Governmental and Nonprofit Accounting: Theory and Practice, 9e Update (Freeman)
Problems and Essay Questions
1) Rank the following in terms of their level of authority under government GAAP—
from highest (1) to lowest (5).
_____ A GASB Technical Bulletin
_____ A GASB Implementation Guide
_____ AICPA Industry Audit and Accounting Guide cleared by the GASB
_____ An article in the AICPA Journal of Accountancy
_____ A GASB Interpretation
Answer:
2- A GASB Technical Bulletin
4- A GASB Implementation Guide
2- AICPA Industry Audit and Accounting Guide cleared by the GASB
5- An article in the AICPA Journal of Accountancy
1- A GASB Interpretation
Topic: GAAP Hierarchy) — Chapter 1
,2) Indicate how the following funds would be classified as to type: (G) governmental,
(P) proprietary, or as (F) fiduciary.
_____ Internal service
_____ Agency
_____ General
_____ Special revenue
_____ Investment trust
_____ Capital projects
_____ Debt service
_____ Pension trust
_____ Permanent
_____ Enterprise
_____ Private-purpose trust
Answer:
P- Internal service
F- Agency
G-General
G-Special revenue
F- Investment trust
G-Capital project
G-Debt service
F- Pension trust
G-Permanent
P- Enterprise
,F- Private-purpose trust
Topic: Fund Categories — Chapter 2
3) Part 1—Analyze the effects of the following transactions on the accounting equations
for the various governmental funds and nonfund accounts of a state or local government.
Also, identify the fund that would be used to record the transactions.
1. Retired general government bonds payable upon maturity. The face value was
$2,000,000. Interest of $100,000 was also due and paid. All resources had been
accumulated in a separate fund prior to the retirement date.
2. Sold land for $300,000, which had been used many years ago as a public park. The
land had been purchased for $140,000. The proceeds of the sale are unrestricted.
3. The wages of general government employees were paid in the amount of $25,000
during the month.
4. Incurred construction costs on a major general government construction project,
$6,000,000; $5,400,000 was paid.
5. Issued a $800,000, six-month note (6% interest) to provide temporary financing for
the construction of a handicap accessible ramp a city hall.
6. The six-month note matures and was paid with interest.
7. Depreciation expense of $80,000 for general capital assets.
8. General Fund resources of $3,000,000 were paid to a newly established Capital
Projects Fund. The resources will not be repaid to the General Fund.
Governmental Funds
Entry Level FA - RL = FB
1.
2.
, 3.
4.
5.
6.
7.
8.
8a.
General Capital Assests and General Long-Term Liabilities Accounts
Entry GCA - GLTL = NA
Answer:
Part I
Governmental Funds
Entry Level FA - RL = FB
1. DSF ($2,100,000) (2,100,000)
2. GF 300,000 300,000
GF or
3. SRF (25,000) (25,000)
Problems and Essay Questions
1) Rank the following in terms of their level of authority under government GAAP—
from highest (1) to lowest (5).
_____ A GASB Technical Bulletin
_____ A GASB Implementation Guide
_____ AICPA Industry Audit and Accounting Guide cleared by the GASB
_____ An article in the AICPA Journal of Accountancy
_____ A GASB Interpretation
Answer:
2- A GASB Technical Bulletin
4- A GASB Implementation Guide
2- AICPA Industry Audit and Accounting Guide cleared by the GASB
5- An article in the AICPA Journal of Accountancy
1- A GASB Interpretation
Topic: GAAP Hierarchy) — Chapter 1
,2) Indicate how the following funds would be classified as to type: (G) governmental,
(P) proprietary, or as (F) fiduciary.
_____ Internal service
_____ Agency
_____ General
_____ Special revenue
_____ Investment trust
_____ Capital projects
_____ Debt service
_____ Pension trust
_____ Permanent
_____ Enterprise
_____ Private-purpose trust
Answer:
P- Internal service
F- Agency
G-General
G-Special revenue
F- Investment trust
G-Capital project
G-Debt service
F- Pension trust
G-Permanent
P- Enterprise
,F- Private-purpose trust
Topic: Fund Categories — Chapter 2
3) Part 1—Analyze the effects of the following transactions on the accounting equations
for the various governmental funds and nonfund accounts of a state or local government.
Also, identify the fund that would be used to record the transactions.
1. Retired general government bonds payable upon maturity. The face value was
$2,000,000. Interest of $100,000 was also due and paid. All resources had been
accumulated in a separate fund prior to the retirement date.
2. Sold land for $300,000, which had been used many years ago as a public park. The
land had been purchased for $140,000. The proceeds of the sale are unrestricted.
3. The wages of general government employees were paid in the amount of $25,000
during the month.
4. Incurred construction costs on a major general government construction project,
$6,000,000; $5,400,000 was paid.
5. Issued a $800,000, six-month note (6% interest) to provide temporary financing for
the construction of a handicap accessible ramp a city hall.
6. The six-month note matures and was paid with interest.
7. Depreciation expense of $80,000 for general capital assets.
8. General Fund resources of $3,000,000 were paid to a newly established Capital
Projects Fund. The resources will not be repaid to the General Fund.
Governmental Funds
Entry Level FA - RL = FB
1.
2.
, 3.
4.
5.
6.
7.
8.
8a.
General Capital Assests and General Long-Term Liabilities Accounts
Entry GCA - GLTL = NA
Answer:
Part I
Governmental Funds
Entry Level FA - RL = FB
1. DSF ($2,100,000) (2,100,000)
2. GF 300,000 300,000
GF or
3. SRF (25,000) (25,000)
