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MULTIPLE CHOICE (CHAPTER 10) 1. A governmental entity receives a gift of cash and investments with a fair value of $200,000. The donor specified that the earnings from the gift must be used to beautify city-owned parks and the principal must be re-invested. The $200,000 gift should be accounted for in which of the following funds? a) General fund. b) Private-purpose trust fund. c) Agency fund. d) Permanent fund. 2. In previous years, Center City had received a $400,000 gift of cash and investments. The donor had specified that the earnings from the gift must be used to beautify city-owned parks and the principal must be re-invested. During the current year, the earnings from this gift were $24,000. The earnings from this gift should generally be considered revenue to which of the following funds? a) Special revenue fund. b) Private-purpose trust fund. c) Agency fund. d) Permanent fund. Use the following information to answer Questions #3-4 The City received $200,000 to help maintain a local art museum that is owned and operated by a not-for-profit organization. During the year the City transferred net earnings of $20,000 to the appropriate entity/fund. 3. The $200,000 gift would be reported in a (an): a) Special revenue fund. b) Private-purpose trust fund. c) Agency fund. d) Permanent fund. 4. The $20,000 transfer would be reported by the fund that made the transfer as a (an) a) Transfer out. b) Expenditure. c) Deduction from Net AssetsBenefits. d) Expense. Use the following information to answer Questions #5-6. In the current year, the City of Katerah earned $24,000 on the principal of a private-purpose trust fund but disbursed only $20,000. 5. During the current year the private-purpose trust fund will recognize, related to earnings: a) $24,000 revenues. b) $20,000 revenues. c) $24,000 addition to net assets. d) $20,000 addition to net assets. 6. During the current year the private-purpose trust fund will recognize, related to the cash outflow: a) $20,000 transfer out. b) $20,000 expenses. c) $24,000 deduction from net assets. d) $20,000 deduction from net assets. 7. Which of the following activities of a governmental entity should be accounted for in a fiduciary fund? a) Funds received from the federal government to support public transportation activities. b) Funds received from an individual who specified that the principal must be kept intact but the income can be used to support families of police officers killed in the line of duty. c) Funds received from the state government that must be used to purchase capital assets. d) Funds received from a contractor to assist with the development of utility infrastructure. 8. What basis of accounting is used to account for transactions of a governmental private-purpose trust fund?... View Full Document

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