ACCT 410 QUIZ 1

ACCT 410 QUIZ 1

For questions 1-8, please respond as True (T) or False (F). One point for each question.

1. The state collects a gasoline tax that must be used to support highway construction and maintenance. The gasoline tax revenue should be accounted for in the Internal Service fund.

2. For government funds, increases in spendable resources are reported as revenues or other financing sources and decreases in spendable resources are reported as expenditures or other financing resources.

3. When a government fund pays $100,000 to a contractor after purchasing a building, the fund records the debit as Expenditures-capital projects. However a proprietary fund records a debit to Buildings.

4. All government funds use accrual basis of accounting.

5. Since the general fund is a catch-all fund, a government agency typically uses several general funds to record different types of transactions.

6. Government wide financial statements include three basic financial statements, a statement of net assets, a statement of activities, and an income statement.

7. The statement of net assets represents assets plus liabilities or fund balance.

8. GASBS does not require the entity to report the non-spendable fund balance.

Question 8 and 9 require a written essay response. (Respond with one page double spaced for each question). Use APA with references to support your response). One point for each question.

9. What factors distinguish a government entity from a non-profit entity? Discuss at 3-4 factors.

10. Why do governments use fund accounting and how do they determine how many funds to use? Discuss at least three reasons for each part of this question.