Choose the best answer for each of the following questions.
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1 | | Questions 1 and 2 are based on the following related journal entries that were recorded in chronological sequence in the general fund of a governmental entity:
Entry A | Encumbrances | 15,000 | | | Fund Balance Reserved for Encumbrances | | 15,000 | Entry B | Fund Balance Reserved for Encumbrances | 15,000 | | | Encumbrances | | 15,000 | Entry C | Expenditures | 15,150 | | | Vouchers Payable | | 15,150 |
The sequence of these journal entries indicates that: |
| | A) | An adverse event was foreseen and a reserve of $15,000 was created; later the reserve was canceled and a liability for the unfavorable event was recorded. |
| | B) | An order was placed for goods or services estimated to cost $15,000; the actual cost was $15,150, for which a liability was recorded when the goods or services were received. |
| | C) | Encumbrances were anticipated but later failed to materialize and were reversed; a liability of $15,150 was incurred. |
| | D) | Entry A was erroneous and was reversed; a liability of $15,150 was incurred. |
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2 | | Immediately after journal entry A was recorded, the general fund had a balanced annual budget for all transactions. Recording entries B and C would: |
| | A) | Not change the balanced condition of the budget |
| | B) | Cause the general fund to show a budgetary surplus |
| | C) | Cause the general fund to show a budgetary deficit |
| | D) | Not affect the current fiscal year budget but would affect the budget of the following fiscal year |
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3 | | A city's general fund budget for the forthcoming fiscal year shows estimated revenues in excess of appropriations. The recording of this budget results in an increase in the ledger account: |
| | A) | Taxes ReceivableCurrent |
| | B) | Budgetary Fund Balance |
| | C) | Fund Balance Reserved for Encumbrances |
| | D) | Encumbrances |
| | E) | Unreserved and Undesignated Fund Balance |
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4 | | Which of the following types of revenues generally is recognized in the general fund of a governmental entity? |
| | A) | Receipts from a city-owned parking structure |
| | B) | Interest earned on investments held for retirement of employees |
| | C) | Revenues of internal service funds |
| | D) | Property taxes |
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5 | | Authority granted by a governmental entity's legislative body to make general fund expenditures and to incur obligations during a fiscal year is the definition of an: |
| | A) | Appropriation |
| | B) | Authorization |
| | C) | Encumbrance |
| | D) | Expenditure |
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6 | | When goods that previously were approved for purchase are received by a general fund but not yet paid for, what ledger account is credited? |
| | A) | Fund Balances Reserved for Encumbrances |
| | B) | Vouchers Payable |
| | C) | Expenditures |
| | D) | Appropriations |
| | E) | Some other account |
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7 | | What ledger account might be credited to record a general fund's obligation for goods ordered but not yet received? |
| | A) | Appropriations |
| | B) | Encumbrances |
| | C) | Obligations |
| | D) | Fund Balance Reserved for Encumbrances |
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8 | | A credit to the Budgetary Fund Balance ledger account in a journal entry to record the budget of a governmental entity's general fund indicates that: |
| | A) | Estimated expenses exceed actual revenues |
| | B) | Actual expenses exceed estimated expenses |
| | C) | Estimated revenues exceed appropriations |
| | D) | Appropriations exceed estimated revenues |
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9 | | Billings for goods and services to the general fund from other funds of a governmental entity are debited to the ledger account: |
| | A) | Interfund Expenditures |
| | B) | Other Financing Uses |
| | C) | Interfund Obligations |
| | D) | Expenditures |
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10 | | The profit motive is among the objectives of the two proprietary funds (enterprise funds and internal service funds) of a governmental entity. |
| | A) | True |
| | B) | False |
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11 | | Not every municipality has a general fund. |
| | A) | True |
| | B) | False |
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12 | | Under the modified accrual basis revenues are recognized only when they become both measurable and available. |
| | A) | True |
| | B) | False |
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13 | | Short term prepayments are recognized as assets. |
| | A) | True |
| | B) | False |
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14 | | Budgetary accounts are "estimated accounts" that are the opposite (in terms of debit and credit) from real accounts. |
| | A) | True |
| | B) | False |
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