ACC 410 Week 4 Quiz – Strayer
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Quiz 3 Chapter 4
Chapter 4
Governmental Activities -
Recognizing Revenues
TRUE/FALSE (CHAPTER 4)
1. If an entity elects to focus on all
economic resources (both current and long-term assets and liabilities), then it
should adopt a modified accrual basis of accounting.
2. The budgetary measurement focus of
governments is determined by applicable state or local laws.
3. The revenue-recognition issues facing
governments are simpler to resolve than those of businesses.
4. Governmental activities tend to derive the
majority of their revenues from exchange transactions.
5. In accounting for property taxes, under the
modified accrual basis, existing standards provide that, except in unusual
circumstances, revenues should be recognized only if cash is expected to be
collected within sixty days of year-end.
6. Ad valorem taxes are taxes that are based
on value.
7. Income taxes are classified as ad valorem
taxes.
8. Sales taxes are taxpayer assessed, that is,
parties other than the beneficiary government determine the tax base.
9. All intergovernmental grants are accounted
for in exactly the same way.
10. Revenues that cannot be classified as general
revenues are by default considered program revenues.
11. Taxes that are imposed on the reporting government’s
citizens are considered general revenues, even if they are restricted to
specific programs.
MULTIPLE CHOICE (CHAPTER 4)
1. As used in governmental accounting,
interperiod equity refers to a concept of
a)
providing the same level of services to citizens each year.
b)
measuring whether current year revenues are sufficient to pay for
current year services.
c)
levying property taxes at the same rate each year.
d)
requiring that general fund budgets be balanced each year.
2. For fund financial statements, the
measurement focus and basis of accounting used 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.
3. The modified accrual basis of accounting is
used in presenting the fund financial statements of the governmental funds because
a)
it is the superior method of accounting for the economic resources of
any entity.
b)
it provides information as to the extent the entity achieved interperiod
equity.
c)
it is budget oriented while facilitating comparisons among entities.
d)
it results in accounting measurements based on the substance of
transactions.
4. As used in defining the term
‘modified accrual basis of accounting’, available means
a)
received in cash.
b)
will be received in cash within 60 days of year-end.
c)
collection in cash is reasonably assured.
d)
collected within the current period or expected to be collected soon
enough thereafter to be used to pay liabilities of the current period.
5. Under the accrual basis of accounting,
property tax revenues are recognized
a)
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 is
reasonably assured.
d)
when they are available to finance expenditures of the fiscal period.
6. Under the modified accrual basis of
accounting, the amount of property tax revenues that should be recognized 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 expected 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 sixty
days of the fiscal period.
7. Under 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.
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 market values on securities held in the portfolio at
year-end.
8. Under the 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.
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 market values on securities held in the portfolio at
year-end.
9. Under the modified accrual basis of
accounting, derived nonexchange revenues are recognized by a governmental
entity as revenue
a)
when the underlying exchange transaction occurs.
b)
when available.
c)
when the underlying event occurs and the revenue is available.
d)
when earned.
10. Under the accrual basis of accounting,
derived nonexchange revenues are recognized by a governmental entity as revenue
a)
when the underlying exchange transaction occurs.
b)
when available.
c)
when the underlying event occurs and the revenue is available.
d)
when earned.
11. Under the modified accrual basis of
accounting, gains and losses on disposal of fixed assets
a)
are not recognized.
b) are recognized when the proceeds (cash) of
the sale are received (on the installment basis).
c)
are recognized only if there is a gain.
d)
are recognized when the sale occurs, regardless of when the cash is
collected.
12. Under the accrual basis of accounting, gains
and losses on disposal of fixed assets
a)
are not recognized.
b)
are recognized when the proceeds (cash) of the sale are received (on the
installment basis).
c)
are recognized only if there is a gain.
d)
are recognized when the sale occurs, regardless of when the cash is
collected.
13. Under the
modified accrual basis of accounting, fines, license fees, permits, and other
miscellaneous revenue are generally recognized
a)
when cash is received.
b)
when assessed.
c)
when an enforceable legal claim exists.
d) when an enforceable legal
claim exists and the revenue is available.
14. Under the
accrual basis of accounting, fines, license fees, permits, and other
miscellaneous revenue are generally recognized
a)
when cash is received.
b)
when assessed.
c)
when an enforceable legal claim exists.
d)
when an enforceable legal claim exists and the revenue is available.
15. A city which has a 12/31 fiscal year end has
adopted a policy of recognizing the maximum amount of property tax revenue
allowable under GAAP. Property taxes of
$600,000 (of which 10% are estimated to be uncollectible) are levied in October
1999 to finance the activities of the fiscal year 2000. During 2000, cash collections related to
property taxes levied in October 1999 were $500,000. In 2001 the following amounts related to the
property taxes levied in October 1999 were collected: January $25,000; March,
$5,000. For the fiscal year ended
12/31/00, what amount should be recognized as property tax revenues related to
the 1999 levy on the fund financial statements?
a)
$600,000.
b)
$540,000.
c)
$525,000.
d)
$500,000.
16. A city that has adopted a 12/31 fiscal year
end has adopted a policy of recognizing property tax revenue consistent with
the 60-day rule allowable period under GAAP.
Property taxes of $600,000 (of which none are estimated to be
uncollectible) are levied in October 2000 to finance the activities of fiscal
year 2001. Property taxes are due in two
installments June 20 and December 20.
Cash collections related to property taxes are as follows:
1/15/01 for property taxes levied in 1999, due in
2000 $ 25,000
2/15/01 for property taxes levied in 1999, due in
2000 $ 15,000
3/15/01 for property taxes levied in 1999, due in
2000 $ 10,000
6/20/01 First installment of taxes levied in 2000,
due 6/20/01 $350,000
12/20/01
Second installment of taxes levied in 2000, due 12/20/01 $150,000
1/15/02 for property taxes levied in 2000, due in
2001 $ 15,000
2/15/02 for property taxes levied in 2000, due in
2001 $ 10,000
3/15/02 for property taxes levied in 2000, due in
2001 $ 5,000
The total amount of property tax revenue that will be recognized in the
government-wide financial statements in 2001 is:
a)
$600,000.
b)
$575,000.
c)
$535,000.
d)
$525,000.
17. Under GAAP, property taxes levied in one
fiscal period to finance the activities of the following fiscal period are recognized as revenue in
the fund financial 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
collected within that period or within
a period no greater than 60 days after the close of the fiscal year.
18. Under GAAP, property taxes levied in one
fiscal period to finance the activities of the following fiscal period are recognized as revenue in
the government-wide financial 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
collected within that period or within a period no greater than 60 days after
the close of the fiscal year.
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