E17-3 Multiple-Choice Questions on Budgets, Expenditures, and Revenue
[AICPA Adapted]
1.
c
2.
d
3.
c
4.
a
5.
b
6.
c
7.
d
8.
b
9.
c
10.
d
E17-4 Multiple-Choice Questions on the General Fund
1.
b
2.
d
3.
c
The balances in the ENCUMBRANCES CONTROL and the FUND BALANCEASSIGNED FOR ENCUMBRANCES accounts are the same. Therefore, an
excess of one account over the other indicates a recording error.
4.
c
The following entry is made when a purchase order is approved:
ENCUMBRANCES CONTROL
BUDGETARY FUND BALANCE – ASSIGNED FOR ENCUMBRANCES
5.
b
The 60-day rule for property tax revenues states that property taxes collected
within 60 days after the end of a fiscal year (within first 60 days of 2007) may be
classified as revenues of the prior fiscal year (2006). The entry to record the tax
levy would be:
Property Taxes Receivable
700,000
Allowance for Uncollectible Taxes
10,000
Revenue – Property Taxes
600,000
Deferred Revenue (reported as a liability
on the general fund balance sheet)
90,000
[Note: The estimated uncollectibles are on the property taxes reported as
deferred revenue.]
6.
a
Upon receipt of the order, Oak would record the following entries:
BUDGETARY FUND BALANCE – ASSIGNED
FOR ENCUMBRANCES
ENCUMBRANCES CONTROL
Expenditures Control
Vouchers Payable
7.
a
5,000
5,000
4,950
Johnson would record the following entry:
ESTIMATED REVENUES CONTROL
9,000,000
ESTIMATED OTHER FINANCING SOURCE –
TRANSFER IN (Internal Service)
1,000,000
ESTIMATED OTHER FINANCING SOURCE –
TRANSFER IN (Debt Service)
500,000
APPROPRIATIONS CONTROL
BUDGETARY FUND BALANCE – UNASSIGNED
8.
c
9.
a
10.
b
4,950
XXXXXX
XXX
E17-5 Encumbrances at Year-End
a.
Outstanding encumbrances lapse at year-end.
(1)
Order equipment—November 3, 20X2:
ENCUMBRANCE
BUDGETARY FUND BALANCE--ASSIGNED
FOR ENCUMBRANCES
Order equipment and record encumbrance.
(2)
21,000
21,000
Year-end entries—December 31, 20X3:
BUDGETARY FUND BALANCE – ASSIGNED FOR
ENCUMBRANCES
ENCUMBRANCES
Close remaining budgeted encumbrances.
21,000
21,000
Fund Balance – Unassigned
21,000
Fund Balance – Assigned for Encumbrances
21,000
Reserve actual fund balance for outstanding encumbrances at year-end.
(3)
City Council accepts outstanding encumbrances—January 1, 20X3:
Fund Balance – Assigned for Encumbrances
Fund Balance – Unassigned
Reverse prior-year encumbrance reserve.
21,000
21,000
ENCUMBRANCES
21,000
BUDGETARY FUND BALANCE – ASSIGNED
FOR ENCUMBRANCES
21.000
Establish budgetary control over encumbrances renewed from prior year.
(4)
Equipment received—January 18, 20X3:
BUDGETARY FUND BALANCE – ASSIGNED FOR
ENCUMBRANCES
ENCUMBRANCES
Remove budgetary reserve for goods received.
21,000
21,000
Expenditures
21,800
Vouchers Payable
Record expenditure for goods received at actual cost of $21,800.
(5)
21,800
Year-end entry—December 31, 20X3:
Fund Balance—Unassigned
Expenditures
Close 20X3 expenditures account.
21,800
21,800
E17-5 (continued)
b.
Outstanding encumbrances are nonlapsing.
(1)
Order equipment—November 3, 20X2:
ENCUMBRANCE
BUDGETARY FUND BALANCE--ASSIGNED
FOR ENCUMBRANCES
Order equipment and record encumbrance.
(2)
Fund Balance – Unassigned
Fund Balance – Assigned for Encumbrances
Reserve fund balance for outstanding encumbrances.
21,000
21,000
21,000
21,000
21,000
Equipment received—January 18, 20X3:
Expenditures – 20X2
Expenditures (20X3)
Vouchers Payable
Record actual expenditure for goods received.
(5)
21,000
Date the encumbrances from prior year—January1, 20X3::
Fund Balance – Assigned for Encumbrances
Fund Balance – Assigned for
Encumbrances – 20X2
Reclassify reserve from 2002, prior year.
(4)
21,000
Year-end entries—December 31, 20X2:
BUDGETARY FUND BALANCE – ASSIGNED
FOR ENCUMBRANCES
ENCUMBRANCES
Close remaining budgetary encumbrances.
(3)
21,000
21,000
800
21,800
Closing entries—December 31, 20X3:
Fund Balance – Assigned for
Encumbrances – 20X2
21,000
Expenditures – 20X2
Close expenditures account for prior year encumbrances.
Fund Balance – Unassigned
Expenditures (20X3)
Close expenditures for current year.
21,000
800
800
E17-5 (continued)
(Note: In entry (4), the $800 excess of actual cost over the encumbered amount must be
approved as part of 20X3's expenditures. Entry (4) records the City Council’s approval
with a debit to Expenditures (20X3) which increases 20X3’s total expenditures. The
expenditures for 20X3 are closed in entry (5). If the actual cost was less than the
encumbered amount, then the difference should be closed to Fund Balance-Unassigned,
although some governmental units have a policy of closing any difference between actual
and encumbered amounts for prior year encumbrances to the current year's
expenditures.)
c.
(1)
Outstanding encumbrances are nonlapsing; City Council cancels order—
January 1, 20X3:
Fund Balance—Assigned for Encumbrances
Fund Balance—Unassigned
City Council cancels 20X2 order for equipment.
21,000
21,000
E17-6 Accounting for Inventories of Office Supplies
a.
Consumption method of accounting for inventories:
(1)
Purchase of supplies:
August 8, 20X2
Expenditures
Vouchers Payable
Acquire inventory of supplies.
(2)
3,600
3,600
Entries at end of 20X2 fiscal year:
September 30, 20X2
Inventory of Supplies
Expenditures
Recognize ending inventory of supplies.
Fund Balance – Unassigned
Fund Balance – Assigned for Inventories
Establish fund reserve for ending inventory.
Fund Balance – Unassigned
Expenditures
Close expenditures account.
2,800
2,800
2,800
2,800
800
800
E17-6 (continued)
(3)
Entry at end of 20X3 fiscal year:
September 30, 20X3
Expenditures
Inventory of Supplies
Record expenditures for inventories consumed.
b.
2,800
2,800
Fund Balance – Assigned for Inventories
Fund Balance – Unassigned
Remove fund balance reserve for inventories consumed.
2,800
Fund Balance – Unassigned
Expenditures
Close expenditures account.
2,800
2,800
2,800
Purchase method of accounting for inventories:
(1)
Purchase of supplies:
August 8, 20X2
Expenditures
Vouchers Payable
Acquire inventory of supplies.
(2)
3,600
Entries at end of 20X2 fiscal year:
September 30, 20X2
Inventory of Supplies
Fund Balance – Assigned for Inventories
Recognize ending inventory of supplies.
Fund Balance – Unassigned
Expenditures
Close expenditures account.
(3)
3,600
2,800
2,800
3,600
3,600
Entries at end of 20X3 fiscal year:
September 30, 20X3
Fund Balance – Assigned for Inventories
Inventory of Supplies
Remove fund balance reserve for inventories consumed.
2,800
2,800
P17-14 General Fund Entries [AICPA Adapted]
1.
ESTIMATED REVENUES CONTROL
APPROPRIATIONS CONTROL
BUDGETARY FUND BALANCE – UNASSIGNED
Record the budget.
3,000,000
Taxes Receivable
Allowance for Uncollectible Taxes
Revenue from Taxes
Record tax levy.
2,870,000
Cash
Taxes Receivable
Record tax collection.
2,810,000
Allowance for Uncollectible Taxes
Taxes Receivable
Record write-off of uncollectible taxes:
July 1, 20X1, taxes receivable balance
20X2 tax levy
Less: Taxes collected
Taxes receivable final balance
Taxes written off as uncollectible
Cash
Miscellaneous Revenue
Collect miscellaneous revenue.
2.
2,980,000
20,000
70,000
2,800,000
2,810,000
40,000
40,000
$ 150,000
2,870,000
(2,810,000)
(170,000)
$ 40,000
130,000
130,000
Fund Balance – Assigned for Encumbrances
Fund Balance – Unassigned
Reverse prior reserve which has been renewed.
60,000
ENCUMBRANCES
BUDGETARY FUND BALANCE – ASSIGNED
FOR ENCUMBRANCES
Renew encumbrances from prior period.
60,000
ENCUMBRANCES
BUDGETARY FUND BALANCE – ASSIGNED
FOR ENCUMBRANCES
Record encumbrances.
2,700,000
60,000
60,000
2,700,000
P17-14 (continued)
3.
4.
Expenditures
Due to Other Funds
Record liability to other funds for services received.
BUDGETARY FUND BALANCE – ASSIGNED
FOR ENCUMBRANCES
ENCUMBRANCES
Reverse encumbrances for items received.
Expenditures
Vouchers Payable
Record expenditures.
BUDGETARY FUND BALANCE – ASSIGNED
FOR ENCUMBRANCES
ENCUMBRANCES
Reverse reserve for encumbrances.
Expenditures (Prior Period)
Vouchers Payable
Actual expenditure for goods received.
Due to Other Funds
Vouchers Payable
Record approval for payment to other funds.
Vouchers Payable
Cash
Record voucher payments.
5.
ENCUMBRANCES
BUDGETARY FUND BALANCE – ASSIGNED
FOR ENCUMBRANCES
Record May 10 encumbrance.
142,000
142,000
2,700,000
2,700,000
2,700,000
2,700,000
60,000
60,000
58,000
58,000
210,000
210,000
2,640,000
2,640,000
91,000
91,000
P17-15 General Fund Entries and Statements
a.
Entries for 20X2 budget and transactions:
1.
2.
ESTIMATED REVENUES CONTROL
APPROPRIATIONS CONTROL
ESTIMATED OTHER FINANCIAL
USES – TRANSFER OUT
Record budget.
1,877,000
1,840,000
37,000
ENCUMBRANCES
BUDGETARY FUND BALANCE – ASSIGNED
FOR ENCUMBRANCES
Renew encumbrances from prior period.
21,000
Fund Balance – Assigned for Encumbrances
Fund Balance – Unassigned
Reverse reserve for renewed encumbrances.
21,000
21,000
21,000
Property Tax Receivable – Current
Allowance for Uncollectibles – Current
Property Tax Revenue
Record property tax levy.
1,600,000
Cash
Property Taxes Receivable – Current
Property Taxes Receivable – Delinquent
Collect property taxes.
1,590,000
Allowance for Uncollectibles – Delinquent
Property Taxes Receivable – Delinquent
Property Tax Revenue
Write off remaining delinquent property taxes.
16,000
1,584,000
1,507,000
83,000
9,000
7,000
2,000
Property Taxes Receivable – Delinquent
93,000
Allowance for Uncollectibles – Current
16,000
Property Taxes Receivable – Current
Allowance for Uncollectibles – Delinquent
Reclassify remainder of uncollected 20X2 property taxes.
Cash
Sales Tax Revenue
Miscellaneous Revenue
Due to Motor Pool Fund
Other cash receipts.
93,000
16,000
333,000
284,000
39,000
10,000
P17-15 (continued)
3.
ENCUMBRANCES
BUDGETARY FUND BALANCE – ASSIGNED
FOR ENCUMBRANCES
Record purchase orders.
BUDGETARY FUND BALANCE – ASSIGNED
FOR ENCUMBRANCES
ENCUMBRANCES
Reverse reserve for items received.
4.
b.
1,800,000
1,800,000
1,773,000
1,773,000
Expenditures
Vouchers Payable
Actual expenditures for items received.
1,788,000
Vouchers Payable
Cash
Vouchers paid.
1,793,000
1,788,000
1,793,000
Due from Central Stores Fund
Other Financing Uses – Transfer Out
Cash
Other cash payments and transfer.
13,000
37,000
50,000
Pine Ridge
General Fund
Preclosing Trial Balance
December 31, 20X2
Debit
Cash
Property Tax Receivable – Delinquent
Allowance for Uncollectibles – Delinquent
Due from Central Stores Fund
Vouchers Payable
Due to Motor Pool Fund
Fund Balance – Unassigned
Property Tax Revenue
Sales Tax Revenue
Miscellaneous Revenue
Expenditures
Other Financing Uses – Transfer Out
ESTIMATED REVENUES CONTROL
APPROPRIATIONS CONTROL
ESTIMATED OTHER FINANCING USES– TRANSFER
OUT
ENCUMBRANCES
BUDGETARY FUND BALANCE – ASSIGNED
FOR ENCUMBRANCES
Credit
$ 191,000
93,000
$
16,000
13,000
26,000
10,000
161,000
1,586,000
284,000
39,000
1,788,000
37,000
1,877,000
1,840,000
37,000
48,000
$4,047,000
48,000
$4,047,000
P17-15 (continued)
c.
Closing entries:
APPROPRIATIONS CONTROL
ESTIMATED OTHER FINANCING
USES – TRANSFER OUT
ESTIMATED REVENUES CONTROL
Close budgetary accounts.
BUDGETARY FUND BALANCE – ASSIGNED
FOR ENCUMBRANCES
ENCUMBRANCES
Close remaining encumbrances.
1,840,000
37,000
1,877,000
48,000
48,000
Fund Balance – Unassigned
48,000
Fund Balance – Assigned for
Encumbrances
Reserve fund balance for outstanding purchase orders.
Property Tax Revenue
Sales Tax Revenue
Miscellaneous Revenue
Expenditures
Other Financing Uses – Transfer Out
Fund Balance – Unassigned
Close operating statement accounts.
d.
48,000
1,586,000
284,000
39,000
1,788,000
37,000
84,000
Pine Ridge
General Fund
Balance Sheet
December 31, 20X2
Assets
Cash
Property Tax Receivables – Delinquent
Less: Allowance for Uncollectibles – Delinquent
Due from Central Stores Fund
Total Assets
Liabilities and Fund Balance
Vouchers Payable
Due to Motor Pool Fund
Fund Balance:
Spendable:
Assigned to:
General Government Services
Unassigned
Total Liabilities and Fund Balance
$191,000
$ 93,000
(16,000)
77,000
13,000
$281,000
$ 26,000
10,000
$ 48,000
197,000
245,000
$281,000
P17-15 (continued)
e.
Pine Ridge
General Fund
Statement of Revenues, Expenditures, and Changes
in Fund Balance
For Fiscal Year Ended December 31, 20X2
Revenue:
Property Taxes
Sales Taxes
Miscellaneous
Total Revenue
Expenditures:
Current
Capital Outlay – Furniture
Total Expenditures
Excess of Revenue over Expenditures
Other Financing Sources (Uses):
Transfer Out
Change in Fund Balance
Fund Balance, January 1, 20X2
Fund Balance, December 31, 20X2
$1,586,000
284,000
39,000
$1,909,000
$1,746,000
42,000
$1,788,000
$ 121,000
(37,000)
84,000
161,000
$ 245,000
$
[Note that the $42,000 expenditure for the office furniture capital outlay is reported
separately. The theoretical support for this is that the expenditure will also benefit future
periods. Some governmental entities report capital outlays made in the general fund with
current expenditures because current financial resources were expended. Some
governments integrate capital outlay expenditures into the appropriate functional
categories (e.g., fire protection, government administration, or streets and highways)
rather than separately report the expenditures for capital outlays. The choice of reporting
alternative for the general fund is up to the governmental entity because the total
expenditures will be the same regardless of how or where the capital outlay is reported.]
P17-17 Identification of Governmental Accounting Terms
1. Government-wide financial statements
2. The Governmental Accounting Standards Board (GASB)
3. A fund
4. Interfund services provided or used
5. Internal service and enterprise funds
6. Infrastructure assets
7. Agency and trust funds
8. Modified accrual basis
9. Flow of total economic resources
10. The property tax levy
11. The general, special revenue, capital projects, debt service funds and permanent
funds
12. The allowance for uncollectible property taxes
13. Budgetary fund balance – unassigned
14. Encumbrances
15. The consumption method
16. Other financing uses – transfer out
17. Expenditures
18. Fund balance – unassigned
19. Expenditures
20. Appropriations
21. Nonlapsing method