

for which they were billed. They had nosupplies

on hand at the start of the year.

The school district transferred $150,000 fromits

general fund to its debt service fund to makeits

required March 31, 2012, interest payment.This

amount was paid from the debt service fund

when due. It represented interest on $8million

of bonds that were issued, at par, onSeptember

30, 2011. The next interest payment of$150,000

is due on September 30, 2012. The districtalso

transferred $75,000 from the general fund tothe

debt service fund to provide for theeventual

repayment of principal.

The district transferred $4.5 million fromthe

general fund to its pension fund (a%uFB01duciary

fund) in partial payment of its actuariallyre-

quired contribution of $5.0 million for theyear.

On August 31 , the district acquired schoolbuses

at a cost of $900,000. The district gavethe

supplier installment notes that required thedis-

trict to make three annual payments of$361,903.

The %uFB01rst payment is due in August 201 3.The

buses have a useful life of 10 years, withno

salvage value.

Select an answer to the following questionsfrom

the amounts listed after them. An amount maybe

selected once, more than once, or not atall. ___ 1. Amount that thegeneral fund should rec-

ognize as supplies expense, assuming that

inventory is accounted for on a purchases

basis.

___ 2. Amount that the district shouldrecognize

as a pension expenditure in its general

fund

___ 3. Amount that the district shouldrecognize

as a pension expense in its government-

wide statements

___ 4. Amount that the general fund shouldrec-

ognize as nonreciprocal transfers-out

___ 5. Amount that the district shouldrecognize

as total debt service expenditures in its

governmental funds.

___ 6. Amount that the government shouldrec-

ognized as total debt service expense inits

government-wide statements

___ 7. Amount that the district shouldrecognize

as other %uFB01nancing sources in itsgeneral

fund %uFB01nancial statements

___ 8. Amount that the district shouldrecog-

nize as capital-related expenditures (in-

cluding depreciation) pertaining to its

buses in its governmental fund%uFB01nancial

statements. The district recognizes a full

year%u2019s depreciation on all capital assetsin

the year of acquisition.

___ 9. Amount that the district shouldrecognize

as capital-related expenses (including de-

preciation) pertaining to its buses in its

government-wide %uFB01nancial statements.

The district recognizes a full year%u2019sde-

preciation on all capital assets in theyear

of acquisition.

___ 10. Amount that the district shouldrecognize

as nonspendable fund balance in its gov-

ernmental fund statements.

b. 75,000

c. 80,000

d. 90,000

e. 137,500

f. 150,000

g. 220,000

h.275,000 i. 300,000

j. 900,000

k. 1,925,000

l. 4,500,000

m. 5,000,000

n. 8,000,000

o. 8,900,000

2. Prepare worksheet entries and postto the worksheet for the following items. Identify each adjustmentby the letter used in the problem:

a. Record the January 1, 2015balances of general fixed assets and related accumulateddepreciation accounts. The City of Monroe had the followingbalances (excluding Internal Service Funds):

	Cost	Accumulated Depreciation
Totals	$ 65,900,000	29,800,000

b. Eliminate thecapital expenditures shown in the governmental funds Statement ofRevenues, Expenditures, and Changes in Fund Balances.

c. Depreciation expense(governmental activities) for the year totaled $ 5,750,000.

d. Eliminate theother financing sources from the sale of bonds by recording aliability for bonds payable and the related premium.

e. As of January1, 2015, the City of Monroe had $12,000,000 in general obligationbonds outstanding.

f. Eliminate the expenditures for bondprincipal.

g. Accrueinterest in the amount of $328,000. (Two bond issues wereoutstanding; interest payments for both were last made on July 1,2015. The computation is as follows: ($11,200,000 Ã .03 Ã 6/12) +($4,000,000 Ã. 08 Ã 6/12) = $328,000).

h. Adjust for theinterest accrued in the prior year government-wide statements, butrecorded as an expenditure in the 2015 fund basis statements,($12,000,000 Ã .03 Ã 6/12) = $180,000.

i. Amortize bondpremium in the amount of $ 10,000.

j. Makeadjustments for additional revenue accrual. The only adjustment isfor property taxes to eliminate the current year deferral ofproperty taxes.

k. Adjust for the$21,000 of property taxes that was deferred in 2014 and recognizedas revenue in the 2015 fund-basis statements.

l. Assume theCity adopted a policy in 2015 of allowing employees to accumulatecompensated absences. Make an adjustment accruing the expense of $39,500 Charge compensated absences expense.

m. Bring in thebalances of the internal service fund balance sheet accounts.Again, use a single account for all capital assets and a secondaccount for all accumulated depreciation balances (use a separatecolumn of the worksheet to enter Internal Service Fundentries).

n. No revenuesfrom internal service funds were with external parties. Assume$3,200 of the $11,200 âDue from Other Fundsâ in the internalservice accounts represents a receivable from the General Fund andthe remaining $8,000 is due from the enterprise fund. Eliminate the$3,200 interfund receivables.

o. Reducegovernmental fund expenses by the net operating profit of internalservice funds. As the amount is small, reduce general governmentexpenses for the entire amount.

p. Eliminatetransfers that are between departments reported within governmentalactivities.

Gov'tal Fund Balances

Adjustments &Eliminations

Govern-mental Funds Adjusted

Internal Service Funds

Balances for Gov't-wide Stmts