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Unformatted text preview: Chapter 17 - Accounting for State and Local Governments, (Part 2) Chapter 17 Accounting for State and Local Governments, (Part 2) Multiple Choice Questions 1. For government-wide financial statements, what account is credited when a piece of equipment is leased on a capital lease? A. Equipment - Capital Lease B. Encumbrances - Long Term C. Encumbrances - Lease Obligations D. Capital Lease Obligation E. The lease is not recorded. 2. For fund-based financial statements, what account is credited when a piece of equipment is leased on a capital lease? A. Equipment - Capital Lease. B. Encumbrances - Long Term. C. Encumbrances - Lease Obligations. D. Capital Lease Obligation. E. Other Financing Sources - Capital Lease. 3. Jones College, a public institution of higher education, must prepare financial statements A. As if the college was an enterprise fund. B. Following the same rules as state and local governments. C. According to GAAP. D. As if the college was a fiduciary fund. E. In the same manner as private colleges and universities. 4. For the purpose of government-wide financial statements, the cost of cleaning up a government-owned landfill and closing the landfill A. Is not recognized until the costs are actually incurred. B. Is accrued and amortized over the expected useful life of the landfill. C. Is accrued on a pro-rated basis each period based on how full the landfill is. D. Is accrued in full at the time the costs become estimable. E. Is treated as an encumbrance at the time it become estimable and as an expenditure when it is actually paid. 17-1 Chapter 17 - Accounting for State and Local Governments, (Part 2) 5. A method of depreciation for infrastructure assets that allows the expensing of all maintenance costs each year instead of computing depreciation is called A. Government-wide depreciation. B. Proprietary depreciation. C. GASB depreciation. D. Modified approach. E. Alternative depreciation. 6. Drye Township has received a donation of a rare painting worth $1,000,000. For Drye's government-wide financial statements, three criteria must be met before Drye can opt not to recognize the painting as an asset. Which of the following is not one of the three criteria? (1.) The painting is held for public exhibition, education, or research in furtherance of public service, rather than financial gain. (2.) The painting is scheduled to be sold immediately at auction. (3.) The painting is protected, kept unencumbered, cared for, and preserved. A. Item 1 is not one of the three criteria. B. Item 2 is not one of the three criteria. C. Item 3 is not one of the three criteria. D. All three items are required criteria. E. None of the three items are required criteria....
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This note was uploaded on 08/25/2011 for the course ACCT 440 taught by Professor Suresh during the Spring '11 term at Copenhagen Business School.
- Spring '11