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Unformatted text preview: 5 Chapter Recognizing Expenditures in Governmental Funds TRUE/FALSE (CHAPTER 5) 1. Expenditures are generally recognized when resources are acquired; expenses when resources are consumed. 2. Governmental fund liabilities are considered current only when they must be liquidated with expendable available financial resources not, as in businesses and in the government- wide statements, when they must be paid within a year. 3. In a governmental fund, expenditures for wages and salaries should be recognized in the period in which the employees earn them. 4. When accounting for inventory items in a governmental fund, GASB standards permit the use of the consumption method only. 5. The purchases method is consistent with full accrual basis of accounting. 6. When accounting for inventory items in a governmental fund, a reservation of fund balance is always required when the consumption method is used. 7. In budgeting for governmental funds, governments appropriate the resources for general capital assets in the periods when they are to be purchased, not in the periods in which the assets will be used. 8. Per GASB standards, governments do not report general capital assets or depreciation in governmental funds. 9. If recording a general long-term liability in a governmental fund upon issuing a bond, the credit should be to a bonds payable account. 10. Most governments budget (appropriate) resources for principal and interest only for the period in which a payment is due not for future payments. 11. Government-wide statements present revenues and expenses from the perspective of the government, not of individual funds. ch05 Page 1 MULTIPLE CHOICE (CHAPTER 5) 1. Which of the following funds would use the modified accrual basis of accounting in preparing its fund financial statements? a) City Electric Utility Enterprise Fund. b) City Hall Capital Project Fund. c) City Motor Pool Internal Service Fund. d) City Employee Pension Trust Fund. 2. Which of the following funds would use the accrual basis of accounting in preparing its fund financial statements? a) City General Fund. b) City Hall Capital Project Fund. c) City Motor Pool Internal Service Fund. d) None of the above. 3. As used in governmental accounting, expenditures are decreases in a) Net Assets. b) Net Financial Resources. c) Net Cash. d) Net Economic Resources. 4. Assume that the City of Juneau maintains its books and records to facilitate the preparation of its fund financial statements. The City pays its employees bi-weekly on Friday. The fiscal year ended on Wednesday, June 30. Employees had been paid on Friday, June 25. The employees paid from the General Fund had earned $120,000 on Monday, Tuesday, and Wednesday (June 28, 29, and 30). What entry, if any, should be made in the City s General Fund?...
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- Spring '10
- Fiscal Year, Generally Accepted Accounting Principles