Purkerson, Smith, and Traynor have operated a bookstore for a number of years as a partnership. Atthe beginning of 2018, capital balances were as follows: Purkerson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $60,000 Smith . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,000 Traynor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 Due to a cash shortage, Purkerson invests an additional $8,000 in the business on April 1, 2018.Each partner is allowed to withdraw $1,000 cash each month. The partners have used the same method of allocating profits and losses since the business’sinception: ∙ Each partner is given the following compensation allowance for work done in the business:Purkerson, $18,000; Smith, $25,000; and Traynor, $8,000. ∙ Each partner is credited with interest equal to 10 percent of the average monthly capital balancefor the year without regard for normal drawings. ∙ Any remaining profit or loss is allocated 4:2:4 to Purkerson, Smith, and Traynor, respectively.The net income for 2018 is $23,600. Each partner withdraws the allotted amount each month. What are the ending capital balances for 2018?
> Go to www.phoenix.gov and do a search for the term “CAFR.” Those results should lead to the latestCAFR for the City of Phoenix, Arizona. The financial statements for a state and local government mustinclude a Management’s Discussion and Analysis of the i
> Read the following journal article: “25 Years of State and Local Governmental Financial Reporting—An Accounting Standards Perspective,” The Government Accountants Journal, Fall 1992. Or, as an alternative possibility, do a search of books in the college
> If this landfill is judged to be a governmental fund, what liability will be reported at the end of the second year on fund financial statements? a. $–0– b. $110,000 c. $190,000 d. $200,000 A city starts a solid waste landfill that it expects to fill to
> Which of the following is true for the Year 2 government-wide financial statements? a. Both expense and liability will be zero. b. Both expense and liability will be $110,000. c. Expense will be $110,000 and liability will be $190,000. d. Expense will be
> A city creates a solid waste landfill. It assesses a charge to every person or company that uses the landfill based on the amount of materials contributed. In which of the following will the landfill probably be recorded? a. General fund. b. Special reve
> In the early part of 2018, the partners of Hugh, Jacobs, and Thomas sought assistance from a localaccountant. They had begun a new business in 2017 but had never used an accountant’s services. Hugh and Jacobs began the partnership by contributing $150,00
> A city provides a local business with a tax abatement so that real estate taxes will be avoided for the next five years. In exchange, the business agrees to construct a new facility to hire 50 or more individuals. How is this reported? a. Only on the gov
> A city agrees to allow the Jones Company to operate within its geographical boundaries without having to pay real estate taxes for the following 10 years. In exchange, Jones agrees to continue employing at least 120 people at all times. For this tax abat
> Which of the following has the least amount of official authority for the financial reporting of state and local governments? a. GASB Technical Bulletins. b. GASB Statements of Governmental Accounting Standards. c. GASB Concepts Statements. d. GASB Imple
> Which of the following is most likely to be true about the financial reporting of a public college or university? a. It resembles the financial reporting of private colleges and universities. b. It will continue to use its own unique style of financial r
> Which of the following is true about the statement of cash flows for the proprietary funds of a state or local government? a. The indirect method of reporting cash flows from operating activities is allowed although the direct method is recommended. b. T
> Government-wide financial statements make a distinction between program revenues and general revenues. How is that difference shown? a. Program revenues are offset against the expenses of a specific function; general revenues are assigned to governmental
> A government reports that its public safety function had expenses of $900,000 last year and program revenues of $200,000 so that its net expenses were $700,000. On which financial statement is this information presented? a. Statement of activities. b. St
> The City of Bacon is located in the County of Pork. The city has a school system and reports buildings at a net $3.6 million although they are actually worth $4.2 million. The county has another school system and reports buildings at a net $5.2 million a
> An employment agency for individuals with disabilities works closely with the City of Hanover. The employment agency is legally separate from the city but still depends on it for financial support, which leads to a potential financial burden for the city
> An accountant is trying to determine whether the school system of the City of Abraham is fiscally independent. Which of the following is not a requirement for being deemed fiscally independent? a. Holding property in its own name. b. Issuing bonded debt
> The partnership of Matteson, Richton, and O’Toole has existed for a number of years. At the presenttime the partners have the following capital balances and profit and loss sharing percentages: O’Toole elects to with
> Which of the following is not necessary for a special purpose local government to be viewed as a primary government for reporting purposes? a. It must have a separately elected governing body. b. It must have specifically defined geographic boundaries. c
> Which of the following is true about the management’s discussion and analysis (MD&A)? a. It is an optional addition to the comprehensive annual financial report, but the GASB encourages its inclusion. b. It adds a verbal explanation for the numbers and t
> Which of the following is true about use of the modified approach? a. It can be applied to all capital assets of a state or local government. b. It is used to adjust depreciation expense either up or down based on conditions for the period. c. It is requ
> A city builds sidewalks throughout its various neighborhoods at a cost of $2.1 million. Which of the following is not true? a. Because the sidewalks qualify as infrastructure, the asset is viewed in the same way as land so that no depreciation is recorde
> Assume in Problem 12 that the city reports the work as a capital asset. Which of the following is true? a. Depreciation is not recorded because the city has no cost. b. Depreciation is not required if the asset is viewed as being inexhaustible. c. Deprec
> In Problem 12, which of the following statements is true about reporting a revenue in connection with this gift? Problem 12 The City of Wilson receives a large sculpture valued at $240,000 as a gift to be placed in front ofthe municipal building. Which o
> The City of Wilson receives a large sculpture valued at $240,000 as a gift to be placed in front of the municipal building. Which of the following is true for reporting the gift within the government-wide financial statements? a. A capital asset of $240,
> The City of Nomanchester has a defined benefit pension plan for a number of its employees. A pension trust fund has been set up that currently has a net position of $32.7 million because quite a number of investments are being held. An actuary estimates
> The City of Francois, Texas, has begun the process of producing its current comprehensive annualfinancial report (CAFR). Several organizations that operate within the city are related in some wayto the primary government. The city’s accountant is attempt
> A city government adds street lights within its boundaries at a total cost of $300,000. The lights should burn for at least 10 years but can last significantly longer if maintained properly. The city sets up a system to monitor these lights with the goal
> The E.N.D. partnership has the following capital balances as of the end of the current year: Pineda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $230,000 Adams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,0
> On January 1, 2017, the City of Graf pays $60,000 for a work of art to display in the local library. The city will take appropriate measures to protect and preserve the piece. However, if the work is ever sold, the money received will go into unrestricte
> On January 1, 2017, a rich citizen of the Town of Ristoni donates a painting valued at $300,000 to be displayed to the public in a government building. Although this painting meets the three criteria to qualify as an artwork, town officials choose to rec
> The City of Columbus has approximately 2,000 employees. For the past three decades, the city has provided its employees with a defined benefit pension plan. The plan contract calls for specific payment amounts to be made to each retiree based on a set fo
> The City of Lawrence opens a solid waste landfill in 2017 that is at 54 percent of capacity on December 31, 2017. The city had initially anticipated closure costs of $2 million but later that year decided that closure costs would actually be $2.4 million
> On January 1, 2017, the City of Hastings created a solid waste landfill that it expects to reach capacity gradually over the next 20 years. If the landfill were to be closed at the current time, closure costs would be approximately $1.2 million plus an a
> For component units, what is the difference in discrete presentation and blending? a. A blended component unit is shown to the left of the statements; a discretely presented component unit is shown to the right. b. A blended component unit is shown at th
> The City of Huble has a defined benefit pension plan for a number of its employees. Which of the following is not included immediately in the determination of pension expense that this government should recognize in its government-wide financial statemen
> If this landfill is judged to be a proprietary fund, what liability will be reported at the end of the second year on fund financial statements? a. $–0– b. $110,000 c. $190,000 d. $200,000 A city starts a solid waste landfill that it expects to fill to
> The accountants for a city are attempting to determine the proper reporting for a new transaction so that the financial statements are in conformity with generally accepted accounting principles. No authoritative answer can be found. What should happen n
> City government officials are analyzing a complicated financial transaction. A GASB Implementation Guide seems to provide one reporting answer and a GASB Concepts Statement seems to provide a different answer. What reporting is most appropriate? a. The g
> On January 1, 2017, the dental partnership of Angela, Diaz, and Krause was formed when thepartners contributed $30,000, $58,000, and $60,000, respectively. Over the next three years, thebusiness reported net income and (loss) as follows: 2017 . . . . . .
> The City of Dickens has a fiscal year ending December 31, Year 5. The city council is viewed asthe highest level of decision-making authority for the government. For each of the following, indicatewhether the overall statement is true or false. Assume th
> A city starts a public library that has separate incorporation and gets some of its money for operationsfrom the state and some from private donations. Indicate whether each of the following independentstatements is true or false and briefly explain each
> A city receives a copy of its original charter from the year 1799 as a gift from a citizen. The documentwill be put under glass and displayed in the city hall for all to see. The fair value is estimatedat $10,000. Indicate whether each of the following i
> Use the same information as in problem 44 except that, by the end of Year 3, the landfill is40 percent filled. The city now realizes that the total closure costs will be $3 million. Indicatewhether each of the following independent statements is true or
> A city has a solid waste landfill that was filled 12 percent in Year 1 and 26 percent in Year 2. Duringthose periods, the government expected that total closure costs would be $2 million. As a result,it paid $50,000 to an environmental company on July 1
> On the first day of the year, the City of Wolfe bought $20,000 of equipment with a 5-year life andno salvage value for its school system. It was capitalized but no other entries were ever made. Themachine was monitored using the modified approach. a. Bas
> The city maintains a landfill that has been recorded during the current year within its parks. The landfillgenerated program revenues of $4,000 in Year 4 and cash expenses of $15,000. It also paid $3,000cash for a piece of land. These transactions were r
> Assume that the one component unit had program revenues of $30,000 and expenses of $42,000and spent $10,000 for land during Year 4. However, it should have been handled as a blended componentunit, not as a discretely presented component unit. According t
> On the first day of Year 4, the city receives a painting as a gift that qualifies as a work of art. It has a30-year life, is worth $15,000, and is being displayed at one of the local parks. The accountant accidentallycapitalized and depreciated it althou
> For each of the following, indicate whether the statement is true or false and include a brief explanationfor your answer. a. A pension trust fund appears in the government-wide financial statements but not in the fundfinancial statements. b. Permanent f
> Use the information in problem 37 to prepare the 2017 fund financial statements for the governmental funds and the proprietary funds. A statement of cash flows is not required. Assume that “available” is defined as within 60 days and that all funds are m
> The City of Pfeiffer starts the year of 2017 with the general fund and an enterprise fund. The general fund has two activities: education and parks/recreation. For convenience, assume that the general fund holds $123,000 cash and a new school building co
> The City of Bernard starts the year of 2017 with the following unrestricted amounts in its general fund: cash of $20,000 and investments of $70,000. In addition, it holds a small building bought on January 1, 2016, for general government purposes for $30
> The following information pertains to the City of Williamson for 2017, its first year of legal existence. For convenience, assume that all transactions are for the general fund, which has three separate functions: general government, public safety, and h
> The County of Maxnell decides to create a sanitation department and offer its services to thepublic for a fee. As a result, county officials plan to account for this activity within the enterprisefunds. Prepare journal entries for this operation for the
> A local citizen gives the City of Salem a painting by Picasso to display in city hall. Under what condition will the city not report this painting as a capital asset on its government-wide financial statements? If it does report the painting as a capital
> The City of Ronchester has a defined benefit pension plan for its firefighters. How is the amount of pension expense determined that should be recognized in the current year?
> A teacher working for the City of Lights will be provided with a defined benefit pension plan. The city sets up a pension trust fund to monitor the resources held for these future payments. How is the amount of net pension liability to be reported in the
> The City of VanStone operates a solid waste landfill. This facility is 11 percent full after the first year of operation and 24 percent after the second year. How much expense should be recognized on the government-wide financial statements in the second
> A landfill is scheduled to be filled to capacity gradually over a 10-year period. However, at the end of the first year of operations, the landfill is only 7 percent filled. How much liability for closure and postclosure costs should be recognized on gov
> The partnership agreement of Jones, King, and Lane provides for the annual allocation of the business’sprofit or loss in the following sequence: ∙ Jones, the managing partner, receives a bonus equal to 20 percent of the business’s profit. ∙ Each partner
> Why does the operation of a solid waste landfill create reporting concerns for a local government?
> Officials for the city of Winfield have agreed to forgo real estate taxes normally charged to Jamieson Corporation for the subsequent 10 years. In exchange, Jamieson has agreed to build a distribution facility that is expected to hire 500 new employees.
> The accountants for a city government are attempting to determine the appropriate method of reporting a series of unique financial transactions. They have reviewed all of the authoritative sources of GAAP and have not located an answer. What action shoul
> Authoritative GAAP for state and local governments is divided into two categories with the first category having more authority than the second. What sources of GAAP are found in both of these categories?
> What is the most common form for the financial statements prepared by public colleges and universities?
> What are some of the major differences that exist between private colleges and universities and public colleges and universities that affect financial reporting?
> A general purpose government takes over a special purpose government in an acquisition. The consideration is larger than the acquisition value of all assets and liabilities. How is the excess reported?
> In governmental accounting, what is the difference between an acquisition and a merger? What differences exist between the accounting for an acquisition and for a merger?
> How are internal service funds reported on government-wide financial statements?
> Why does a government determine the net expenses or revenues for each of the functions within its statement of activities?
> The Prince-Robbins partnership has the following capital account balances on January 1, 2018: Prince, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . $70,000 Robbins, Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000 P
> How does partnership accounting differ from corporate accounting?
> What is the difference in program revenues and general revenues? Why is that distinction important?
> What are the two fund financial statements for governmental funds? What information does each normally present?
> What are the two government-wide financial statements? What does each normally present?
> What is the difference between a blended component unit and a discretely presented component unit?
> The Willingham Museum qualifies as a component unit of the City of Willingham. How does an activity or function meet the requirements to be deemed a component unit of a primary government?
> A primary government can be either a general purpose government or a special purpose government. What is the difference in these two? How does an activity qualify as a special purpose government?
> What does a comprehensive annual financial report (known as the CAFR) include?
> What does the management’s discussion and analysis (MD&A) normally include? Where does a state or local government present this information?
> What impact does the use of the modified approach have on reporting within the government-wide financial statements?
> Under what condition is the modified approach applied by a state or local government?
> A partnership has the following account balances: Cash $50,000; Other Assets $600,000; Liabilities$240,000; Nixon, Capital (50 percent of profits and losses) $200,000; Hoover, Capital (20 percent)$120,000; and Polk, Capital (30 percent) $90,000. Each of
> Assume in question (9) that the city does not choose to report the painting on the government-wide financial statements as a capital asset. Must the city report a revenue for the gift? In question (9) A local citizen gives the City of Salem a painting b
> Search the Internet for the official website of one or more state or local governments. After reviewingthis website, determine whether the latest comprehensive annual financial report (CAFR) is available onthe site. For example, the most recent comprehen
> The City of Danmark is preparing financial statements. Officials are currently working on the statementof activities within the government-wide financial statements. A question has arisen as to whether a particularrevenue should be identified on governme
> The City of Hampshore is currently preparing financial statements for the past fiscal year. The city manager is concerned because the city encountered some unusual transactions during the current fiscal period and is unsure as to their handling. Require
> The City of Bainland has been undergoing financial difficulties because of a decrease in its tax base caused by corporations leaving the area. On January 1, 2017, the city has a fund balance of only $400,000 in its governmental funds. In 2016, the city h
> Search the Internet for the official website of one or more state or local governments. On this website,determine whether the latest comprehensive annual financial report (CAFR) is available. For example,a recent comprehensive annual financial report for
> Obtain a copy of the original version of GASB Statement 34. Read paragraphs 239 through 277. Required Write a report describing alternatives that the GASB considered when it created Statement 34. Indicatethe alternative that you would have viewed as mos
> Go to the website www.gasb.org and click on “About Us” included in the list that runs across the top of the page. Then click on “Mission, Vision, and Core Values.” Read the information provided by GASB. Required Assume that a financial analyst with whom
> A government expects to receive revenues of $400,000 but has approved expenditures of $430,000.The anticipated shortage will have an impact on which of the following terms? a. Interperiod equity b. Modified accrual accounting c. Consumption accounting d.
> Which of the following statements is true? a. There are three different types of proprietary funds. b. There are three different types of fiduciary funds. c. There are five different types of fiduciary funds. d. There are five different types of governme
> When a partner withdraws from a partnership, why is the final distribution often based on theappraised value of the business rather than on the book value of the capital account balance?
> What is the purpose of enterprise funds? a. To account for operations that provide services to other departments within a government. b. To account for asset transfers. c. To account for ongoing activities such as the police and fire departments. d. To a
> What is the purpose of a special revenue fund? a. To account for revenues legally or externally restricted as an operating expenditure. b. To account for ongoing activities. c. To account for gifts when only subsequently earned income can be expended. d.
> Which of the following is not a governmental fund? a. Special revenue fund b. Internal service fund c. Capital projects fund d. Debt service fund
> Cash of $20,000 is transferred from the general fund to the enterprise fund to pay for work that wasdone. What is reported on the fund financial statements? a. No reporting is made. b. Other Financing Sources increase by $20,000; Other Financing Uses inc
> Cash of $20,000 is transferred from the general fund to the enterprise fund to pay for work that wasdone. What is reported on the government-wide financial statements? a. No reporting is made. b. Other Financing Sources increase by $20,000; Other Financi
> Cash of $60,000 is transferred from the general fund to the debt service fund. What is reported onthe fund financial statements? a. No reporting is made. b. Other Financing Sources increase by $60,000; Other Financing Uses increase by $60,000. c. Revenue
