Q: A city’s governmental funds reported capital outlay expenditures of $$500,000 and calculated depreciation expense for the year of 420$$,000. What is the correct journal entry to adjust these amounts for government-wide financial statements?

$$\n\text{Capital assets} \quad 500,000\n\text{Expenditures—capital outlay} \quad 500,000\n\text{Depreciation expense} \quad 420,000\n\text{Accumulated depreciation—capital assets} \quad 420,000\n$$

Q: A town reported outstanding long-term bonds payable of $3,000,000 in the governmental activities column of its government-wide statement of net position at the end of the previous fiscal year. What is the correct journal entry to record the beginning balance for its long-term bonds for the current year?

$$\n\text{Net position} \quad 3,000,000\n\text{Bonds payable} \quad 3,000,000\n$$

Q: A city had $$8,000 of Deferred Inflows of resources—unavailable property taxes at the beginning of the year. The city collects the 8$$,000 during the current year. What is the correct adjusting entry for government-wide financial statements?

$$\n\text{Revenues—property taxes} \quad 8,000\n\text{Net position} \quad 8,000\n$$

Q: A city sold $$2,000,000 of new general obligation bonds and redeemed 500$$,000 of bonds outstanding at the beginning of the year. What is the correct set of journal entries to adjust the governmental fund financial statements for government-wide reporting?

$$\n\text{Other financing sources—long-term debt issued} \quad 2,000,000\n\text{Bonds payable} \quad 2,000,000\n\text{Bonds payable} \quad 500,000\n\text{Expenditures—bond principal} \quad 500,000\n$$

Question 1

Which of the following best describes the measurement focus and basis of accounting used in government-wide financial statements?

Accepted Answer

Economic resources measurement focus and accrual basis of accounting

Question 2

A city’s governmental funds reported capital outlay expenditures of $$500,000 and calculated depreciation expense for the year of 420$$,000. What is the correct journal entry to adjust these amounts for government-wide financial statements?

Accepted Answer

$$
	ext{Capital assets} \quad 500,000
	ext{Expenditures—capital outlay} \quad 500,000
	ext{Depreciation expense} \quad 420,000
	ext{Accumulated depreciation—capital assets} \quad 420,000
$$

Question 3

Which of the following is NOT included in the government-wide statement of net position?

Accepted Answer

Fiduciary funds

Question 4

How are interfund receivables and payables between governmental funds and enterprise funds reported in the government-wide statement of net position?

Accepted Answer

They are reported as internal balances in the respective columns for governmental and business-type activities

Question 5

A town reported outstanding long-term bonds payable of $3,000,000 in the governmental activities column of its government-wide statement of net position at the end of the previous fiscal year. What is the correct journal entry to record the beginning balance for its long-term bonds for the current year?

Accepted Answer

$$
	ext{Net position} \quad 3,000,000
	ext{Bonds payable} \quad 3,000,000
$$

Question 6

Which of the following best explains why reconciliations are required between governmental fund financial statements and government-wide financial statements?

Accepted Answer

Because different measurement focuses and bases of accounting are used

Question 7

A city had $$8,000 of Deferred Inflows of resources—unavailable property taxes at the beginning of the year. The city collects the 8$$,000 during the current year. What is the correct adjusting entry for government-wide financial statements?

Accepted Answer

$$
	ext{Revenues—property taxes} \quad 8,000
	ext{Net position} \quad 8,000
$$

Question 8

Which of the following is a key difference between the reporting of capital assets in governmental funds and government-wide statements?

Accepted Answer

Capital assets are only reported in the government-wide statements for governmental activities

Question 9

A city sold $$2,000,000 of new general obligation bonds and redeemed 500$$,000 of bonds outstanding at the beginning of the year. What is the correct set of journal entries to adjust the governmental fund financial statements for government-wide reporting?

Accepted Answer

$$
	ext{Other financing sources—long-term debt issued} \quad 2,000,000
	ext{Bonds payable} \quad 2,000,000
	ext{Bonds payable} \quad 500,000
	ext{Expenditures—bond principal} \quad 500,000
$$

Question 10

Which of the following statements about the reporting of Internal Service Fund (ISF) balances and activities in government-wide financial statements is correct?

Accepted Answer

ISF assets and liabilities are aggregated with the activities that are the primary consumers of ISF services

Question 11

Which of the following best describes the 'modified approach' for reporting infrastructure assets?

Accepted Answer

Infrastructure assets are not depreciated if the government can demonstrate they are being preserved at or above a certain condition level

Question 12

Which of the following is a required reconciliation when preparing government-wide financial statements from governmental fund statements?

Accepted Answer

Reconciliation of the governmental funds balance sheet to the government-wide statement of net position

Question 13

A city reported Deferred Inflows of resources—unavailable property taxes of $12,000 at the end of the current fiscal year in its governmental funds. What is the correct adjusting entry for government-wide financial statements?

Accepted Answer

$$
	ext{Deferred inflows of resources—unavailable property taxes} \quad 12,000
	ext{Net position} \quad 12,000
$$

Question 14

Which of the following is true regarding the classification of net position in the government-wide statement of net position?

Accepted Answer

Unrestricted net position is the portion that does not meet the definitions of net investment in capital assets or restricted

Question 15

Which of the following adjustments is necessary when converting governmental fund statements to government-wide statements for expenses incurred but not currently due and payable (e.g., compensated absences)?

Accepted Answer

An adjustment is made to accrue the expense and related liability in the government-wide statements

Question 16

Which of the following best describes the reporting of capital assets in proprietary funds?

Accepted Answer

Capital assets are reported in both proprietary fund and government-wide statements

Question 17

A city’s governmental funds use the modified accrual basis of accounting. Which of the following is a key adjustment when preparing government-wide financial statements?

Accepted Answer

Recognize revenues on the accrual basis, regardless of availability

Question 18

Which of the following is a primary purpose of the government-wide statement of activities?

Accepted Answer

To show the extent to which each government function is self-financing through fees and intergovernmental grants

Government-Wide Financial Statements: Accounting for Governmental and Nonprofit Organizations

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