ACC 410 Week 4 Quiz.docx

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ACC 410 Week 4 Quiz Strayer

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Quiz Cha"ter 4

Cha"ter 4

Go,ern*ental Acti,ities ' -eco.nizin. -e,enues

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1. If an entity elects to focus on all economic resources (both current and long-termassets and liabilities), then it should adopt a modified accrual basis of accounting.

2. The budgetary measurement focus of governments is determined by applicablestate or local laws.

. The revenue-recognition issues facing governments are simpler to resolve thanthose of businesses.

!. "overnmental activities tend to derive the ma#ority of their revenues frome$change transactions.

%. In accounting for property ta$es, under the modified accrual basis, e$istingstandards provide that, e$cept in unusual circumstances, revenues should berecogni&ed only if cash is e$pected to be collected within si$ty days of year-end.

'. d valorem ta$es are ta$es that are based on value.

. Income ta$es are classified as ad valorem ta$es.

*. +ales ta$es are ta$payer assessed, that is, parties other than the beneficiarygovernment determine the ta$ base.

. ll intergovernmental grants are accounted for in e$actly the same way.

1. evenues that cannot be classified as general revenues are by default consideredprogram revenues.

11. Ta$es that are imposed on the reporting government/s citi&ens are consideredgeneral revenues, even if they are restricted to specific programs.

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1. s used in governmental accounting, interperiod e0uity refers to a concept ofa) providing the same level of services to citi&ens each year.
http://budapp.net/ACC-410-Week-4-Quiz-Strayer-282.htmhttp://budapp.net/ACC-410-Week-4-Quiz-Strayer-282.htm


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b) measuring whether current year revenues are sufficient to pay for current yearservices. c) levying property ta$es at the same rate each year. d) re0uiring that general fund budgets be balanced each year.

2. or fund financial statements, the measurement focus and basis of accountingused by governmental fund types are

a) current financial resources and modified accrual accounting.b) economic resources and modified accrual accounting. c) financial resources and full accrual accounting. d) economic resources and full accrual accounting.

. The modified accrual basis of accounting is used in presenting the fund financialstatements of the governmental funds because

a) it is the superior method of accounting for the economic resources of anyentity.

b) it provides information as to the e$tent the entity achieved interperiod e0uity. c) it is budget oriented while facilitating comparisons among entities. d) it results in accounting measurements based on the substance of transactions.

!. s used in defining the term modified accrual basis of accounting/, availablemeans a) received in cash.

b) will be received in cash within ' days of year-end. c) collection in cash is reasonably assured. d) collected within the current period or e$pected to be collected soon enough

thereafter to be used to pay liabilities of the current period.

%. 3nder the accrual basis of accounting, property ta$ revenues are recogni&eda) when they are received in cash.

b) in the year for which they were levied. c) in the year for which they were levied and when collection in cash isreasonably assured. d) when they are available to finance e$penditures of the fiscal period.

'. 3nder the modified accrual basis of accounting, the amount of property ta$revenues that should be recogni&ed by a governmental entity in the current year

related to the current year levy will be a) the total amount of the levy. b) the e$pected collectible portion of the levy. c) the portion of the levy collected. d) the portion of the levy collected in the current year or within si$ty days of the

fiscal period.

. 3nder the modified accrual basis of accounting used by a governmental entity,investment revenues for the current period should include a) only interest and dividends received. b) all interest and dividends received during the period plus all accruals of

interest and dividends earned.


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c) all interest and dividends received plus gains and losses on securities thatwere sold during the period.

d) all interest and dividends received, all gains and losses on securities sold andall changes in mar4et values on securities held in the portfolio at year-end.

*. 3nder the accrual basis of accounting used by a governmental entity, investmentrevenues for the current period should include

a) only interest and dividends received. b) all interest and dividends received during the period plus all accruals of

interest and dividends earned. c) all interest and dividends received plus gains and losses on securities that

were sold during the period. d) all interest and dividends received, all gains and losses on securities sold and

all changes in mar4et values on securities held in the portfolio at year-end.

. 3nder the modified accrual basis of accounting, derived none$change revenues are

recogni&ed by a governmental entity as revenue a) when the underlying e$change transaction occurs. b) when available. c) when the underlying event occurs and the revenue is available. d) when earned.

1. 3nder the accrual basis of accounting, derived none$change revenues arerecogni&ed by a governmental entity as revenue

a) when the underlying e$change transaction occurs. b) when available. c) when the underlying event occurs and the revenue is available. d) when earned.

11. 3nder the modified accrual basis of accounting, gains and losses on disposal offi$ed assets

a) are not recogni&ed. b) are recogni&ed when the proceeds (cash) of the sale are received (on the

installment basis). c) are recogni&ed only if there is a gain. d) are recogni&ed when the sale occurs, regardless of when the cash is collected.

12. 3nder the accrual basis of accounting, gains and losses on disposal of fi$ed assets a) are not recogni&ed. b) are recogni&ed when the proceeds (cash) of the sale are received (on the

installment basis). c) are recogni&ed only if there is a gain. d) are recogni&ed when the sale occurs, regardless of when the cash is collected.

1. 3nder the modified accrual basis of accounting, fines, license fees, permits, and

other miscellaneous revenue are generally recogni&ed

a) when cash is received.

b) when assessed. c) when an enforceable legal claim e$ists.


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d) when an enforceable legal claim e$ists and the revenue is available.

1!. 3nder the accrual basis of accounting, fines, license fees, permits, and other

miscellaneous revenue are generally recogni&ed

a) when cash is received. b) when assessed. c) when an enforceable legal claim e$ists. d) when an enforceable legal claim e$ists and the revenue is available.

1%. city which has a 1251 fiscal year end has adopted a policy of recogni&ing thema$imum amount of property ta$ revenue allowable under "6. 6roperty ta$esof 7', (of which 18 are estimated to be uncollectible) are levied in9ctober 1 to finance the activities of the fiscal year 2. :uring 2, cashcollections related to property ta$es levied in 9ctober 1 were 7%,. In21 the following amounts related to the property ta$es levied in 9ctober 1

were collected; arch, 7%,. or the fiscal year ended12515, what amount should be recogni&ed as property ta$ revenues related tothe 1 levy on the fund financial statements?

a) 7',. b) 7%!,.

c) 7%2%,. d) 7%,.

1'. city that has adopted a 1251 fiscal year end has adopted a policy of

recogni&ing property ta$ revenue consistent with the '-day rule allowable

period under "6. 6roperty ta$es of 7', (of which none are estimated to

be uncollectible) are levied in 9ctober 2 to finance the activities of fiscal year

21. 6roperty ta$es are due in two installments


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51%52 for property ta$es levied in 2, due in 21 7%,

The totalamount of property ta$ revenue that will be recogni&ed in thegovernment-wide financial statements in 21 is;

a) 7',.

b) 7%%,. c) 7%%,. d) 7%2%,.

1. 3nder "6, property ta$es levied in one fiscal period to finance the activitiesof the following fiscal period are recogni&ed as revenue in the fund financialstatements a) in the year levied. b) in the year for which they are intended to finance the activities. c) when collected, regardless of when levied.

d) in the year for which they are intended to finance the activities, if collectedwithin that period or within a period no greater than ' days after the closeof the fiscal year.

1*. 3nder "6, property ta$es levied in one fiscal period to finance the activitiesof the following fiscal period are recogni&ed as revenue in the government-widefinancial statements

a) in the year levied. b) in the year for which they are intended to finance the activities. c) when collected, regardless of when levied.

d) in the year for which they are intended to finance the activities, if collectedwithin that period or within a period no greater than ' days after the close ofthe fiscal year.

1. @ity levies a 28 sales ta$. +ales ta$ must be remitted by the merchants to the@ity by the 2thday of the month following the month in which the sale occurred.@ash received by the @ity related to sales ta$ is as follows;

mount received 1525, applicable to :ecember 1 sales7 %mount received 2525, applicable to


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d) 72%.

2. @ity levies a 28 sales ta$. +ales ta$ must be remitted by the merchants to the@ity by the 2thday of the month following the month in which the sale occurred.@ash received by the @ity related to sales ta$ is as follows;

mount received 1525, applicable to :ecember 1* sales7 %mount received 2525, applicable to


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22. @ity levies a 28 sales ta$ that is collected for them by the +tate. +ales ta$must be remitted by the merchants to the +tate by the 2 thday of the monthfollowing the month in which the sale occurred. The +tate has a policy ofremitting sales ta$es to the @ity within days of collection by the +tate. @ash

received by the +tate related to sales ta$ is as follows;mount received 1525, applicable to :ecember 1 sales7 %mount received 2525, applicable to arch-Aovember 2 sales71mount received 15251 for :ecember 2 sales 7

%%

mount received 25251 for


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2. 3nder "6, income ta$ revenues should be recogni&ed in the fund financial

statements in the accounting period

a) when collected in cash by the ta$ing authority. b) in which the underlying income was earned, regardless of when collected. c) in which the underlying income was earned, if collected in time to satisfy the

budgetary obligations of the preceding year. d) when earned.

2!. 3nder "6, income ta$ revenues should be recogni&ed in the government-

wide financial statements in the accounting period

a) when collected in cash by the ta$ing authority.

b) in which the underlying income was earned, regardless of when collected. c) in which the underlying income was earned, if collected in time to satisfy the

budgetary obligations of the preceding year. d) when earned.

2%. :uring 2, the city issued 7 in fines for failure to 4eep real property in

acceptable/ condition. :uring that period the city spent 72 to mow and clean

up the unoccupied properties for which the fines were assessed. The city

estimates that 7 of the fines issued in 2 will be uncollectible. :uring 1

the city collected 72 related to 2 fines and 72 related to 1 fines. The

amount of revenue that the city should recogni&e in its 2 fund financial

statements related to fines is

a) 72. b) 72%.

c) 72. d) 7.

2'. 3nder "6, license and permit fees should be recogni&ed in the fund financial

statements in the accounting period

a) when collected. b) when collected, plus proceeds collected within ' days of fiscal year-end. c) when earned.

d) when earned, if collected within ' days of fiscal year end.


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2. city receives a 72, grant from the state to purchase vans to transport

physically challenged individuals. :uring the current year the city receives the

entire 72, and purchases one bus for 7*%, and issues a purchase order

for another van for 7*,. The grant revenue that the city should recogni&e on

the government-wide financial statements in the current year is

a) 7--. b) 7 *%,. c) 71'%,. d) 72,.

2*. city receives notice of a 72, grant from the state to purchase vans totransport physically challenged individuals. lthough the city did not receive any ofthe grant funds during the current year, the city purchased one bus for 7*%, andissues a purchase order for another van for 7*,. The grant revenue that the cityshould recogni&e in the government-wide financial statements in the current year is a) 7--. b) 7 *%,. c) 71'%,. d) 72,.

2. 6ayments made to a state pension plan by the state government on behalf of a

local government should a) not be displayed or disclosed in the local government financial statements. b) be displayed as a revenue in the local government financial statements. c) be displayed as both a revenue and an e$penditure in the local government

financial statements. d) should be disclosed, but not displayed, in the local government financial

statements.

. 3nrestricted grant revenues with a time re0uirement should be recogni&ed in the

accounting period in which

a) the award is announced. b) the cash is received. c) the grant may be used. d) e$penditures are recorded on grant-related activities.

1. eimbursement-type grant revenues are recogni&ed in the accounting period inwhich

a) the award is made. b) the cash is received.

c) cash is disbursed on grant-related activities. d) e$penditures are recorded on grant-related activities.


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2. local governmental entity began the year with a security with an historical costof 7*% and a fair value at the beginning of the year of 7%. :uring the year,dividends of 72 were received. t the end of the year the security had a fair valueof 71. The amount that should be recogni&ed on the fund financial statements

for the year as investment income is a) 7--. b) "ain 7. c) "ain 71%. d) "ain 71.

. local governmental entity began the year with a portfolio of securities with anhistorical cost of 7' and a fair value of 7'2. :uring the year the governmentac0uired an additional security at a cost of 71 and sold for 71 a security that hadan historical cost of 7*' and a fair value at the beginning of the year of 7%. t theend of the year the securities portfolio had a fair value of 7''%. The amount that

should be recogni&ed on the financial statements for the year as investment income is a) "ain 7%. b) "ain 71.

c) "ain 71!.d) "ain 71%.

!. 3nder "6, investment income for governmental entities must include a) only dividends and interest received during the period. b) only dividends and interest earned during the period. c) only reali&ed gains and losses. d) dividends and interest received during the period and both reali&ed and

unreali&ed gains and losses.

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1. 6roperty Ta$esssuming that the @ity maintains the boo4s and record in a manner that facilitatesthe preparation of the fund financial statements, prepare all necessary 2 #ournalentries to record the following 2 events related to the revenues of a city. The@ity has a 1251 fiscal year-end. The city has adopted the '-day rule for all

revenue recognition for which it is appropriate.

a) 9n


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:elin0uent 2 ta$es collected in arch, 21 7 1%,

c) :elin0uent 2 property ta$es were reclassified as delin0uent.

d) 72, of 1* ta$es was written off.

2. +ales Ta$ evenuesssuming that the @ity maintains the boo4s and records in a manner that facilitatesthe preparation of the fund financial statements, prepare all necessary 2 #ournalentries to record the following 2 events related to the revenues of a city. The@ity has a 1251 fiscal year-end. The city has adopted the '-day rule for allrevenue recognition for which it is appropriate. The @ity levies a local sales ta$which is collected by the merchants and remitted to the @ity by the 2thday of themonth following the month of sale.

a) 9n


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f) estaurant licenses are issued for a one-year period. The licenses are valid forone year from


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b) :iscuss the appropriate basis for revenue recognition for each of these grants.c) :iscuss the rationale for each of these methods of revenue recognition.

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ACC 410 Week 4 Quiz.docx