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EXAM 2 TEST BANK QUESTIONS, Exams of Nursing

The School of Architecture at Taliesin (SOAT)Nursing

EXAM 2 TEST BANK QUESTIONS EXAM 2 TEST BANK QUESTIONS

Typology: Exams

2023/2024

Available from 09/04/2024

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EXAM 2 TEST BANK QUESTIONS

If an entity elects to focus on all economic resources, then it should adopt a modified

accrual

basis of accounting -

✔F

The budgetary measurement focus of governments is determined by applicable state or

local

laws -

✔T

The revenue-recognition issues facing governments are generally focused on the

exchange

transaction earning process, similar to those of businesses. -

✔F

Governmental activities tend to derive the majority of their revenues from exchange

transactions -

✔F

In accounting for property taxes, under the modified accrual basis, existing standards

provide that, except in unusual circumstances, revenues should be recognized only if

cash is expected to be collected within sixty days of year-end -

✔T

Ad valorem taxes are taxes that are based on value -

✔T

Income taxes are classified as ad valorem taxes -

✔F

Sales taxes are taxpayer assessed, that is, parties other than the beneficiary

government

determine the tax base. -

✔T

Revenues that cannot be classified as general revenues are by default considered

program

revenues -

✔F

Taxes that are imposed on the reporting government's citizens are considered general

revenues, even if they are restricted to specific programs -

✔T

1. As used in governmental accounting, interperiod equity refers to a concept of

a) providing the same level of services to citizens each year.

b) measuring whether current year revenues are sufficient to pay for current year

services.

c) levying property taxes at the same rate each year.

d) requiring that general fund budgets be balanced each year. -

✔B

2. For fund financial statements, the measurement focus and basis of accounting used

by

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EXAM 2 TEST BANK QUESTIONS

If an entity elects to focus on all economic resources, then it should adopt a modified accrual basis of accounting - ✔F The budgetary measurement focus of governments is determined by applicable state or local laws - ✔T The revenue-recognition issues facing governments are generally focused on the exchange transaction earning process, similar to those of businesses. - ✔F Governmental activities tend to derive the majority of their revenues from exchange transactions - ✔F In accounting for property taxes, under the modified accrual basis, existing standards provide that, except in unusual circumstances, revenues should be recognized only if cash is expected to be collected within sixty days of year-end - ✔T Ad valorem taxes are taxes that are based on value - ✔T Income taxes are classified as ad valorem taxes - ✔F Sales taxes are taxpayer assessed, that is, parties other than the beneficiary government determine the tax base. - ✔T Revenues that cannot be classified as general revenues are by default considered program revenues - ✔F Taxes that are imposed on the reporting government's citizens are considered general revenues, even if they are restricted to specific programs - ✔T

As used in governmental accounting, interperiod equity refers to a concept of a) providing the same level of services to citizens each year. b) measuring whether current year revenues are sufficient to pay for current year services. c) levying property taxes at the same rate each year. d) requiring that general fund budgets be balanced each year. - ✔B
For fund financial statements, the measurement focus and basis of accounting used by

governmental fund types are a) current financial resources and modified accrual accounting. b) economic resources and modified accrual accounting. c) financial resources and full accrual accounting. d) economic resources and full accrual accounting. - ✔A

The modified accrual basis of accounting is used in presenting the fund financial statements of the governmental funds because a) it is the superior method of accounting for the economic resources of any entity. b) it provides information as to the extent the entity achieved interperiod equity. c) it is budget oriented while facilitating comparisons among entities. d) it results in accounting measurements based on the substance of transactions. - ✔C
As used in defining the modified accrual basis of accounting, the term "available" means a) received in cash. b) will be received in cash within 60 days of year-end. c) collection in cash is reasonably assured. d) collected within the current period or expected to be collected soon enough thereafter to be used to pay liabilities of the current period. - ✔D
Under the modified accrual basis of accounting, derived nonexchange revenues are recognized when a) they are earned. b) they are measurable and available to finance the expenditures of the current period. c) the underlying exchange transaction occurs. d) the underlying exchange transaction occurs and they are measurable and available to finance the expenditures of the current period. - ✔D
Under the accrual basis of accounting, property tax revenues are recognized a) when they are received in cash. b) in the year for which they were levied. c) in the year for which they were levied and when collection in cash is reasonably assured. d) they are available to finance expenditures of the fiscal period. - ✔B
Under the modified accrual basis of accounting, the amount of property tax revenues that should be recognized by a governmental entity in the current year related to the current year levy will be a) the total amount of the levy. b) the expected collectible portion of the levy.

✔B

Under the modified accrual basis of accounting, gains and losses on disposal of fixed assets a) are not recognized. b) are recognized when the proceeds (cash) of the sale are received (on the installment basis). c) are recognized only if there is a gain. d) are recognized when the sale occurs, regardless of when the cash is collected. - ✔A
Under the accrual basis of accounting, gains and losses on disposal of fixed assets a) are not recognized. b) are recognized when the proceeds (cash) of the sale are received (on the installment basis). c) are recognized only if there is a gain. d) are recognized when the sale occurs, regardless of when the cash is collected. - ✔D
Under the modified accrual basis of accounting, license fees, permits, and other miscellaneous revenue are generally recognized for practical purposes a) when cash is received. b) when the exchange takes place. c) over the period during which the government obtains an enforceable legal claim. d) when related expenditures are incurred. - ✔A
Ideally, under the accrual basis of accounting, license fees, permits, and other miscellaneous revenue should be recognized a) when cash is received. b) when the exchange takes place. c) over the period during which the government obtains an enforceable legal claim. d) when related expenditures are incurred. - ✔B
A city that has a 12/31 fiscal year end has adopted a policy of recognizing the maximum amount of property tax revenue allowable under GAAP. Property taxes of $720,0000 (of which 10% are estimated to be uncollectible) are levied in October 2010 to finance the activities of the fiscal year 2011. During 2011, cash collections related to property taxes levied in October 2010 were $600,000. In 2012 the following amounts related to the property taxes levied in October 2010 were collected: January $30,000; March, $6,000. For the fiscal year ended 12/31/11, what amount should be recognized as property tax revenues related to the 2010 levy on the governmental fund financial statements? a) $720,000. b) $648,000. c) $630,000.

e) $600,000. - ✔C

A city that has a 12/31 fiscal year end has adopted a policy of recognizing the maximum amount of property tax revenue allowable under GAAP. Property taxes of $720,0000 (of which 10% are estimated to be uncollectible) are levied in October 2010 to finance the activities of the fiscal year 2011. During 2011, cash collections related to property taxes levied in October 2010 were $600,000. In 2012 the following amounts related to the property taxes levied in October 2010 were collected: January $30,000; March, $6,000. For the fiscal year ended 12/31/11, what amount should be recognized as property tax revenues related to the 2010 levy on the government-wide financial statements? a) $720,000. b) $648,000. c) $630,000. d) $600,000. - ✔B
A city that has a 12/31 fiscal year end has adopted a policy of recognizing property tax revenue consistent with the 60-day rule allowable period under GAAP. Property taxes of $600,000 (of which none are estimated to be uncollectible) are levied in October 2010 to finance the activities of fiscal year 2011. Property taxes are due in two installments June 20 and December 20. Cash collections related to property taxes are as follows: 1/15/11 for property taxes levied in 2009, due in 2010 $ 25, 2/15/11 for property taxes levied in 2009, due in 2010 $ 15, 3/15/11 for property taxes levied in 2009, due in 2010 $ 10, 6/20/11 First installment of taxes levied in 2010, due 6/20/11 $350, 12/20/11 Second installment of taxes levied in 2010, due 12/20/11 $150, 1/15/12 for property taxes levied in 2010, due in 2011 $ 15, 2/15/12 for property taxes levied in 2010, due in 2011 $ 10, 3/15/12 for property ta - ✔C
A city that has a 12/31 fiscal year end has adopted a policy of recognizing property tax revenue consistent with the 60-day rule allowable period under GAAP. Property taxes of $600,000 (of which none are estimated to be uncollectible) are levied in October 2010 to finance the activities of fiscal year 2011. Property taxes are due in two installments June 20 and December 20. Cash collections related to property taxes are as follows: 1/15/11 for property taxes levied in 2009, due in 2010 $ 25, 2/15/11 for property taxes levied in 2009, due in 2010 $ 15, 3/15/11 for property taxes levied in 2009, due in 2010 $ 10, 6/20/11 First installment of taxes levied in 2010, due 6/20/11 $350,

the 20th day of the month following the month in which the sale occurred. Cash received by the City related to sales tax is as follows: Amount received 1/20/11, applicable to December 2010 sales $ Amount received 2/20/11, applicable to January 2011 sales $ 30 Amount received during 2011 related to February-November 2011 sales $ Amount received 1/20/12 for December 2011 sales $ Amount received 2/20/12 for January 2012 $ 40 Assuming the City uses the same period to define "available" as the maximum period allowable for property taxes, what amount should it recognize in the government-wide financial statement as sales tax revenue for the fiscal year ended 12/31/11. a) $430. b) $530. c) $540. d) $550. - ✔C

A City levies a 2% sales tax that is collected for them by the State. Sales tax must be remitted by the merchants to the State by the 20th day of the month following the month in which the sale occurred. The State has a policy of remitting sales taxes to the City within 30 days of collection by the State. Cash received by the State related to sales tax is as follows: Amount received 1/20/11, applicable to December 2010 sales $ Amount received 2/20/11, applicable to January 2011 sales $ 30 Amount received 3/20/11, applicable to February 2011 sales $ 20 Amount received during 2011 related to March-November 2011 sales $ Amount received 1/20/12 for December 2011 sales $ Amount received 2/20/12 for January 2012 $ 40 Amount received 3/20/12 for February 2012 $ 10 Assuming the City uses the same period to define "available" as the maximum period allowable for property taxes, what amount should it recognize as s - ✔C
A City levies a 2% sales tax that is collected for them by the State. Sales tax must be remitted by the merchants to the State by the 20th day of the month following the month in which the sale occurred. The State has a policy of remitting sales taxes to the City within 30 days of collection by the State. Cash received by the State related to sales tax is as follows: Amount received 1/20/11, applicable to December 2010 sales $ Amount received 2/20/11, applicable to January 2011 sales $ 30 Amount received 3/20/11, applicable to February 2011 sales $ 20 Amount received during 2011 related to March-November 2011 sales $

Amount received 1/20/12 for December 2011 sales $ Amount received 2/20/12 for January 2012 $ 40 Amount received 3/20/12 for February 2012 $ 10 Assuming the City uses the same period to define "available" as the maximum period allowable for property taxes, what amount should it recognize as s - ✔C

During 2011, a state has the following cash collections related to state income taxes Payroll withholdings and estimated payments related to 2011 income $ 4/15/11 Balance of 2010 (net of $10 refunds) income taxes $ 40 1/15/12 payroll withholdings and estimated payments related to 2011 income $ 30 2/15/12 payroll withholdings and estimated payments related to 2011 income $ 35 3/15/12 payroll withholdings and estimated payments related to 2012 income $ 25 4/15/12 Balance of 2011 (net of $5 refunds) income taxes $ 45 Assuming that the state defines available as the maximum period allowable for property taxes, what is the amount of revenue that will be recognized in the 2011 governmental fund financial statements related to state income taxes? a) $400. b) $405. c) $430. d) $465. - ✔C
During 2011, a state has the following cash collections related to state income taxes Payroll withholdings and estimated payments related to 2011 income $ 4/15/11 Balance of 2010 (net of $10 refunds) income taxes $ 40 1/15/12 payroll withholdings and estimated payments related to 2011 income $ 30 2/15/12 payroll withholdings and estimated payments related to 2011 income $ 35 3/15/12 payroll withholdings and estimated payments related to 2011 income $ 25 4/15/12 Balance of 2011 (net of $5 refunds) income taxes $ 45 Assuming that the state defines available as the maximum period allowable for property taxes, what is the amount of revenue that will be recognized in the 2011 government- wide financial statements related to state income taxes? a) $400. b) $475. c) $430. d) $465. - ✔C
Under GAAP, income tax revenues should be recognized in the governmental fund financial statements in the accounting period a) when collected in cash by the taxing authority. b) in which the underlying income was earned, regardless of when collected. c) in which the underlying income was earned, if collected in the current period or soon enough thereafter to pay liabilities of the current period. d) when earned. -

A city receives a $150,000 grant from the state to purchase vans to transport physically challenged individuals. During the current year the city receives the entire $150,000 and purchases one bus for $65,000 and issues a purchase order for another van for $60,000. The grant revenue that the city should recognize on the government-wide financial statements in the current year is a) $-0-. b) $ 65,000. c) $125,000. d) $150,000. - ✔A
A city receives notice of a $150,000 grant from the state to purchase vans to transport physically challenged individuals. Although the city did not receive any of the grant funds during the current year, the city purchased one bus for $65,000 and issues a purchase order for another van for $60,000. The grant revenue that the city should recognize in the government- wide financial statements in the current year is a) $-0-. b) $ 65,000. c) $125,000. d) $150,000. - ✔D
Payments made to a state pension plan by the state government on behalf-of a local government should a) not be displayed or disclosed in the local government financial statements. b) be displayed as a revenue in the local government financial statements. c) be displayed as both a revenue and an expenditure in the local government financial statements. d) should be disclosed, but not displayed, in the local government financial statements - ✔C
Unrestricted grant revenues with a time requirement should be recognized a) when the award is announced. b) when the cash is received. c) in the period in which the grant is required to be used. d) when expenditures are recognized on grant-related activities. - ✔C
Reimbursement-type grant revenues are recognized in the accounting period in which a) the award is made. b) the cash is received. c) the grantee is notified of the award.

d) expenditures are recorded on grant-related activities. - ✔D

At the beginning of its fiscal year, a local government owned an investment with a historical cost of $85 and a fair value of $95. During the year, dividends of $2 were received. At the end of the year, the investment had a fair value of $100. The amount that should be recognized on the governmental fund financial statements for the year as investment income is a) $-0-. b) $7. c) $15. d) $17. - ✔B
A local governmental entity began the year with a portfolio of securities with an historical cost of $1,200 and a fair value of $1,240. During the year the government acquired an additional security at a cost of $260 and sold for $200 a security that had an historical cost of $ and a fair value at the beginning of the year of $190. At the end of the year, the securities portfolio had a fair value of $1,330. The amount that should be recognized on the financial statements for the year as investment income is a) $10. b) $20. c) $28. d) $30. - ✔D
Under GAAP, investment income for governmental entities must include a) only dividends and interest received during the period. b) only dividends and interest earned during the period. c) only realized gains and losses. d) dividends and interest received during the period and both realized and unrealized gains and losses - ✔D
A governmental entity is the recipient of a bequest of a multi-story office building that the government intends to use as a new city hall. The building has a historical cost of $850,000; a book value in the hands of the benefactor of $700,000; and a fair value of $1,050,000. The city should recognize on its governmental fund financial statements, donations revenue of a) $-0-. b) $700,000.

generated from—not the contributed assets—may be used to finance specific programs. A government should recognize revenue from the initial endowment when a) it receives the assets (cash). b) when it receives the pledge. c) ratably over 30 years. d) never. The contributions themselves cannot be used to support the government's programs. - ✔B

For purposes of recognizing property tax revenues in governmental funds, "available" is defined as a. revenues received within 90 days of year-end. b. revenues received within 60 days of year-end. c. revenues received within 120 days of year-end. d. being up to the judgment of the preparer. - ✔B
Which of the following is not characterized as non-exchange? a. Sales taxes b. Property taxes c. Fines and forfeits d. Charges for services - ✔D
Which of the following is a derived tax revenue? a. Income taxes b. Sales taxes c. Both of the above d. Neither of the above - ✔C
A wealthy philanthropist donates three buildings to H-Town. Each of the buildings has a fair market value of $5 million. H-Town plans to use Building 1 as a new fire station, but sell Buildings 2 and 3. Building 2 is sold after year-end, but within the availability period. Building 3 fails to sell by the time H-Town issues the financial statements. As a result, which of the following represents the correct way to record revenue from the three buildings? a). Dr Buildings $15 million Cr Deferred revenue $5 million Cr Revenue from donations $10 million b). Dr Land held for sale $10 million Cr Deferred revenue $5 million Cr Revenue from donations $5 million c). Dr Land held for sale $5 million Cr Deferred revenue $5 million

d). Dr Land held for sale $5 million Cr Revenue from donations $5 million - ✔D The resources to service all general long-term debts of the governmental entity are typically accounted for in debt service funds - ✔T When governments establish capital projects funds, they may choose to maintain a separate fund for each major project, or they may choose to combine two or more projects in a single fund. - ✔T Governments are required to integrate budgetary account information in their debt service and capital projects funds only when control cannot readily be established by means other than a budget. - ✔T Capital projects funds do not report long-term obligations in the fund. - ✔T When bonds are issued at a premium, the capital projects fund can transfer those excess resources to the debt service fund - ✔T When bonds are issued at a discount, the debt service fund usually transfers an amount to the capital projects fund to make up for the deficiency - ✔F In accounting for costs incurred on a major construction project in a capital projects fund, the construction outlays would be reported in the fund as general capital assets - ✔F Debt service funds are maintained to account for resources accumulated to pay interest and principal on general long-term debt—that is, long-term debt associated primarily with governmental activities - ✔T In contrast to the accounting for debt service fund expenditures, the interest revenue on bonds held as investments should be accrued in the period the revenue is earned - ✔T Special assessments are imposed nonexchange transactions, similar to property tax levies - ✔T

Salt City issued $5 billion of bonds at face value to fund the reconstruction of the major interstate highways in and around their city. The bond underwriters withheld $2 million for underwriting fees and remitted the balance to the City. Assuming the City maintains its books and records in a manner that facilitates the preparation of fund financial statements, how would the underwriting fee be accounted for in the capital projects fund? a) Reduce Other Financing Sources by $2 million. b) Reduce Bonds Payable by $2 million. c) Increase Expenditures by $2 million. d) It would not be accounted for in the capital projects fund. - ✔C
Sugar City issued $2 million of bonds to fund the construction of a new city office building. The bonds have a stated rate of interest of 5% and were sold at 101. Which of the following entries should be made in the Capital Projects Fund to record this event? a) Debit Cash $2.02 million; Credit Bonds payable $2 million and Premium on bonds payable $.02 million. b) Debit Cash $2.02 million; Credit Bonds payable $2 million and Other financing sources $.02 million. c) Debit Cash $2.02 million; Credit Other financing sources $2.02 million. d) Debit Cash $2.02 million; Credit Other financing sources $2 million and Revenue $. million. - ✔C Voters in Lincoln School District approved the construction of a new high school and approved an $8 million bond issue with a stated rate of interest of 6% to fund the construction. Bids were received and the low bid was $8 million. When the bonds were issued, they sold for face value less bond underwriting fees of $.5 million. The School Board voted to fund the balance of the construction by a transfer from the general fund.
The entry in the capital projects fund to record the receipt of the bond proceeds would be a) Debit Cash $7.5 million; Credit Bonds payable $7.5. b) Debit Cash $7.5 million; Credit Other financing sources $7.5. c) Debit Cash $7.5 million and Expenditures $.5 million; Credit Bonds payable $ million. d) Debit Cash $7.5 million and Expenditures $.5 million; Credit Other financing sources $8. -

✔D

Voters in Lincoln School District approved the construction of a new high school and approved an $8 million bond issue with a stated rate of interest of 6% to fund the construction. Bids were received and the low bid was $8 million. When the bonds were issued, they sold for face value less bond underwriting fees of $.5 million. The School Board voted to fund the balance of the construction by a transfer from the general fund.

The entry in the capital projects fund to record the additional funding for the construction would be a) Debit Due from general fund $.5 million; Credit Other financing sources—transfer $.5 million. b) Debit Due from general fund $.5 million; Credit Revenue $.5 million. c) Debit Cash $.5 million; Credit Due to general fund $.5 million. d) Debit Other financing sources $.5 million; Credit Due to general fund $.5 million. - ✔A Voters in Phillips City approved the construction of a new city hall building and approved a $ million bond issue with a stated rate of interest of 6% to fund the construction. When the bonds were issued, they sold for 101. What are appropriate entries related to the premium?
In the capital projects fund a) Debit Cash $50,000; Credit Revenues $50,000; no other entries required. b) Debit Cash $50,000; Credit Other financing sources—transfer $50,000; No other entries required. c) Debit Cash $50,000; Credit Revenues; ALSO Debit Other financing uses—transfer $50,000; Credit Cash $50,000. d) Debit Cash $50,000; Credit Other financing sources—Bond premium $50,000; ALSO Debit Other financing uses—transfer $50,000; Credit Cash $50,000. - ✔D Voters in Phillips City approved the construction of a new city hall building and approved a $ million bond issue with a stated rate of interest of 6% to fund the construction. When the bonds were issued, they sold for 101. What are appropriate entries related to the premium?
In the debt service fund a) Debit Cash $50,000; Credit Revenues $50,000; no other entries required. b) Debit Cash $50,000; Credit Other financing sources—transfer $50,000; No other

c) Debit Grants receivable $5 million; Credit Deferred revenue $5 million. d) Debit Grants receivable $5 million; credit Other financing sources—transfer $ million. - ✔B

Previously Rose City issued bonds with a face value of $10 million to construct a new city maintenance facility. Assuming that the City maintains its books and records in a manner that facilitates the preparation of the fund financial statements, what is the appropriate entry when the City receives a progress billing from the contractor? a) Debit Building; Credit Cash b) Debit Building; Credit Accounts payable. c) Debit Expenditure; Credit Accounts payable. d) No entry is required. - ✔C
Previously Atomic City had issued bonds with a face value of $10 million to construct a new city hall. Because the money will not be needed for several months, the city invested the bond proceeds in U.S. Government securities. Assuming that the city maintains its books and records in a manner that facilitates the preparation of the fund financial statements, what is the appropriate entry when the City receives interest on the investments? a) Debit Cash; Credit Revenue. b) Debit Cash; Credit Other financing source c) Debit Cash; Credit Deferred revenue d) No entry required. - ✔A
A City issued bonds for the purpose of financing a major capital improvement. Which fund is the most appropriate fund in which to record the receipt of the bond proceeds? a) General Fund. b) Special Revenue Fund. c) Capital Projects Fund. d) Debt Service Fund. - ✔C
Use of a Debt Service Fund is required a) When financial resources are being accumulated for the purpose of paying for capital asset acquisition. b) When financial resources are being accumulated for the purpose of paying principal and interest when it matures. c) For all bonded debt service payments. d) For all debt service payments. - ✔C

Six years ago Hill City issued $10 million of 6% term bonds, due 30 years from the date of issue. Interest on the bonds is payable semi-annually on January 1 and July 1. Hill City has a September 30 fiscal year end. The amount of interest payable that would be included on the balance sheet for the debt service fund of Hill City at September 30 would be a) $ -0-. b) $150,000. c) $300,000. d) $600,000. - ✔A Several years ago, the City of Russell issued $7 million of 6% serial bonds at 101. Principal payments of $350,000 are due each June 30 for 20 years. Interest on the bonds is payable each December 31 and June 30. As of June 30, 2011, the City has not paid the June 30 principal and interest payment.
The amount of interest payable (assuming an outstanding balance of $4,000,000 of bonds) that would be included on the balance sheet for the debt service fund of the City of Russell at June 30, 2011 would be a) $ -0-. b) $168,000. c) $210,000. d) $420,000. - ✔B Several years ago, the City of Russell issued $7 million of 6% serial bonds at 101. Principal payments of $350,000 are due each June 30 for 20 years. Interest on the bonds is payable each December 31 and June 30. As of June 30, 2011, the City has not paid the June 30 principal and interest payment.
The amount of bonds payable that should be included on the balance sheet for the debt service fund of the City of Russell at June 30, 2011 would be a) $0. b) $350,000. c) $700,000. d) $3,150,000. - ✔A
Sue City has outstanding $5 million in general obligation term bonds used to finance the construction of the new City Library. Sue City has a June 30 fiscal year-end. Interest

EXAM 2 TEST BANK QUESTIONS, Exams of Nursing

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EXAM 2 TEST BANK QUESTIONS

✔B

✔D