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Keller Graduate School of Management ACCT 567 Midterm Exam

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Question;1. Question: (TCOs A and B) Fiduciary funds are to use which of the following measurement and basis of accounting? Student Answer: Economic resource measurement focus and accrual basis of accounting. Current financial resources measurement focus and accrual basis of accounting. Economic resources measurement focus and modified accrual basis of accounting. None of the above, the fiduciary funds have no revenues. 2. Question: (TCOs A and B) Funds other than the General Fund are required to be considered to be a major fund when Student Answer: (A) total assets, liabilities, revenues, or expenditures/expenses of that fund constitute 10 percent of either the governmental or enterprise category. (B) total assets, liabilities, revenues, or expenditures/expenses of that fund are at least 5 percent of the total of the governmental and enterprise category. The conditions of either A or B exist. The conditions of both A and B exist. 3. Question: (TCOs A and B) Which of the following is most correct with regard to Management?s Discussion and Analysis? Student Answer: Both state and local governments and federal agencies are required to provide a MD&A. Federal agency financial reports are required to provide a MD&A. State and local government agencies are required to provide a MD&A. Both state and local government and federal agencies are encouraged, but not required to provide a MD&A. 4. Question: (TCOs B and C) Governmental Fund Balance is required to be displayed in which of the categories? Student Answer: Nonspendable, Spendable, Assigned, and Unassigned Restricted, Unrestricted, Assigned, and Unassigned Nonspendable, Restricted, Committed, Assigned, and Unassigned Nonspendable, Restricted, and Unrestricted 5. Question: (TCOs B and C) The proper journal entry to record an encumbrance would include which of the following? Student Answer: (A) A debit to the Encumbrance Account. (B) A debit to the Reserve for Encumbrances Account. (C) A credit to the Reserve for Encumbrances Account. A and C would both be included in the journal entry. 6. Question: (TCOs B and C)) Capital assets that are used by an enterprise fund should be accounted for in the following fund? Student Answer: Enterprise fund but no depreciation on the capital assets should be recorded. Enterprise fund and depreciation on the capital assets should be recorded. Business-type activities journal but no depreciation on the capital assets should be recorded. Governmental activities journal and depreciation on the capital assets should be recorded. 7. Question: (TCO E) King City receives a trust donation for the purpose of maintaining flower in city parks, but the donor does not make a specification as to how the principal must be maintained. This type of trust should be appropriately accounted for which of the following fund? Student Answer: General Fund Permanent Fund Special Revenue Fund Permanent Fund 8. Question: (TCO E) Which fund type is the interest on Long Term Debt typically not accrued, however, it is recognized as an expenditure in the year in which interest is legally due? Student Answer: Debt Service Fund Pension Trust Fund Internal Service Fund Enterprise Fund 9. Question: (TCO E) Which of the following funds or activities general journals would it be inappropriate to record depreciation of capital assets? Student Answer: Capital Projects Fund Governmental Activities Internal Service Fund Business-type activities 10. Question: (TCO D) Under GASB Statement No. 33, when would a special revenue fund be considered to have satisfied the eligibility requirement of a reimbursement type federal grant? Student Answer: Only as the work is completed for a project. When the work has started for the project. Only after the work is completely finished for the project. When a plan for the use of the funds has been developed and approved by the appropriate personnel. 1. Question: (TCO E) You are in a staff meeting with the city controller and one of your colleagues was quoted as follows: ?Capital projects funds are established by a government to account for all plant or equipment acquired by construction.? Do you agree with this statement? Why or why not? 2. Question: (TCOs A and B) What are fiduciary funds? Please identify and explain the two main types and what is the main difference between the funds? 3. Question: (TCO D) The City of Norton received a gift of $3,500,000 from a group of local residents on April 1, 2012 and signed an agreement that the funds would be invested on a permanent basis and the income would be used to purchase artifacts for the city museum. The following transactions took place during the fiscal year ended Dec 31, 2012. a. The gift was recorded on the books on April 1.b. On April 1, 2012, the Calvin Co. bonds were purchased in the amount of $3,000,000, at par. The bonds carry an annual interest rate of 5 percent, payable semiannually on October 1 and April 1. The city also purchased a certificate with a face value of $250,000 pays interest of 4 percent on semiannually on October 1 and April 1.c. On October 1, the semiannual interest was received on the bonds and certificate of deposit.d. From October 1 through December 1, payments were made totaling $85,000 to purchase artifacts for the city museum.e. On December 31, an accrual was made for interest for the bonds and the certificate of deposit.f. After a review of the bond market on December 31, 2012, the bonds had a market value of $2,979,000, exclusive of accrued interest.g. The books were closed on December 31. Requireda. Record the transactions on the books for Calvin Co. Museum Endowment Fund.b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the Calvin Co. Museum Endowment Fund for the year ended December 31, 2012. c. Prepare the Balance Sheet for the Calvin Co. Museum Endowment Fund for the year ended December 31, 2012.

 

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