Devry ACCT567 final exam 2015

Question 1.1. (TCO A) Which of the following statements should be prepared by all not-for-profit organizations? (Points : 5)

(A) Statement of functional expenses

(B) Statement of revenues, expenses, and changes in net position

(C) Statement of financial position

Both A and B

Question 2.2. (TCO B) According to GASB standards, when should transfers be recognized? (Points : 5)

When earned.

When collected in cash.

When authorized by the budget ordinance.

In the period the interfund receivable and payable arise.

Question 3.3. (TCO C) When the budget of a government is recorded and when appropriations exceeds estimated revenues, the budgetary fund balance account is (Points : 5)

credited at the beginning of the year and debited at the end of the year.

credited at the beginning of the year and no entry is made at the end of the year.

debited at the beginning of the year and no entry is made at the end of the year.

debited at the beginning of the year and credited at the end of the year.

Question 4.4. (TCO D) The General Fund used electricity provided by the city-owned electric utility (an enterprise fund of the city). The General Fund general journal entry to record the transaction will include (Points : 5)

a debit to Due to Other Funds.

a debit to Interfund Transfers Out.

a debit to Expenses.

a debit to Expenditures.

Question 5.5. (TCO E) During the year, a wealthy local businessman donated a building to city of Perris. The original cost of the building was $340,000. Accumulated depreciation at the date of the gift amounted to $220,000. The appraised fair market value of the donation at the date of the gift was $525,000 of which $35,000 was the value of the land on which the building was situated. At what amount should the city record this donated property in the governmental activities accounts at the government-wide level? (Points : 5)

$220,000.

$120,000.

$340,000.

$525,000.

Question 6.6. (TCO E) Which of the following resource inflows would be recorded as a revenue of a debt service fund? (Points : 5)

Receipt of the premium on a new bond issue.

Property taxes levied by the debt service fund for debt service purposes.

Taxes collected by the General Fund and transferred to the debt service fund.

Transfer of the residual equity of a capital projects fund to the debt service fund.

Question 7.7. (TCO G) Which of the statements concerning agency funds is a true statement? (Points : 5)

Agency funds use the same basis of accounting as permanent funds.

Agency funds are reported only on the statement of fiduciary net position.

Agency funds use the temporary accounts—Additions and Deductions.

Agency funds never receive cash.

Question 8.8. (TCO J) GASB standards require that governmental fund financial statements include which of the following? (Points : 5)

(A) Balance Sheet

(B) Statement of activities

(C) Statement of cash flows

Both A and B

Question 9.9. (TCO H) In audits of state and local government units, which of the following paragraphs may not be required in the auditor’s report for every audit? (Points : 5)

Scope paragraph

Explanatory paragraph

Opinion paragraph

Introductory Paragraph

Question 10.10. (TCO H) Securities donated to a not-for-profit organization should be recorded at the (Points : 5)

donor’s recorded amount.

fair market value at the date of the gift.

fair market value at the date of the gift, or the donor’s recorded amount, whichever is higher.

fair market value at the date of the gift, or the donor’s recorded amount, whichever is lower.

Question 11.11. (TCO I) Colleges and universities often make loans to students. How would these loans be reported on the financial statements? (Points : 5)

An expense

A liability

A receivable

An investment

Question 12.12. (TCO I) The primary source of revenues for most hospitals are (Points : 5)

investment income.

capitation fees from health maintenance organizations.

exchange transactions, such as fees for services.

nonexchange transactions, such as contributions.

Page 2

Question 1. 1. (TCOs D, E, F, and G) Please list the name of the fund(s) in which each of the following transactions or events would be recorded.

(1) Proceeds of $500,000 were received from a bond issue were used for the purchase of the privately owned water utility in the city.

(2) Property taxes of $300,000 were designated to be set aside for the eventual retirement of the City Hall building bonds that were collected.

(3) Payment of $800,000 was made to a contractor for progress made in the construction of the new City Hall building.

(4) Interest of $50,000 was paid on the bonds issued for the purchase of the water utility.

(5) Interest of $100,000 was paid on the bonds issued for the payment of the improvement of streets in the residential district.

(6) City motor vehicle license fees of $40,000 were to be used for general street expenditures were collected. (Points : 30)

Question 2. 2. (TCO F) What is the accounting equation for a proprietary fund? What are the three components of net assets? Please explain the nature each component. (Points : 40)

Question 3. 3. (TCO I) During the fiscal year of June 2012, Claremont General Hospital, a not-for-profit healthcare organization, had the following revenue-related transactions. (The amounts are summarized for the entire year.)

(1) Healthcare services that are provided to inpatients and outpatients amounted to $10,200,000, of which $370,000 were for charity cases, $957,000 was paid by uninsured patients, and $8,873,000 was billed to Medicare, Medicaid, and other insurance companies.

(2) Pharmaceutical drugs and medicines sold by the hospital pharmacy amounted to $990,000, all of which was paid by the customer or the insurance companies.

(3) Medicare, Medicaid, and third-party payors (insurance companies) approved and paid $5,996,000 of the $8,873,000 billed by the hospital during the year (please review transaction #1).

(4) A contribution of $3,000,000 (of which is unconditional) was received in cash from a donor to construct a new facility for terminally ill patients. The full amount is expendable for that purpose. No activity has taken place during the current year.

(5) A total of $860,000 was received from the following activities/sources: cafeteria and gift shop sales, $680,000, unrestricted transfers from the Claremont Hospital Foundation, $110,000, and fees for medical transcripts, $70,000.

(6) The allowance for uncollectible receivables was increased by $1,500.

Requirements:

a. Record the preceding transactions in general journal form.

b. Prepare the unrestricted revenues, gains, and other support section of Claremont General Hospital’s statement of operations for the current year. (Points : 40)

Question 4. 4. (TCO E) Please record the following transactions in the Capital Projects Fund in the general journal for the following transactions.

a. Bradley County issued $6,300,000, 5% bonds with interest payable on a semiannual basis on July 1 and January 1. The bonds sold for 103 on July 30, 2012. Proceeds from the bond issue were to be used for construction of the new sheriff station with all interest and premiums received to be used to service the debt issue.

b. A state grant of $400,000 was received to help finance the construction of the sheriff station.

c. The General Fund transferred $450,000 for use in the construction of the new sheriff station.

d. A federal grant of $850,000 was received to help finance the construction of the new sheriff station.

e. A construction contract was awarded to the Spring Construction Company in the amount of $7,500,000.

f. The new sheriff station was completed on May 1, 2013, three months ahead of schedule. The construction expenditures amounted to $7,650,000. When the project was completed, the cost of the sheriff station was allocated to the following, $490,000 for land, $7,180,000 for the building, and the remainder to equipment.

g. The temporary accounts of the capital projects were closed to Fund Balance-Restricted. The amounts are restricted due to the bond issue that is related to the construction of the sheriff station. The capital projects fund will be closed by transferring remaining funds to the debt service fund for repayment. (Points : 40)

Question 5. 5. (TCO F) The following Statement of Cash Receipts and Disbursements was prepared by the bookkeeper of the City of Glass City Museum of Science. The museum is a component unit of the City of Glass City and must be included in the city’s financial statements. It began operations on January 1, 2012 with no liabilities or commitments and only two assets.

(1) $6,000 in cash and (2) Land that was acquired for $11,000.

Cash Basis

12 months

Cash Receipts:

Admission Fees $295,000

Loan from the Bank $50,000

Total deposits $345,000

Cash Disbursements:

Supplies $62,000

Wages 104,000

Utilities 48,000

Purchase of Equipment 70,000

Purchase of Fixtures 45,000

Interest on the Bank Loan 1,250

Total checks $330,250

Excess of Receipts Over Disbursements $14,750

Additional Information:

• The loan from the bank is dated April 1 and is for a five-year period. Interest (5% annual rate) is paid on Oct. 1 and April 1 of each year, beginning Oct. 1, 2012.

• The equipment was purchased on April 1, 2012 with the proceeds provided by the bank loan and has an estimated useful life of 10 years (please use the straight-line method of depreciation) for computing depreciation on the equipment. The fixtures were purchased on July 1, 2012 and has an estimated useful life of five years (please use the straight-line method of depreciation) for computing depreciation on the fixtures.

• Supplies on-hand amounted to $5,900 at December 31, 2012.

• All other bills and salaries related to 2012 had been paid by the close of business on December 31.

Required:

Please prepare a Statement of Revenues, Expenses, and Changes in Net Assets for the year ended December 31, 2012 assuming the city plans to account for its activities on the accrual basis. (Points : 40)