2.99 See Answer

Question: Which of the following is true about


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 GASB encourages its inclusion.
b. It adds a verbal explanation for the numbers and trends presented in the financial statements.
c. It appears at the very end of a government’s comprehensive annual financial report.
d. It replaces a portion of the fund financial statements traditionally presented by state and local governments.


> Help & Save is a private not-for-profit entity that operates in Kansas. Swim For Safety is a private not-for-profit entity that operates in Missouri. The leaders of these two organizations have decided to combine forces on January 1, 2020, in order t

> The Watson Foundation, a private not-for-profit entity, starts 2020 with cash of $100,000, contributions receivable (net) of $200,000, investments of $300,000, and land, buildings, and equipment (net) of $200,000. Net assets without donor restrictions we

> You are preparing a statement of activities for the University of Richland, a private not-for-profit entity. The following questions should be viewed as independent of each other. Part I During the current year, a donor gives $400,000 cash to the school

> The University of Danville is a private not-for-profit university that starts the current year with $700,000 in net assets: $400,000 without donor restrictions and $300,000 with donor restrictions. The $300,000 is composed of $200,000 with purpose restri

> The following questions concern the accounting principles and procedures applicable to a private not-for-profit entity. Write answers to each question. a. What is the difference between exchange revenue and contributed revenue? b. What is the significanc

> Why is a private not-for-profit entity more likely to use the direct method of reporting operating activity cash flows than a for-profit business would be? a. The direct method is the traditional approach for private not-for-profit entities. b. An indire

> The Willson Center is a private not-for-profit entity. During 2020, it receives pledges of $600,000 that it expects to collect during 2021. Of that amount, 10 percent is viewed as conditional. Of the rest, $300,000 must be used for automotive equipment f

> The IFRS Foundation and IASB maintain a website at www.ifrs.org. Go to this website and access “Use of IFRS Standards by jurisdiction” (click on the “Around the World” tab). Select a country of interest, and access its “Jurisdictional Profile” (available

> A private not-for-profit entity is working to create a cure for a disease. The charity starts the year with one asset, cash of $700,000. Net assets without donor restrictions are $400,000. Net assets with donor restrictions are $300,000. Of the restricte

> During the year ended December 31, 2020, Andersen Hospital (operated as a private not-for-profit entity) received and incurred the following:

> Shirly Ngo spends four days in a local private not-for-private hospital. The hospital charges her $140,000 for the services. Her insurance company has contracts with the hospital that will lower the amount that has to be paid. The hospital believes it ha

> Mike Jones spends five days in a local private not-for-profit hospital. The hospital charges him $170,000 for the services. His insurance company has contracts with the hospital that will lower the amount that has to be paid. The hospital believes it has

> Which of the following is not true about the application of new revenue recognition rules to private not-for-profit health care entities? a. Revenues are likely to be much lower than under previous rules. b. Bad debts will be recorded as direct reduction

> A health care entity provides services to a patient. Those services have a standard charge of $76,000. The insurance company that represents the patient has a contract with the entity that leads to a $20,000 reduction in that charge. That reduction is re

> Which of the following are unique to the reporting of revenue by a health care entity? a. Charity care must be reported even if the entity does not anticipate seeking collection. b. The patients pay for little of the services, and significant discounts a

> What are the three types of restricted net assets? a. Current, noncurrent, structural b. Purpose, time, permanent c. Immediate, longer than one year, longer than five years d. Monetary, nonmonetary, leveraged

> A local private not-for-profit entity receives a large monetary pledge. Accountants are attempting to determine if the contribution is conditional. They are assessing the possible existence of a barrier that has to be overcome. Which of the following is

> The Houston Corporation signs a formal pledge to give $100,000 in cash to a private not-for-profit entity within the next year. The money must be spent to upgrade important equipment used by the charity. The pledge is judged to be a conditional contribut

> The Cinco Centavo Company (CCC), a U.S. company, made credit sales to four customers in Asia on September 15, 2018, and received payment on October 15, 2018. Information related to these sales is as follows: CCC’s fiscal year ends Septe

> The Stanton Company conveys $23,000 in cash to a private not-for-profit entity. The money must be used for a designated purpose. This conveyance is viewed as a conditional contribution. Which of the following is recorded by the private not-for-profit ent

> The Peyton Corporation conveys $60,000 in cash to a private not-for-profit entity. It is viewed as a conditional contribution. Which of the following is most likely to be true about this donation? a. It has been restricted for use in a future period of t

> A statement of financial position shows account balances in two separate columns. How are those columns labeled? a. Current and noncurrent b. Temporary and permanent c. Without donor restrictions and with donor restrictions d. Contributed funds and funds

> The Jones family lost its home in a fire during December 2020. On December 25, 2020, a philanthropist sent money to the Amer Benevolent Society, a private not-for-profit entity, specifically to be conveyed to the Jones family to help them recover. The mo

> A private not-for-profit entity receives $32,000 in cash from solicitations made in the local community. The charity receives an additional $1,500 from members in payment of their annual dues. These members receive benefits of commensurate value to the a

> A private not-for-profit entity receives a gift of new furniture from a retail department store. The furniture has a fair value of $2,100. The entity holds the furniture for several weeks. After a flood, the entity gives the furniture to several needy fa

> A private not-for-profit entity sends a mailing to all of its current and former members regardless of whether they have ever donated money or not. The mailing has a total cost of $22,000. It asks for monetary contributions to help achieve the charity’s

> A private not-for-profit entity has the following expenses for the current year. How should the not-for-profit entity report these costs? a. Program service expenses of $100,000 and supporting service expenses of $160,000 b. Program service expenses of $

> Which of the following statements about the reporting of functional expenses is not true? a. A statement of functional expenses is now required of all private not-for-profit entities. b. Functional expenses are divided between program services and suppor

> Use the same information as in (8). What liability balance will Webster report on its government- wide financial statements on December 31, 2020? a. $463,048 b. $487,419 c. $511,790 d. $517,419

> The FASB ASC Subtopic “Variable Interest Entities” affects thousands of business enterprises that now, as primary beneficiaries, consolidate entities that qualify as controlled VIEs. Retrieve a recent annual report of one or more of the following compani

> Reynolds County has three large trucks with a total net book value of $600,000 and remaining lives of six years with no expected residual value. County officials lease the trucks to the City of Webster on January 1, 2020, for six years. Based on a negoti

> Use the same information as in Problem 51, except that, by the end of Year 3, the landfill is 40 percent filled. The city now realizes that the total closure costs will be $3 million. Indicate whether each of the following independent statements is true

> Indicate whether each of the following statements is true or false, and include a brief explanation for your answer. a. A pension trust fund appears in the government-wide financial statements but not in the fund financial statements. b. Permanent funds

> Use the information in problem 44 to prepare the 2020 fund financial statements for (a) the govern- mental funds and (b) the proprietary funds. A statement of cash flows is not required. Assume the city defines “available” as within 60 days and that all

> The City of Pfeiffer starts the year of 2020 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 2020 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, 2019, for general government purposes for $30

> The following information pertains to the City of Williamson for 2020, 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 waste management department and offer its services to the public for a fee. As a result, county officials plan to account for this activity as an enterprise fund. Prepare journal entries for this operation for th

> On January 1, 2020, 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, 2020, 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

> AutoNav Company agrees to pay $20 million in cash to the four former owners of Easy-C, Inc., for all of its assets and liabilities. These four owners of Easy-C developed and patented a technology for real- time monitoring of traffic patterns on the natio

> The City of Lawrence opens a solid waste landfill in 2020 that is at 54 percent of capacity on December 31, 2020. City officials had initially anticipated closure costs of $2 million but later that year decided that closure costs would actually be $2.4 m

> On January 1, 2020, the City of Hastings creates 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

> The City of Raylan has a rather large warehouse that it no longer needs. The city had previously used the warehouse to store supplies and equipment for the school system, police department, and other public service functions. It has a remaining expected

> The City of Leonard decides to lease school desks for its school system rather than buy them because the lessor will do all scheduled maintenance. On January 1, 2020, the school system leases 5,000 school desks for four years. After that, they will be re

> The City of Bacon is located in the County of Pork. The city has a school system that reports buildings at a net $3.6 million although they are actually worth $4.2 million. The county has a separate school system that reports buildings at a net $5.2 mill

> 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 the city for financial support. This support creates a potential financial burden

> 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 the school system to be judged as fiscally independent? a. Holding property in its own name b.

> 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 statements 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.

> On October 18, 2020, Armstrong Auto Corporation ("Armstrong") announced its plan to acquire 80 percent of the outstanding 500,000 shares of Bardeen Electric Corporation’s ("Bardeen") common stock in a business combination following regulatory app

> A city builds sidewalks throughout various neighborhoods at a cost of $2.1 million. Which of the following statements 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

> Assume in problem 17 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 inexhaustible. c. Depreciation

> In problem 17, which of the following statements is true about reporting a revenue in connection with this gift? a. A revenue will be reported. b. Revenue is reported but only if the asset is reported. c. If the asset is not capitalized, the city recogni

> Use the same information as in (8). What amount of deferred lease revenue will Reynolds report on its statement of net position as of December 31, 2020, assuming that the county recognizes revenue on a straight-line method? a. Zero b. $487,419 c. $500,00

> Use the same information as in (8). What amount of depreciation expense will Reynolds report in its government-wide financial statements for 2020? a. Zero b. $52,581 c. $100,000 d. $112,581

> Use the same information as in (8). What is the total amount of expenditures that Webster will report on its fund financial statements for the governmental funds for 2020? a. $112,581 b. $136,954 c. $600,000 d. $712,581

> During 2020, the City of Coyote received $10,000, which was recorded as a general revenue in the general fund. It was actually a program revenue earned by the city’s park program. a. What was the correct overall change for 2020 in the net position report

> In 2020, the City of Coyote receives a $320,000 cash grant from the state to reduce air pollution. Although a special revenue fund could have been set up, the money remains in the general fund. The cash was received immediately but will have to be return

> The City of Coyote mails property tax bills for 2021 to its citizens during August 2020. Payments could be made early to receive a discount. The levy becomes legally enforceable on February 15, 2021. All money the government receives must be spent during

> The City of Coyote mails property tax bills for 2021 to its citizens during August 2020. Property owners could make payments early to receive a discount. The levy becomes legally enforceable on February 15, 2021. All money received by the city must be sp

> A vice president for operations at Poncho Platforms asks for your help on a financial reporting issue concerning goodwill. Two years ago, the company suffered a goodwill impairment loss for its Chip Integration reporting unit. Since that time, however, t

> The City of Coyote records an art display within its general fund. The display generates revenues of $9,000 this year as well as expenditures of $45,000 ($15,000 in expenses and $30,000 to buy land for the display). The CPA firm determines that the city

> On December 30, 2020, the City of Coyote borrows $20,000 for the general fund on a 60-day note. In that fund, the city records Cash and Other Financing Sources. In the general information, this city reports a $30,000 overall increase in the fund balance

> During 2020, the City of Coyote contracts to build a bus stop for schoolchildren costing $10,000 as a special assessments project. The city collects $10,000 from directly affected citizens. The government has no obligation in connection with this project

> Inside the City of Patience, Fund A transfers $20,000 in cash to Fund B. For each of the following, indicate whether the statement is true or false and, if false, explain why. a. If Fund A is the general fund and Fund B is an enterprise fund, nothing is

> The following are transactions of the City of Grayson. Indicate how each of the following transactions affects the fund balance of the general fund, and its classifications, for fund financial statements. Then describe the effect each transaction has on

> On December 1, 2020, a state government awards a city government a grant of $1 million to be used specifically to provide hot lunches for all schoolchildren. No money is received until June 1, 2021. For each of the following, indicate whether the stateme

> Government officials of the City of Johnson expect to receive general fund revenues of $400,000 in 2020 but approve spending only $380,000. Later in the year, as they receive more information, they increase the revenue projection to $420,000. Officials a

> Use the transactions in problem (47) but prepare a statement of net position for the government- wide financial statements. Assume that the general fund held $180,000 in cash on the first day of the year and no other assets or liabilities. No amount of t

> The following transactions relate to the general fund of the city of Lost Angels for the year ending December 31, 2020. Prepare a statement of revenues, expenditures, and other changes in fund balance for the general fund for the period to be included in

> The fiscal year for the City of Havisham ends December 31, Year 5. If the city were to produce financial statements before any adjustments, the following figures would be included: ∙ Governmental activities: Assets = $800,000, Liabilities = $300,000, and

> In this project, you are to provide an analysis of alternative accounting methods for controlling interest investments and subsequent effects on consolidated reporting using Excel. Modeling in Excel helps you quickly assess the impact of alternative acco

> A city has only one activity, its school system. The school system is accounted for within the general fund. For convenience, assume that, at the start of 2020, the school system and the city have no assets. During the year, the city assesses property ta

> The following trial balance is taken from the General Fund of the City of Jennings for the year ending December 31, 2020. Prepare a condensed statement of revenues, expenditures, and other changes in fund balance. Also prepare a condensed balance sheet.

> Chesterfield County had the following transactions. Prepare the entries first for fund financial statements and then for government-wide financial statements. a. A budget is passed for all ongoing activities. Revenue is anticipated to be $834,000, with a

> Following are descriptions of transactions and other financial events for the City of Tetris for the year ending December 2020. Not all transactions have been included here. Only the general fund formally records a budget. No encumbrances were carried ov

> Prepare journal entries for a local government to record the following transactions, first for fund financial statements and then for government-wide financial statements. a. The government sells $900,000 in bonds at face value to finance the constructio

> Prepare journal entries for the City of Pudding’s governmental funds to record the following transactions, first for fund financial statements and then for government-wide financial statements. a. A new truck for the sanitation department was ordered at

> A local government has the following transactions during the current fiscal period. Prepare journal entries without dollar amounts, first for fund financial statements and then for government-wide financial statements. a. The budget for the police depart

> A city transfers cash of $90,000 from its general fund to start construction on a police station. The city issues a bond at its $1.8 million face value. The police station is built for a total cost of $1.89 million. Prepare all necessary journal entries

> The board of commissioners of the City of Hartmoore adopts a general fund budget for the year ending June 30, 2020. It includes revenues of $1,000,000, bond proceeds of $400,000, appropriations of $900,000, and operating transfers out of $300,000. If thi

> A city transfers cash of $20,000 from its general fund to an enterprise fund to pay for work done by the enterprise fund for the school system. What is reported on the city’s fund financial statements? a. No reporting is made. b. Other Financing Sources

> On January 1, 2020, Hi-Speed.com acquired 100 percent of the common stock of Wi-Free Co. for cash of $730,000. The consideration transferred was allocated among Wi-Free’s net assets as follows: At the acquisition date, the computer soft

> On February 1, 2020, when the spot rate was $1.00 per Swiss franc, Blue Bogey Company (BBC) fore- casted the purchase of component parts on May 1, 2020, at a price of 100,000 Swiss francs. On that date, BBC entered into a forward contract to purchase 100

> A city transfers cash of $20,000 from its general fund to an enterprise fund to pay for work per- formed by the enterprise fund for the school system. How does the city report this transfer on its government-wide financial statements? a. No reporting is

> A county transfers cash of $60,000 from its general fund to a debt service fund. What is reported on the county’s fund financial statements? a. No reporting is made. b. Other Financing Sources increase by $60,000. Other Financing Uses increase by $60,000

> Which of the following is an example of an interactivity transaction? a. A city transfers money from the general fund to a debt service fund. b. A city transfers money from a capital projects fund to the general fund. c. A city transfers money from a spe

> The partnership of Hendrick, Mitchum, and Redding has the following account balances: This partnership is being liquidated. Hendrick and Mitchum are each entitled to 40 percent of all profits and losses with the remaining 20 percent going to Redding. a.

> The Simpson, Hart, Bobb, and Reidel partnership has terminated operations and is undergoing liquidation. Sales commissions and other liquidation expenses are expected to total $19,000. The partnership’s balance sheet prior to the commen

> A partnership has the following account balances at the date of termination: Cash, $80,000; Noncash Assets, $660,000; Liabilities, $320,000; Bell, capital (50 percent of profits and losses), $200,000; Mann, capital (30 percent), $120,000; Scott, capital

> When a partnership is liquidated, how is the final distribution of partnership cash made to the partners? a. Equally b. According to the profit and loss ratio c. According to the final capital account balances d. According to the initial investment made

> Patrick has a capital balance of $120,000 in a local partnership, and Caitlin has a $90,000 balance. These two partners share profits and losses by a ratio of 60 percent to Patrick and 40 percent to Caitlin. Camille invests $60,000 in cash in the partner

> A partnership has the following capital balances with partners’ profit and loss percentages indicated parenthetically: Ranzilla agrees to pay a total of $245,000 directly to these three partners to acquire a 25 percent ownership interes

> A partnership has the following capital balances with partners’ profit and loss percentages indicated parenthetically: Anne is going to invest $125,000 into the business to acquire a 40 percent ownership interest. Goodwill is to be reco

> On January 1, 2020, Innovus, Inc., acquired 100 percent of the common stock of ChipTech Company for $670,000 in cash and other fair-value consideration. ChipTech’s fair value was allocated among its net assets as follows: The December 3

> Steve Reese is a well-known interior designer in Fort Worth, Texas. He wants to start his own business and convinces Rob O’Donnell, a local merchant, to contribute the capital to form a partnership. On January 1, 2019, O’Donnell invests a building worth

> A partnership of attorneys in the St. Louis, Missouri, area has the following balance sheet accounts as of January 1, 2021: According to the articles of partnership, Athos is to receive an allocation of 50 percent of all partnership profits and losses, w

> Kimble, Sykes, and Gerard open an accounting practice on January 1, 2019, in Chicago, Illinois, to be operated as a partnership. Kimble and Sykes will serve as the senior partners because of their years of experience. To establish the business, Kimble, S

> Gorman and Morton form a partnership on May 1, 2019. Gorman contributes cash of $50,000; Morton conveys title to the following properties to the partnership: The partners agree to start their partnership with equal capital balances. No goodwill is to be

2.99

See Answer