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Becker CPA Review, PassMaster Questions Lecture: Financial 9 1 2009 DeVry/Becker Educational Development Corp. All rights reserved. CPA PassMaster QuestionsFinancial 9 Export Date: 10/30/08 Becker CPA Review, PassMaster Questions Lecture: Financial 9 2 2009 DeVry/Becker Educational Development Corp. All rights reserved. Governmental Accounting (Part B) CPA-00967 Type1 M/C A-D Corr Ans: B PM#2 F 9-01 1. CPA-00967 ARE R03 #17 Page 22 Nox City reported a $25,000 net increase in the fund balances for total governmental funds. Nox also reported an increase in net assets for the following funds: Motor pool internal service fund $9,000 Water enterprise fund 12,000 Employee pension fund 7,000 The motor pool internal service fund provides service to the general fund departments. What amount should Nox report as the change in net assets for governmental activities? a. $25,000 b. $34,000 c. $41,000 d. $46,000 CPA-00967 Explanation Choice "b" is correct. The reconciliation of the change in fund balances in governmental fund financial statements to the change in net assets for governmental activities in the government-wide financials is computed using the GOES BARE mnemonic. The fact pattern only describes measurement focus (GOES) issues computed as follows: G Change in G overnmental Fund Balance $25,000 O Capital O utlay 0 (net of depreciation) 0 E Expenditure Principal Payments on Debt - Proceeds from New Debt 0 S Internal S ervice Fund Net Income 9,000 Change in Net Assets in government-wide financial statements $34,000 Choice "a" is incorrect. The change in fund balance is not equal to the change in net assets after consideration of the reconciling items described above. Choice "c" is incorrect. The change in fund balance reconciles to the change in net assets as a result of considering only the change in internal service fund net assets per above. Changes in pension fund net assets are not relevant to the reconciliation. Choice "d" is incorrect. The change in fund balance reconciles to the change in net assets as a result of considering only the change in internal service fund net assets per above. Changes in water and sewer (enterprise) net assets are not relevant to the reconciliation. CPA-00986 Type1 M/C A-D Corr Ans: A PM#5 F 9-01 2. CPA-00986 ARE R02 #12 Page 28 Hunt Community Development Agency (HCDA), a financially independent authority, provides loans to commercial businesses operating in Hunt County. This year, HCDA made loans totaling $500,000. How should HCDA classify the disbursements of loans on the cash flow statement? a. Operating activities. b. Non-capital financing activities. c. Capital and related financing activities. d. Investing activities. ... View Full Document

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