ACCT 4421 TEST BANK 2026 UPDATED
QUESTIONS SOLUTIONS
◉ Premiums received on tax-supported bonds are generally transferred
to what fund? Answer: Debt Service
◉ A liability is recorded in governmental funds when: Answer: Goods or
services are received, and the invoice is vouchered.
◉ The town received a $5,000,000 endowment, the terms of which
indicate that earnings on the endowment are to be used by health and
welfare to provide vaccines to all citizens that are interested. Where
would the $5,000,000 be recorded? Answer: Permanent Fund
◉ What is the process by which a legal valuation is placed on taxable
property called? Answer: Property assessment
◉ When Capitol City makes its annual lease payment on an unpaid lease
obligation, the journal entry for the governmental activities accounts will
include: Answer: A debit to lease Obligation Payable
,◉ Which of the following is not a required disclosure about each major
class of capital assets? Answer: Capital acquisitions and sales or other
dispositions during the year showing the date and method of acquisition
or disposition.
◉ For which of the following types of nonexchange transactions are
revenues recognized when all the eligibility requirements are met?
Answer: Voluntary nonexchange transactions.
◉ The receipt of equipment that had previously been ordered should be
recorded in the General Fund as a debit to: Answer: Expenditures
◉ In which of the following would it not be appropriate to record
depreciation of capital assets? Answer: Capital projects fund
◉ The sale of revenue bonds by a water utility fund would be recorded:
Answer: In an enterprise fund as a liability.
◉ The account "Interfund Transfers In" would be classified in a General
Fund statement of revenues, expenditures, and changes in fund balance
as a(an): Answer: Other Financing source
◉ The General Fund sent $750,000 to a debt service fund to cover
principal and interest costs. This transaction would be recorded in the
,governmental activities journal as Answer: It would not be recorded
since the transaction involves two governmental funds.
◉ Which of the following bases of accounting should be used in
preparing fund financial statements?
Governmental fundsProprietary fundsFiduciary funds
A)Modified accrual Accrual Modified accrual
B)Modified accrual Modified accrual Modified accrual
C)Modified accrual Accrual Accrual
D)Accrual Accrual Accrual Answer: Choice C
◉ In accounting for state and local governments the modified accrual
basis is required for Answer: Governmental Funds
◉ Which of the following is not classified as a support activity reported
by not-for-profit entities? Answer: Program Expenses
◉ GASB standards require that general capital assets be recorded in the
government-wide statements at: Answer: Historical Cost
◉ When a government transfers the rights and obligations of an asset to
another legally separate governmental or private sector entity, the
transaction is referred to as: Answer: A service concession arrangement
, ◉ The Town of Orleans purchased a truck for the parks department. If
the operations of the parks department are financed by general revenues,
which of the following is correct concerning where the capital asset
would be recorded? Answer: General Fund: No; Governmental
Activities: Yes
◉ Under the modified accrual basis of accounting used by the General
Fund, financial resources are considered available if the revenue or other
financing source is expected to be collected Answer: During the current
fiscal period or soon enough after year-end to pay current period
obligations.
◉ Which of the following is not one of the seven elements defined by
the GASB concept statements? Answer: Expenses
◉ The Financial Accounting Standards Board has the responsibility for
setting accounting and financial reporting standards for which of the
following? Answer: All not-for-profit organizations that are
nongovernmental and business entities.
◉ Which of the following would be considered a general capital asset?
Answer: A vehicle purchased from General Fund revenues.
◉ Expenditures and expenses are classified as which of the following
elements under GASB concepts statements? Answer: Outflows of
resources.
QUESTIONS SOLUTIONS
◉ Premiums received on tax-supported bonds are generally transferred
to what fund? Answer: Debt Service
◉ A liability is recorded in governmental funds when: Answer: Goods or
services are received, and the invoice is vouchered.
◉ The town received a $5,000,000 endowment, the terms of which
indicate that earnings on the endowment are to be used by health and
welfare to provide vaccines to all citizens that are interested. Where
would the $5,000,000 be recorded? Answer: Permanent Fund
◉ What is the process by which a legal valuation is placed on taxable
property called? Answer: Property assessment
◉ When Capitol City makes its annual lease payment on an unpaid lease
obligation, the journal entry for the governmental activities accounts will
include: Answer: A debit to lease Obligation Payable
,◉ Which of the following is not a required disclosure about each major
class of capital assets? Answer: Capital acquisitions and sales or other
dispositions during the year showing the date and method of acquisition
or disposition.
◉ For which of the following types of nonexchange transactions are
revenues recognized when all the eligibility requirements are met?
Answer: Voluntary nonexchange transactions.
◉ The receipt of equipment that had previously been ordered should be
recorded in the General Fund as a debit to: Answer: Expenditures
◉ In which of the following would it not be appropriate to record
depreciation of capital assets? Answer: Capital projects fund
◉ The sale of revenue bonds by a water utility fund would be recorded:
Answer: In an enterprise fund as a liability.
◉ The account "Interfund Transfers In" would be classified in a General
Fund statement of revenues, expenditures, and changes in fund balance
as a(an): Answer: Other Financing source
◉ The General Fund sent $750,000 to a debt service fund to cover
principal and interest costs. This transaction would be recorded in the
,governmental activities journal as Answer: It would not be recorded
since the transaction involves two governmental funds.
◉ Which of the following bases of accounting should be used in
preparing fund financial statements?
Governmental fundsProprietary fundsFiduciary funds
A)Modified accrual Accrual Modified accrual
B)Modified accrual Modified accrual Modified accrual
C)Modified accrual Accrual Accrual
D)Accrual Accrual Accrual Answer: Choice C
◉ In accounting for state and local governments the modified accrual
basis is required for Answer: Governmental Funds
◉ Which of the following is not classified as a support activity reported
by not-for-profit entities? Answer: Program Expenses
◉ GASB standards require that general capital assets be recorded in the
government-wide statements at: Answer: Historical Cost
◉ When a government transfers the rights and obligations of an asset to
another legally separate governmental or private sector entity, the
transaction is referred to as: Answer: A service concession arrangement
, ◉ The Town of Orleans purchased a truck for the parks department. If
the operations of the parks department are financed by general revenues,
which of the following is correct concerning where the capital asset
would be recorded? Answer: General Fund: No; Governmental
Activities: Yes
◉ Under the modified accrual basis of accounting used by the General
Fund, financial resources are considered available if the revenue or other
financing source is expected to be collected Answer: During the current
fiscal period or soon enough after year-end to pay current period
obligations.
◉ Which of the following is not one of the seven elements defined by
the GASB concept statements? Answer: Expenses
◉ The Financial Accounting Standards Board has the responsibility for
setting accounting and financial reporting standards for which of the
following? Answer: All not-for-profit organizations that are
nongovernmental and business entities.
◉ Which of the following would be considered a general capital asset?
Answer: A vehicle purchased from General Fund revenues.
◉ Expenditures and expenses are classified as which of the following
elements under GASB concepts statements? Answer: Outflows of
resources.
