First Exam Simulator Wrong Answers

Question 0

When art of $2 million is donated to the city and will be 1) held for public exhibition, 2) protected, cared for and kept unencumbered, and 3) not be sold except for purposes of acquiring different items for the collection. Because the art will be displayed in general government buildings, the governmental activities would show…

Answer 0

Revenue from donations of $2 million and an expense of $2 million

Question 1

The payment of principal on long term debt out of the general fund is considered…

Answer 1

An expenditure

Question 2

When prices are rising, a LIFO inventory method will produce a…

2) why?

Answer 2

Lower ending inventory than other inventory methods

Because cost of ending inventory consists of older lower cost
Items

Question 3

Debt accounted for in a pension trust or a proprietary fund is…

Answer 3

Serviced within those funds and not connected to general long
Term debt

Question 4

Goods that have been billed FOB shipping point, but are not shipped until the next year, should be…

Answer 4

Included in the company’s ending inventory

Question 5

What amount of the lessor’s capital lease payments should be included in cash outflows from financing activities?

Answer 5

Principal portion of the monthly payments only (not interest portion)

Question 6

Other financing sources and uses is not an appropriate category for…

Answer 6

Proprietary funds

Question 7

In a troubled restructuring agreement, the debtor has its $150,000 in notes cancelled in exchange for given up land with a carrying amount of $75,000 and a fair value on $100,000. What amount should the debtor report as a gain?

Answer 7

$50,000 = carrying amount of note - fair value of land

Question 8

Agency fund does not have a…

Answer 8

Fund net position

Question 9

Agency fund acts as a…

Answer 9

Custodian of resources belonging to other entities

Question 10

It is important to disclose changes in the government’s custodial responsibilities by showing…

Answer 10

Increases or decreases in the asset and liabilities

Question 11

In the agency fund’s accounting equation…

Answer 11

Assets and liabilities equal each other

Question 12

In combining financial statements in comprehensive financial reporting, agency funds financial statements would include…

Answer 12

A combining statement of changes in assets and liabilities- agency
Funds

Question 13

When accruing interest expense on bonds payable, what rate should be used?

Answer 13

Coupon rate on the face of the bonds

Question 14

GASB statement 1:

Interperiod equity

Answer 14

Financial reporting should provide info to determine whether

Current year revenues were sufficient to pay for current year services

Question 15

GASB statement 1:

Budgeting and fiscal compliance, financial reporting should demonstrate whether…

Answer 15

Resources were obtained and used in accordance with the entity’s
Legally adopted budget

It should demonstrate compliance with other finance related
Legal or contractual requirements

Question 16

GASB statement 1:

Service efforts costs and accomplishments, financial reporting should provide information to…

Answer 16

Assist users in assessing the service efforts, costs and accomplishments of the governmental entity

Question 17

Disclosure is required by public ally held companies to disclose if 10%
or more of total revenues come from…2

Answer 17

1 sales to single customers

2 from export sales

Question 18

Not for profits are allowed to use the fair value at the date of promise to give…

Answer 18

Securities is initially recognized even if contribution will not take
place for several years

Question 19

When not for profits recognize promises to give they create…

2) what does the non profit do instead?

Answer 19

An allowance for uncollectible pledges, but do not recognize
Bad debt expense as business does

2) instead the nonprofit reduces the revenue by the uncollectible
Amount

Question 20

Non profits should not record an expense for estimated uncollectible promises when…

Answer 20

Promises to give are initially recognized

Question 21

For current refundings of debt reported on government wide statements, GASB sates that the difference between…

Answer 21

Reacquisition price of old debt and net carrying value of new debt
Be amortized over shorter of remaining life of old debt or life of
New debt

Question 22

For current refundings of debt reported on government wide statements, GASB sates that debt issue costs should…

Answer 22

Be deferred

Question 23

Information which becomes known after the balance sheet date but before the financial statements are issued should be…

Answer 23

Disclosed, but not accrued until the following year

Question 24

Governments with significant budgetary perspective differences that preclude providing budgetary comparisons for the general fund and each major specific revenue fund are required to present…

Answer 24

Budgetary comparison schedules as required supplementary

Info

Question 25

Budgetary comparison statements may be included in…

Answer 25

Basic financial statements or in the required supplementary info

Question 26

Budgetary comparison statements are not listed among items to be included in…

Answer 26

Management’s discussion and analysis (MD&A)

Question 27

To calculate the carrying amount of bonds when they are issued at a discount, the discount amortization is…

Answer 27

Added to the previous period’s carrying amount

Question 28

To calculate cash for December 31st, should a check written in January be added back to the bank statement balance or the checkbook balance to record the company’s cash?

Answer 28

Check book balance

Question 29

Average exposure percentage in the 1st year, over a 2 year contract where revenue is incurred evenly is…

Answer 29

50%

Question 30

An equipment service contract company’s revenues are…

Answer 30

Repairs on service contracts

Question 31

4 accounting bases that may be used to prepare financial statements in conformity with a comprehensive basis of accounting other than GAAP

Answer 31

1 governmental type provisions
2 income tax returns
3 cash receipts and disbursements basis
4 other criteria having support such as price level basis