ACCT 567 Final Exam, Complete solutions, Verified Answers.

ACCT 567 Final Exam (TCO A) On what should the government-wide financial statements report? (Points : 5) Net position and results of the financial operations of the government as a whole. Budgetary Compliance The cos ...

ACCT 567 Final Exam (TCO A) On what should the government-wide financial statements report? (Points : 5) Net position and results of the financial operations of the government as a whole. Budgetary Compliance The cost of government services Fiscal accountability (TCO A) Which of the following groups is considered a primary user of a state or local government’s general-purpose external financial statements? (Points : 5) Managers and administrators Employees Special Interest Groups Citizens (TCO A) Which of the following statements should be prepared by all not-for-profit organizations? (Points : 5) • Statement of functional expenses • (B) Statement of revenues, expenses, and changes in net position • (C) Statement of financial position • Both A and B (TCO B) According to GASB standards, when should transfers be recognized? (Points : 5) When earned. When collected in cash. When authorized by the budget ordinance. In the period the interfund receivable and payable arise. (TCO C) Comparisons of budgeted versus actual revenues and expenditures are a requirement of which of the following situations? (Points : 5) Required by GAAP for the general fund and major special revenue funds for which an annual budget has been legally adopted. Required by GAAP for all government fund types. Required by GAAP for internal management reports only, they are not permitted for external financial reporting. It is optional under GASB standards for all funds. (TCO C) Which of the following will increase the fund balance of a government at the end of the fiscal year?(Points : 5) The sum of revenues and other financing sources is more than the sum of expenditures and other financing uses. Expenditures are more than the difference between revenues and the excess of other financing sources over other financing uses. Revenues are more than the sum of expenditures, other financing sources, and other financing uses. The sum of fund balance, revenues, and other financing sources is more than the sum of expenditures and other financing uses. (TCO C) When the budget of a government is recorded and when appropriations exceeds estimated revenues, the budgetary fund balance account is (Points : 5) credited at the beginning of the year and debited at the end of the year. credited at the beginning of the year and no entry is made at the end of the year. debited at the beginning of the year and no entry is made at the end of the year. debited at the beginning of the year and credited at the end of the year. (TCO D) The revenues account of a government entity is debited when (Points : 5) The budget is recorded at the beginning of the year. Property taxes are recorded. The account is closed to fund balance-unassigned at the end of the year. Property taxes are collected. (TCO D) The General Fund used electricity provided by the city-owned electric utility (an enterprise fund of the city). The General Fund general journal entry to record the transaction will include (Points : 5) A debit to Due to Other Funds. A debit to Interfund Transfers Out. A debit to Expenses. A debit to Expenditures. (TCO E) During the year, a wealthy local businessman donated a building to city of Perris. The original cost of the building was $340,000. Accumulated depreciation at the date of the gift amounted to $220,000. The appraised fair market value of the donation at the date of the gift was $525,000 of which $35,000 was the value of the land on which the building was situated. At what amount should the city record this donated property in the governmental activities accounts at the government-wide level? (Points : 5) $220,000. $120,000. $340,000. $525,000. (TCO E) Which of the following resource inflows would be recorded as a revenue of a debt service fund? (Points : 5) Receipt of the premium on a new bond issue. Property taxes levied by the debt service fund for debt service purposes. Taxes collected by the General Fund and transferred to the debt service fund. Transfer of the residual equity of a capital projects fund to the debt service fund. (TCO E) A government enters into a capital lease for the purchase of a new fire truck. The present value of the future lease payments is $830,500 and there is a down payment at the beginning of the lease of $32,000. What amount should be recorded in the governmental activities account for the fire truck? (Points : 5) $32,000 $830,500 $798,500 $862,500 (TCO E) Which of the following budgetary accounts is typically used by a debt service fund? (Points : 5) Encumbrances Encumbrances Outstanding Estimated Uncollectible Accounts Appropriations (TCO G) Which of the statements concerning agency funds is a true statement? (Points : 5) Agency funds use the same basis of accounting as permanent funds. Agency funds are reported only on the statement of fiduciary net position. Agency funds use the temporary accounts—Additions and Deductions. Agency funds never receive cash. (TCO G) What basis of accounting helps maintain the original principal of a trust? (Points : 5) Cash basis Accrual basis Modified accrual basis Legal basis (TCO J) Which of the following items are typically reported differently between the governmental fund statements and the governmental activities column of the government-wide statements? (Points : 5) Inventories Cash collected on property taxes receivable Capital outlays Accounts Payable and other accrued expenses (TCO J) GASB standards require that governmental fund financial statements include which of the following?(Points : 5) • Balance Sheet • Statement of activities • Statement of cash flows Both A and B (TCO J) The government-wide financial statements required by GASB standards are a (Points : 5) statement of net position and statement of cash flows statement of net position, statement of activities, and statement of cash flows statement of activities and statement of cash flows statement of net position and statement of activities (TCO H) A condition whereby the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis is called a(an) (Points : 5) system design weakness. deficiency. unacceptable reportable condition. audit alert item. (TCO H) Under FASB Standards, how would a not-for-profit organization recognize a conditional pledge? (Points : 5) It would disclose the amount of the conditional pledge in the notes to the financial statements. It would debit Pledges Receivable and credit Deferred Contributions. It would debit Pledges Receivable and credit Contributions—Temporarily Restricted. It would not recognize the conditional pledge until pledge conditions are substantially met. (TCO I) Which of the following items would not affect the amounts reported in the Revenues and Gains section of the statement of activities for a private college or university? (Points : 5) Student tuition and fees Net assets released from restriction Tuition and fees discounts and allowances Deferred revenues (TCO I) How would the estimated uncollectible tuition and fees be reported on the financial statements of a university? (Points : 5) • It would be reported as part of net revenue by a public university. • It would be reported as an operating expense by a public university. • It would be reported as an operating expense by a private university. Both A and C are the proper recording methods of reporting estimated uncollectible tuition and fees. (TCO I) The primary source of revenues for most hospitals are (Points : 5) Investment income. Capitation fees from health maintenance organizations. Exchange transactions, such as fees for services. Nonexchange transactions, such as contributions. (TCO I) Colleges and universities often make loans to students. How would these loans be reported on the financial statements? (Points : 5) An expense A liability A receivable An investment (TCO I) Charity service and bad debts in a public hospital that follows business-type accounting are (Points : 5) both reported as deductions from gross patient revenue in arriving at net patient revenue. both reported as expenses reported differently, with charity service reported as a deduction from gross patient revenue and bad debts reported as an expense. reported differently, with charity service disclosed in the notes to the financial statements and bad debts reported as a deduction from revenue. (TCOs D, E, F, and G) Please list the name of the fund(s) in which each of the following transactions or events would be recorded. (1) Proceeds of $500,000 were received from a bond issue were used for the purchase of the privately owned water utility in the city. (2) Property taxes of $300,000 were designated to be set aside for the eventual retirement of the City Hall building bonds that were collected. (3) Payment of $800,000 was made to a contractor for progress made in the construction of the new City Hall building. (4) Interest of $50,000 was paid on the bonds issued for the purchase of the water utility. (5) Interest of $100,000 was paid on the bonds issued for the payment of the improvement of streets in the residential district. (6) City motor vehicle license fees of $40,000 were to be used for general street expenditures were collected. (Points : 30) 1. (TCOs D, E, F, and G) Please list the name of the fund(s) in which each of the following transactions or events would be recorded.(1) Bonds of $1,000,000 from which the proceeds are to be used for the construction of a new City Hall building. (2) Salaries of $170,000 were paid to personnel in the office of the mayor. (3) Installment payments of $75,000 were received from the property owners that were assessed for the street improvement project. (4) Over $65,000 of funds were received by employees by payroll deductions that are to be used for the purchase of United States Government Bonds for those employees on an individual basis. (5) Materials of $140,000 were to be used for the general repair of the streets that were purchased by the city. (6) Excess funds of $60,000 were transferred from the water utility to the General Fund. (Points : 30) ACCT 567 Final Exam 2. (TCO F) The garbage collection of the city of Rockwell could be accounted for through the General Fund, a Special Revenue Fund, or an Enterprise Fund. Please identify the circumstances in which each of these fund types might be appropriate. (Points : 40) 2. (TCO F) (1) What are the key differences between the cash flow statement requirements for Enterprise Funds and those for business enterprises? (2) Please identify the proper classification on the statement of cash flow of the Enterprise Fund versus the Private Business Enterprise. Transaction Type Government Classification Business Classification Capital asset acquisition/sale Capital debt issue/retirement Noncapital debt issue/retirement Interest paid on capital debt Interest paid on noncapital debt Receipt of investment earnings (Points : 40) ACCT 567 Final Exam 3. (TCO I) During the fiscal year of June 2012, Jefferson General Hospital, a not-for-profit healthcare organization, had the following revenue-related transactions. (The amounts are summarized for the entire year.) (1) Healthcare services that are provided to inpatients and outpatients amounted to $9,640,000, of which $420,000 were for charity cases, $865,000 was paid by uninsured patients, and $8,355,000 was billed to Medicare, Medicaid, and other insurance companies. (2) Pharmaceutical drugs and medicines sold by the hospital pharmacy amounted to $830,000, all of which was paid by the customer or the insurance companies. (3) Medicare, Medicaid, and third-party payors (insurance companies) approved and paid $5,640,000 of the $8,355,000 billed by the hospital during the year (please review transaction #1). (4) A contribution of $4,000,000 (of which is unconditional) was received in cash from a donor to construct a new facility for cancer patients. The full amount is expendable for that purpose. No activity has taken place during the current year. (5) A total of $810,000 was received from the following activities/sources: cafeteria and gift shop sales, $630,000, unrestricted transfers from the Claremont Hospital Foundation, $110,000, and fees for medical transcripts, $70,000. (6) The allowance for uncollectible receivables was increased by $1,350.Enter the templates provided in the answer space and complete the following requirements: Requirements: a. Record the preceding transactions in general journal form. b. Prepare the unrestricted revenues, gains, and other support section of Jefferson General Hospital’s statement of operations for the current year.(Points : 40) ACCT 567 Final Exam 4. (TCO E) Enter the template provided in the answer space and record the following transactions in the Capital Projects Fund in the general journal for the following transactions.a. McDowell County issued $4,000,000, 5% bonds with interest payable on a semiannual basis on July 1 and January 1. The bonds sold for 102 on July 30, 2012. Proceeds from the bond issue were to be used for construction of the new sheriff station with all interest and premiums received to be used to service the debt issue. b. A state grant of $250,000 was received to help finance the construction of the sheriff station. c. The General Fund transferred $300,000 for use in the construction of the new sheriff station. d. A federal grant of $500,000 was received to help finance the construction of the new sheriff station. e. A construction contract was awarded to the Young Construction Company in the amount of $4,750,000. f. The new sheriff station was completed on May 1, 2013, three months ahead of schedule. The construction expenditures amounted to $4,870,000. When the project was completed, the cost of the sheriff station was allocated to the following, $310,000 for land, $4,180,000 for the building, and the remainder to equipment. g. The temporary accounts of the capital projects were closed to Fund Balance-Restricted. The amounts are restricted due to the bond issue that is related to the construction of the sheriff station. The capital projects fund will be closed by transferring remaining funds to the debt service fund for repayment.(Points : 40) (TCO E) Please record the following transactions in the Capital Projects Fund in the general journal for the following transactions. a. McDowell County issued $4,000,000, 5% bonds with interest payable on a semiannual basis on July 1 and January 1. The bonds sold for 102 on July 30, 2012. Proceeds from the bond issue were to be used for construction of the new sheriff station with all interest and premiums received to be used to service the debt issue. b. A state grant of $250,000 was received to help finance the construction of the sheriff station. c. The General Fund transferred $300,000 for use in the construction of the new sheriff station. d. A federal grant of $500,000 was received to help finance the construction of the new sheriff station. e. A construction contract was awarded to the Young Construction Company in the amount of $4,750,000. f. The new sheriff station was completed on May 1, 2013, three months ahead of schedule. The construction expenditures amounted to $4,870,000. When the project was completed, the cost of the sheriff station was allocated to the following, $310,000 for land, $4,180,000 for the building, and the remainder to equipment. g. The temporary accounts of the capital projects were closed to Fund Balance-Restricted. The amounts are restricted due to the bond issue that is related to the construction of the sheriff station. The capital projects fund will be closed by transferring remaining funds to the debt service fund for repayment. (Points : 40) ACCT 567 Final Exam 5. (TCO F) The following Statement of Cash Receipts and Disbursements was prepared by the bookkeeper of the City of Glass City Museum of Science. The museum is a component unit of the City of Glass City and must be included in the city’s financial statements. It began operations on January 1, 2012 with no liabilities or commitments and only two assets. (1) $6,000 in cash and (2) Land that was acquired for $11,000.Cash Basis 12 months Cash Receipts: Admission Fees $295,000 Loan from the Bank $50,000 Total deposits $345,000Cash Disbursements: Supplies $62,000 Wages 104,000 Utilities 48,000 Purchase of Equipment 70,000 Purchase of Fixtures 45,000 Interest on the Bank Loan 1,250 Total checks $330,250Excess of Receipts Over Disbursements $14,750Additional Information:• The loan from the bank is dated April 1 and is for a five-year period. Interest (5% annual rate) is paid on Oct. 1 and April 1 of each year, beginning Oct. 1, 2012. • The equipment was purchased on April 1, 2012 with the proceeds provided by the bank loan and has an estimated useful life of 10 years (please use the straight-line method of depreciation) for computing depreciation on the equipment. The fixtures were purchased on July 1, 2012 and has an estimated useful life of five years (please use the straight-line method of depreciation) for computing depreciation on the fixtures. • Supplies on-hand amounted to $5,900 at December 31, 2012. • All other bills and salaries related to 2012 had been paid by the close of business on December 31.Required: Enter the template provided in the answer space and complete the following requirements: Please prepare a Statement of Revenues, Expenses, and Changes in Net Assets for the year ended December 31, 2012 assuming the city plans to account for its activities on the accrual basis. (Points : 40) ACCT 567 Final Exam (TCO F) The following Statement of Cash Receipts and Disbursements was prepared by the bookkeeper of the City of McMurray Museum of Science. The museum is a component unit of the City of McMurray and must be included in the city’s financial statements. It began operations on January 1, 2012 with no liabilities or commitments and only two assets. (1) $12,000 in cash and (2) Land that was acquired for $25,000. Cash Basis 12 months Cash Receipts: Admission Fees $320,600 Loan from the Bank $60,000 Total deposits $380,600 Cash Disbursements: Supplies $71,000 Wages 124,000 Utilities 52,000 Purchase of Equipment 90,000 Interest on the Bank Loan 1,500 Total checks $338,500 Excess of Receipts Over Disbursements $ 42,100 Additional Information: • The loan from the bank is dated April 1 and is for a five-year period. Interest (5% annual rate) is paid on Oct. 1 and April 1 of each year, beginning Oct. 1, 2012. • The equipment was purchased on April 1, 2012 with the proceeds provided by the bank loan and has an estimated useful life of 12 years (please use the straight-line method of depreciation) for computing depreciation on the equipment. • Supplies on-hand amounted to $5,400 at December 31, 2012. • All other bills and salaries related to 2012 had been paid by the close of business on December 31. Required: Please prepare a Statement of Revenues, Expenses, and Changes in Net Assets for the year ended December 31, 2012 assuming the city plans to account for its activities on the accrual basis. (Points : 40) ACCT 567 Final Exam