GOV AND NFP EXAM 2, CH 8 BOOK
EXAM 2, ACCT 505 CH 7 MC EXAM 2,
CHAPTER 6 EXAM 2, CH 6 EXAM 2,
GOV AND NP ACCOUNTING HW 5
EXAM 2, ACC 546 CH 8 EXAM 2
QUESTIONS WITH 100% CORRECT
ANSWERS
Events that reduce the recorded cost of capital assets include which of the following:
- Retirements
- Sales
- Theft or loss
- General maintenance - ANSWER-- retirements
- sales
-theft or loss
Which of the following are part of the GASB's definition of intangible assets?\
- Capital assets that financial in nature
- Capital assets that lack physical substance
- Capital assets that have a useful life of more than one period - ANSWER-- Capital
assets that lack physical substance
- Capital assets that have a useful life of more than one period
True or false: An asset impairment can occur due to a change in the manner or
duration of an asset's use. - ANSWER-True
**an asset impairment is from any significant, unexpected decline in the service utility
of a capital asset
Restoration costs approach - ANSWER-The estimated cost to recover the utility of
the asset
Service units approach - ANSWER-the portion of estimated service utility life of the
asset that has been estimated lost due to impairment (appropriate for impairments
due to environmental factors or obsolescence)
Deflated depreciated replacement cost approach - ANSWER-the estimated current
cost of a replacement asset with similar depreciation and deflated for the effects of
inflation (appropriate for impairment due to change in the manner or duration of use)
Which of the following would not be considered a general long-term liability?
,- The estimated liability to clean up the hazardous waste storage sites of the city's
Public Works Department.
- Capitalized equipment leases of the water utility fund
- Compensated absences for the city's Police Department
- Five-year notes payable used to acquire computer equipment for the city's
administrative offices - ANSWER-*Capitalized equipment leases of the water utility
fund
Proceeds from bonds issued to construct a new city hall would most likely be
recorded in the journal of the: - ANSWER-- Capital projects fund
The liability for long-term debt issued to finance a general asset capital project will
appear in which financial statement? - ANSWER-* Government-wide statement of
net position
Which one of the following statements regarding debt margin is correct?
-Debt margin is the total amount of indebtedness of specified types of debt that is
allowed by law to be outstanding at any one time
-Debt margin is calculated without regard to debt that is authorized but not yet issued
-Debt margin is the difference between the legal debt limit and the amount of net
indebtedness subject to limitation
-All of the statements regarding debt margin are correct - ANSWER--Debt margin is
the difference between the legal debt limit and the amount of net indebtedness
subject to limitation
Budgeting entries for a debt service fund would: - ANSWER-Include appropriations
for principle payments that will become legally due during the fiscal year
On March 2, 2023, 20-year, 3 percent, general obligation serial bonds were issued
by Mossy County at the face amount of $3,000,000. Interest of 3 percent per year is
due semiannually on March 1 and September 1. The first principle payment of
$150,000 is due on March 1, 2024. The county's fiscal year-end is December 31.
What amounts are reported as interest expense in the government-wide financial
statements and interest expenditure in the debt service fund for 2023?
-Interest Expense
-Interest Expenditure - ANSWER-Interest Expense:
- $75,000 (3,000,000/20 years= 150,000/2 semi-annually=75,000)
Interest Expenditure:
- $45,000 (3,000,000 * 3%= 90,000/2 semiannually = 45,000)
Debt service funds may be used to account for all of the following except:
-Repayment of debt principle
-Lease Payments
-Amortization of premium on bonds payable
-The proceeds of refunding bond issues - ANSWER--Amortization of premiums on
bonds payable
,A lease rental payment of $20,000, constituting $12,892 of principle and $7,108 of
interest, is made. Which of the following entries are required at the debt service fund
and government-wide level? - ANSWER-Debt Service Fund
Expenditures- Principal of Lease Obligation Dr 12,892
Expenditures- Interest on Lease Obligation Dr 7,108
Cash Cr 20,000
Governmental Activities
Lease Obligation Payable Dr 12,892
Expenses- Interest on Leases Dr 7,108
Cash Cr 20,000
The liability for special assessment bonds for which the city is not obligated in any
manner should be recorded in a - ANSWER-- None of the fund or governmental
activities general journals, but should be disclosed in the notes to the financial
statements
Total general long-term indebtedness subject to debt margin calculations typically
does not include:
- Debt authorized but not issued as of year-end
- Special assessment debt for which a government might be liable if collections are
insufficient
- General obligation debt
- Lease obligations - ANSWER-* Lease obligations
Which of the following is true of land improvements?
-They are never subject to depreciation
-They are always subject to depreciation
-Those that produce permanent benefits should be depreciated
- Those that deteriorate over time should be depreciated - ANSWER--Those that
deteriorate over time should be depreciated
Donated general capital assets are recorded at which of the following? - ANSWER-
acquisition value
Buildings and improvements acquired by donation should be record at _______ -
ANSWER-acquisition value
The cost of machinery and equipment purchased should include which of the
following?
- Transportation costs
- Purchase price
- Installation costs
- Costs of training personnel on use - ANSWER-Only incurred to get an asset ready
for use are included in the cost**
, - Transportation costs
- Purchase price
- Installation costs
Which of the following is true of works of art or historical treasures?
- they must be capitalized
- they do not have to be capitalized if the proceeds of them can be used to acquired
general capital assets
- they do not have to be capitalized if they are held for public exhibition, education, or
research - ANSWER-- They do not need to be capitalized if they are held for public
exhibition, education, or research
Which of the following is true of Construction Work in Progress?
- It is not reported on the statement of net position
- It is reported on the statement of net position with other assets that are not being
depreciated
- It is reported on the statement of net position with other assets that being
depreciated - ANSWER-It is reported on the statement of net position with other
assets that are not being depreciated
Land acquired through donation should be recorded at ______ value on the date of
donations - ANSWER-acquisition
Building improvements include which of the following?
- renovations that increase a buildings value
- alterations that extend the useful life of a building
- routine repairs and maintenance
- walks, retaining walls, parking lots, fencing - ANSWER-- renovations that increase
a buildings value
- alterations that extend the useful life of a building
Which of the following is true of depreciation expense on infrastructure assets in the
government-wide statement of activities?
- It is only reported if a government adopts that the modified approach
- It is never reported
- It is always reported
- It must be reported unless a government adopts the modified approach -
ANSWER-It must be reported unless a government adopts the modified
Capital assets constructed by outside contractors are capitalized at ____ -
ANSWER-Contract price
Machinery and equipment are usually _____ - ANSWER-acquired by purchase
Which account is used to capitalize the accumulated cost of partially completed
general capital assets? - ANSWER-Construction Work in Progress
EXAM 2, ACCT 505 CH 7 MC EXAM 2,
CHAPTER 6 EXAM 2, CH 6 EXAM 2,
GOV AND NP ACCOUNTING HW 5
EXAM 2, ACC 546 CH 8 EXAM 2
QUESTIONS WITH 100% CORRECT
ANSWERS
Events that reduce the recorded cost of capital assets include which of the following:
- Retirements
- Sales
- Theft or loss
- General maintenance - ANSWER-- retirements
- sales
-theft or loss
Which of the following are part of the GASB's definition of intangible assets?\
- Capital assets that financial in nature
- Capital assets that lack physical substance
- Capital assets that have a useful life of more than one period - ANSWER-- Capital
assets that lack physical substance
- Capital assets that have a useful life of more than one period
True or false: An asset impairment can occur due to a change in the manner or
duration of an asset's use. - ANSWER-True
**an asset impairment is from any significant, unexpected decline in the service utility
of a capital asset
Restoration costs approach - ANSWER-The estimated cost to recover the utility of
the asset
Service units approach - ANSWER-the portion of estimated service utility life of the
asset that has been estimated lost due to impairment (appropriate for impairments
due to environmental factors or obsolescence)
Deflated depreciated replacement cost approach - ANSWER-the estimated current
cost of a replacement asset with similar depreciation and deflated for the effects of
inflation (appropriate for impairment due to change in the manner or duration of use)
Which of the following would not be considered a general long-term liability?
,- The estimated liability to clean up the hazardous waste storage sites of the city's
Public Works Department.
- Capitalized equipment leases of the water utility fund
- Compensated absences for the city's Police Department
- Five-year notes payable used to acquire computer equipment for the city's
administrative offices - ANSWER-*Capitalized equipment leases of the water utility
fund
Proceeds from bonds issued to construct a new city hall would most likely be
recorded in the journal of the: - ANSWER-- Capital projects fund
The liability for long-term debt issued to finance a general asset capital project will
appear in which financial statement? - ANSWER-* Government-wide statement of
net position
Which one of the following statements regarding debt margin is correct?
-Debt margin is the total amount of indebtedness of specified types of debt that is
allowed by law to be outstanding at any one time
-Debt margin is calculated without regard to debt that is authorized but not yet issued
-Debt margin is the difference between the legal debt limit and the amount of net
indebtedness subject to limitation
-All of the statements regarding debt margin are correct - ANSWER--Debt margin is
the difference between the legal debt limit and the amount of net indebtedness
subject to limitation
Budgeting entries for a debt service fund would: - ANSWER-Include appropriations
for principle payments that will become legally due during the fiscal year
On March 2, 2023, 20-year, 3 percent, general obligation serial bonds were issued
by Mossy County at the face amount of $3,000,000. Interest of 3 percent per year is
due semiannually on March 1 and September 1. The first principle payment of
$150,000 is due on March 1, 2024. The county's fiscal year-end is December 31.
What amounts are reported as interest expense in the government-wide financial
statements and interest expenditure in the debt service fund for 2023?
-Interest Expense
-Interest Expenditure - ANSWER-Interest Expense:
- $75,000 (3,000,000/20 years= 150,000/2 semi-annually=75,000)
Interest Expenditure:
- $45,000 (3,000,000 * 3%= 90,000/2 semiannually = 45,000)
Debt service funds may be used to account for all of the following except:
-Repayment of debt principle
-Lease Payments
-Amortization of premium on bonds payable
-The proceeds of refunding bond issues - ANSWER--Amortization of premiums on
bonds payable
,A lease rental payment of $20,000, constituting $12,892 of principle and $7,108 of
interest, is made. Which of the following entries are required at the debt service fund
and government-wide level? - ANSWER-Debt Service Fund
Expenditures- Principal of Lease Obligation Dr 12,892
Expenditures- Interest on Lease Obligation Dr 7,108
Cash Cr 20,000
Governmental Activities
Lease Obligation Payable Dr 12,892
Expenses- Interest on Leases Dr 7,108
Cash Cr 20,000
The liability for special assessment bonds for which the city is not obligated in any
manner should be recorded in a - ANSWER-- None of the fund or governmental
activities general journals, but should be disclosed in the notes to the financial
statements
Total general long-term indebtedness subject to debt margin calculations typically
does not include:
- Debt authorized but not issued as of year-end
- Special assessment debt for which a government might be liable if collections are
insufficient
- General obligation debt
- Lease obligations - ANSWER-* Lease obligations
Which of the following is true of land improvements?
-They are never subject to depreciation
-They are always subject to depreciation
-Those that produce permanent benefits should be depreciated
- Those that deteriorate over time should be depreciated - ANSWER--Those that
deteriorate over time should be depreciated
Donated general capital assets are recorded at which of the following? - ANSWER-
acquisition value
Buildings and improvements acquired by donation should be record at _______ -
ANSWER-acquisition value
The cost of machinery and equipment purchased should include which of the
following?
- Transportation costs
- Purchase price
- Installation costs
- Costs of training personnel on use - ANSWER-Only incurred to get an asset ready
for use are included in the cost**
, - Transportation costs
- Purchase price
- Installation costs
Which of the following is true of works of art or historical treasures?
- they must be capitalized
- they do not have to be capitalized if the proceeds of them can be used to acquired
general capital assets
- they do not have to be capitalized if they are held for public exhibition, education, or
research - ANSWER-- They do not need to be capitalized if they are held for public
exhibition, education, or research
Which of the following is true of Construction Work in Progress?
- It is not reported on the statement of net position
- It is reported on the statement of net position with other assets that are not being
depreciated
- It is reported on the statement of net position with other assets that being
depreciated - ANSWER-It is reported on the statement of net position with other
assets that are not being depreciated
Land acquired through donation should be recorded at ______ value on the date of
donations - ANSWER-acquisition
Building improvements include which of the following?
- renovations that increase a buildings value
- alterations that extend the useful life of a building
- routine repairs and maintenance
- walks, retaining walls, parking lots, fencing - ANSWER-- renovations that increase
a buildings value
- alterations that extend the useful life of a building
Which of the following is true of depreciation expense on infrastructure assets in the
government-wide statement of activities?
- It is only reported if a government adopts that the modified approach
- It is never reported
- It is always reported
- It must be reported unless a government adopts the modified approach -
ANSWER-It must be reported unless a government adopts the modified
Capital assets constructed by outside contractors are capitalized at ____ -
ANSWER-Contract price
Machinery and equipment are usually _____ - ANSWER-acquired by purchase
Which account is used to capitalize the accumulated cost of partially completed
general capital assets? - ANSWER-Construction Work in Progress
