ACCT 410 Quiz 3
T/F questions are worth .5 point each:
1.A fund in itself is a separate legal entity that is established to comply with laws that require that certain transactions be segregated and accounted for as a separate "fund."
2.The Financial Accounting Standards Board (FASB) sets generally accepted accounting principles (GAAPs) for non-government not-for-profit organizations, while government non-profit organizations must follow GASB.
3.The size of a government's operations does not necessarily coincide with the number of funds it establishes.
4.The MDA section of the basic financial statements is an introduction of events that have occurred in the organization as well as the possible effects of events that might happen.
5.The government wide financial statements are presented in addition to fund financial statements and include the entity's fiduciary activities.
6.The budget of an NFP organization is not integrated into the record-keeping procedures and the applicable financial statements, as it is for governmental entities.
7.Certain revenues are precluded by GAAP from being recorded in special revenue funds. Revenues that are earmarked for expenditures for major capital projects should be recorded in special revenue funds.
8.NFP organizations adjust the value of their long-term debt for discounts or premiums on issuance of the debt, whereas governments list their long-term debt in the General Long-term Liabilities accounts at face value even though it may have been issued at a discount or at a premium.
9.Because they use full accrual accounting, NFPs account for depreciation. There is an exception, however, in regard to certain assets that have collection value which are preservable in their current condition, and have a claim on resources sufficient to preserve them indefinitely.
10. Proprietary funds use the accrual basis of accounting and the economic resources measurement focus. Accordingly, proprietary funds recognize revenues when they are earned and recognize expenses when a liability is incurred.
11.The basis of accounting describes when transactions are recorded, not what transactions are recorded. Accordingly, allocations such as depreciation and amortization are not recorded as expenditures of governmental funds, nor are long-term liabilities.
12.Governmental funds use the current financial resources measurement focus, which recognizes as expenditures those costs that result in a decrease in current financial resources.
13.Routine employer contributions from the general fund and internal services billings from the enterprise fund are treated as transfers between funds.
14.The City of Virginia Beach issues $5 million in revenue bonds on January 1 to build a water line for the water enterprise fund. Interest is payable every six months. What entry is made for interest expense as of June 30th?
15.The GASB requires each governmental entity to prepare a CAFR.
16. The budget for Virginia Beach authorizes expenditures of 12 million and forecasts revenues of 10 million for 2016. The entry to record the budget in the General Fund is as follows (true or false).
- Costs to acquire rights to future revenues
- Grant amounts received in advance of meeting timing requirements.
- Proceeds from the sale of future revenues
- Deferred gain from a sale and leaseback transaction.
18. GASBS 34 updated the types of fiduciary funds to include the following:
Pension (and other employee benefit) trust funds
Investment trust funds
Private-purpose trust funds
19.Identify 4 main (the big) differences between fund accounting and proprietary accounting.
20.How are the 4 main differences (refer to question 19) reflected in the fund verses the government financial statements and why?