Question on Fund Transactions [AICPA Adapted]
Items 1 through 10 in the left-hand column represent various transactions pertaining to a municipality that uses encumbrance accounting. Items 11 through 20, also listed in the left-hand column, represent the funds and accounts used by the municipality. To the right of these items is a list of possible accounting and reporting methods.
Required
a. For each of the municipality’s transactions (items 1 through 10), select the appropriate method for recording the transaction. A method of recording the transactions may be selected once, more than once, or not at all.
b. For each of the municipality’s funds, accounts, and other items (items 11 to 20), select the appropriate method of accounting and reporting. An accounting and reporting method may be selected once, more than once, or not at all.
| Transactions |
| Recording of Transactions |
1. | General obligation bonds were issued at par. | A. | Credit Appropriations Control |
2. | Approved purchase orders were issued for supplies. | B. | Credit Budgetary FundBalance—Unassigned |
3. | Supplies in item 2 were received and the related invoices were approved. | C. | Credit Expenditures Control |
4. | General fund salaries and wages were incurred. | D. | Credit Deferred Revenues |
5. | The internal service fund had interfund billings. | E. | Credit Interfund Revenues |
6. | Revenues were earned from a previously awarded grant. | F. | Credit Tax Anticipation Notes Payable |
7. | Property taxes were collected in advance. | G. | Credit Other Financing Sources |
8. | Appropriations were recorded on adoption of the budget. | H. | Credit Other Financing Uses |
I. | Debit Appropriations Control | ||
9. | Short-term financing was received from a bank, secured by the city’s taxing power. | J. K. | Debit Deferred Revenues Debit Encumbrances Control |
10. | There was an excess of estimated inflows over estimated outflows. | L. | Debit Expenditures Control |
| Funds and Accounts |
| Accounting and Reporting |
11. | Enterprise fund fixed assets. | A. | Accounted for in a fiduciary fund |
12. | Capital projects fund. | B. | Accounted for in a proprietary fund |
13. | Permanent fund. | C. | Accounts for permanent endowments that can be used for government programs |
14. | Infrastructure fixed assets. |
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15. | Enterprise fund cash. | D. | Reported as an other financing use |
16. | General fund. | E. | Accounted for in a special assessment fund |
17. | Agency fund cash. | F. | Accounts for major construction activities |
18. | Transfer out from the general fund to the internal service fund. | G. H. | Accounts for property tax revenues Accounts for payment of interest and principal on tax-supported debt |
19. | Special revenue fund (a major fund). | I. | Accounts for revenues from earmarked sources to finance designated activities |
20. | Debt service fund (a major fund). | J. | Reported in government-wide statements |
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