Multiple-Choice Items on Governmental Funds [AICPA Adapted]
Select the correct answer for each of the following.
1. On December 31, 20X1, Tiffin Township paid a contractor $2,000,000 for the total cost of a new firehouse built in 20X1 on township-owned land. Financing was by means of a $1,500,000 general obligation bond issue sold at face amount on December 31, 20X1, with the remaining $500,000 transferred from the general fund. What should be reported on Tiffin’s financial statements for the capital projects fund?
a. Revenue, $1,500,000; Expenditures, $1,500,000.
b. Revenue, $1,500,000; Other Financing Sources, $500,000; Expenditures, $2,000,000.
c. Revenue, $2,000,000; Expenditures, $2,000,000.
d. Other Financing Sources, $2,000,000; Expenditures, $2,000,000.
2. A municipality’s debt service fund is an example of which of the following types of funds?
a. Fiduciary.
b. Governmental.
c. Proprietary.
d. Internal service.
3. Revenue of a governmental unit’s special revenue fund should be recognized in the period in which the
a. Revenue becomes available and measurable.
b. Revenue becomes available for appropriation.
c. Revenue is billable.
d. Cash is received.
4. Taxes collected and held by a municipality for a school district would be accounted for in a(n)
a. Enterprise fund.
b. Intragovernmental (internal) service fund.
c. Agency fund.
d. Special revenue fund.
5. Interest expense on bonds payable should be recorded in a debt service fund
a. At the end of the fiscal period if the interest due date does not coincide with the end of the fiscal period.
b. When issued.
c. When legally payable.
d. When paid.
6. Which of the following funds does not have a fund balance?
a. General fund.
b. Agency fund.
c. Special revenue fund.
d. Capital projects fund.
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