ACCT567 Final Exam (September 2018)

Question 1 5 pts

(CO B) The relationship of functional expenses to natural classifications of expense is shown on the FASB statement for which entity?

Voluntary health and welfare entities

All not-for-profit entities

Colleges and universities

Healthcare entities

Question 2 5 pts

(CO A) Capital assets are depreciated in which fund?

Internal service fund

Special revenue fund

Permanent fund

Custodial fund

Question 3 5 pts

(CO C) A governmental fund balance sheet includes all of the following except

accounts receivable.

bonds payable.

vouchers payable.

inventory.

Question 4 5 pts

(CO D) A governmental fund’s operating statement will include

amortization expense.

interest on a tax anticipation note issued and repaid during the period.

a grant that is intended to finance activities of the following period.

depreciation expense.

Question 5 5 pts

(CO E) Equipment with accumulated depreciation of $30,000 and an original price of $40,000 was sold for $15,000. The journal entry includes all of the following except

a debit to cash for $15,000.

a credit to equipment for $40,000.

a credit to other financing sources for $5,000.

a debit to accumulated depreciation for $30,000.

Question 6 5 pts

(CO E) A lease payment made on an unpaid lease obligation will include

a debit to expenditures—principal of lease obligation

a debit to lease obligation payable.

a credit to lease obligation payable.

a debit to lease expense.

Question 7 5 pts

(CO F) How are the enterprise fund and internal service funds different?

The measurement focus on economic resources for enterprise funds and current financial resources for internal service funds

The number of fund financial statements required

The use of cost accounting by enterprise funds but not internal service funds

The customers who primarily benefit from the fund’s service

Question 8 5 pts

(CO G) Which of the following would be included in the transaction in the debt service fund when investments are transferred to a new asset of $4,500,000 with a current fair value of $4,400,000?

A debit to revenues ~ change in fair value of investments in the amount of $100,000

A debit to investments in the amount of $4,400,000

A debit to equity in cash and investments in the amount of $4,500,000

A credit to investments in the amount of $100,000

Question 9 5 pts

(CO H) In which section of the standard audit report does the auditor inform financial statement users that certain information, such as combining statements or budgetary comparison schedules, may not have been subject to the comprehensive audit procedures?

Auditor’s Opinion section

Other Information section

Auditor’s Responsibility section

Other Matters section

Question 10 5 pts

(CO I) A research grant in a small private college will be reported as an increase in what account, according to FASB?

Board-designated net assets

Net assets without donor restrictions

Net assets with donor restrictions

Deferred revenue

Question 11 5 pts

(CO I) Which of the following is (are) considered an authoritative source of GAAP for nongovernmental not-for-profit healthcare entities?

The FASB Accounting Standards Codification (ASC)

The Healthcare Financial Management Associations’ Financial Accounting and Reporting Manual

All of the options given are considered GAAP according to the GAAP hierarchy.

The AICPA Audit and Accounting Guide Health Care Entities

Question 12 5 pts

(CO J) An interim financial report prepared by a government would most likely be

a schedule of budgeted and actual expenditures.

a schedule of cash flows for governmental funds.

a governmental funds balance sheet.

a government-wide statement of activities.

Question 13 30 pts

(CO E) This year, Temp County issued $3,000,000 in general obligation term bonds for 102. The county is required to use any accrued interest or premiums for servicing the debt issue.

How would the bond issue be recorded at the fund and government-wide levels?

How would the bond issue be reported in the fund financial statements and the government-wide financial statements?

What effect, if any, do interest payments have on the carrying value of the bond issue as reported in the financial statements?

Question 14

(CO D) The following transactions occurred for the city of Fontaine’s general fund.

A budget prepared for the fiscal year included total estimated revenues of $2,774,000 and appropriations of $2,693,000.

Encumbrances issued against the appropriations during the year were $931,000.

The current year’s tax levy of $2,005,000 was recorded; uncollectibles were estimated as $65,000.

Collections of delinquent taxes from prior years’ levies totaled $132,000; collections of the current year’s levy totaled $1,459,000.

Invoices were received and approved for payment for items ordered in documents recorded as encumbrances in Transaction (2) of this problem. The estimated liability was $851,200. Actual costs were $850,500.

Revenue other than taxes collected during the year consisted of licenses and permits, $373,000; intergovernmental revenue, $400,000; and $66,000 of miscellaneous revenues.

Payments on Vouchers Payable totaled $1,505,000.

Prepare the journal entry. (If no entry is required for a transaction or event, select “No Journal Entry Required” in the first account field.)

Question 15

(CO H) Each of the following activities could be performed by an independent auditor. Identify whether generally accepted government auditing standards deem each activity Acceptable (A), Prohibited (P), or Require conceptual framework assessment (R) in regarding to independence and explain why in your own words.

Reporting to those charged with governance on behalf of management

Providing valuation services

Researching and responding to the audited entity’s technical questions on relevant tax laws as an ancillary part of providing tax services

Preparing accounting records and financial statements

Providing internal control monitoring and assessments

Having custody of an audited entity’s assets.

Setting policies and strategic direction for the audited entity

Educating the audited entity on matters within the technical expertise of the auditors

Question 16

(CO I) Prepare in general journal form the entries required for each of the following selected transactions of Northern University, a state-funded public institution engaged only in business-type activities. Some of these transactions are related and some are not. (If no entry is required for a transaction or event, select “No Journal Entry Required” in the first account field.)

A generous alumnus donated $300,000 that can only be used for research on diabetes. The full $300,000 was received in the current fiscal year.

During the current fiscal year, expenses of $150,000 were made in cash for diabetes research (see item 1 above).

The amount of $2,000,000 in long-term bonds was issued to construct a new parking garage on campus.

During the current fiscal year, the parking garage (see item 3 above) was partially completed at a total cash expenditure of $1,800,000.

During the current fiscal year, interest was paid in the amount of $120,000 on the long-term bonds issued for the parking garage project (see item 3 above).

Question 17

(CO A). GASB and FASB standards are concerned only with external financial reporting; whereas, FASAB standards are concerned with both internal and external financial reporting. Do you agree with this statement? Why or why not?