Question 1

A city has only one General Fund buy may have many Special Revenue Funds.

Accepted Answer

The General Fund is the most significant fund of a city, but there is only one. A city may have may Special Revenue Funds, which are used to account for specific revenue sources that are restricted or committed to spending for specific purposes but not for debt service or capital projects.

Question 2

General Fund activities are financed primarily through taxes, intergovernmental grants, and borrowing.

Accepted Answer

General Fund activities are financed by three major types of revenue: taxes, intergovernmental grants, and a host of miscellaneous items. A state or local government would not be able to finance its General Fund activities for long through borrowings.

Question 3

Governments use Special Revenue Funds to provide elected officials, resource providers, and the citizenry with a greater degree of assurance that the revenues provided for specified purposes are used only for those purposes.

Accepted Answer

By accounting for revenues provided for specified purposes separately from other revenues in Special Revenue Funds, governments maintain greater control and accountability over how the revenues are spent.

Question 4

In the General Fund, revenues for property taxes are recognized only if they are both measurable and available.

Accepted Answer

Under the modified accrual basis of accounting used in the General Fund, revenues are recognized when they become susceptible to accrual; that is, when they are measurable and available.

Question 5

Proceeds from tax anticipation notes are recorded as other financing sources in the General Fund.

Accepted Answer

Proceeds from tax anticipation notes are recorded as liabilities in the General Fund.

Question 6

Interest on outstanding tax anticipation notes should be accrued in the General Fund at the end of a government's fiscal year.

Accepted Answer

Tax anticipation notes are short-term borrowings and interest should be accrued in the General Fund.

Question 7

In the General Fund, interest on short-term investments always should be accrued as revenue at a government's fiscal year-end.

Accepted Answer

Interest should only be accrued in the General Fund when it is available-collectible soon enough after year-end to pay current-period liabilities.

Question 8

To record its General Fund budget at the beginning of its fiscal year, a city would debit appropriation accounts and credit estimated revenue accounts.

Accepted Answer

To record its budget at the beginning of its fiscal year, a city would debit estimated revenues accounts and credit appropriations accounts.

Question 9

Governments record revenues for levied property taxes in the General Fund when the property taxes are measurable and available.

Accepted Answer

Under the modified accrual basis of accounting used in the General Fund, revenues are recognized when they become susceptible to accrual; that is, when they are measurable and available.

Question 10

When making a budget adjustment to decrease appropriations in a Special Revenue Fund's budgetary accounts, a credit entry is made to an appropriations account.

Accepted Answer

A debit entry is made to reduce an appropriations account.

Question 11

When goods that were ordered using a Special Revenue Fund's resources are received, a debit entry should be made to an encumbrances account.

Accepted Answer

A credit entry should be made to an encumbrances account to reverse the encumbrance that was established when the goods were ordered.

Question 12

An expenditure for salaries should be recorded in a General or Special Revenue Fund for the work of employees during the last few days of a fiscal year that is not paid until early in the next fiscal year.

Accepted Answer

GASB standards require that salary expenditures for the stub period must be accrued in governmental funds because once incurred, they normally are paid in a timely manner and in full from current financial resources.

Question 13

According to GASB financial reporting requirements, the General Fund and major Special Revenue Funds are required to prepare a budgetary comparison statement.

Accepted Answer

Although a budgetary comparison is required, it does not have to be a statement. GASB standards require preparation of a budgetary comparison, which may be presented either as a basic financial statement or as a schedule in required supplementary information.

Question 14

The actual revenues and expenditures in the budgetary comparison schedule or statement are prepared using the modified accrual basis of accounting.

Accepted Answer

In budgetary comparisons, revenues and expenditures should be reported on the budgetary basis of accounting, which may or may not be the modified accrual basis of accounting. Using the budgetary basis allows for meaningful comparisons of actual revenues and expenditures to amounts shown in the original and final budgets.

Question 15

Major sections of the statement of revenues, expenditures, and changes in fund balance include revenues, expenditures, and other financing sources and uses.

Accepted Answer

Revenues, expenditures, and other financing sources and uses are major sections of the statement of revenues, expenditures, and changes in fund balance.

Question 16

Closing entries for the General Fund and Special Revenue Funds include closing the budgetary accounts against each other and closing the nominal financial accounts to fund balance.

Accepted Answer

Both the budgetary accounts and the nominal financial accounts need to be closed.

Question 17

To close the nominal financial accounts of a Special Revenue Fund, a debit needs to be made to revenue accounts and a credit made to expense accounts.

Accepted Answer

A Special Revenue Fund has expenditure accounts-not expense accounts. Therefore, closing nominal financial accounts requires a credit to expenditure accounts.

Question 18

The tax roll serves as the subsidiary ledger for a government's property taxes receivable.

Accepted Answer

This statement is correct. The tax roll includes, for each piece of taxable property, details such as the legal description of the property, address of the property, type of property, name of property owner, assessed value, the amount levied, the amount collected, and the amount still outstanding.

Question 19

The General Fund is formally defined as the fund used to account for and report on:

Accepted Answer

The General Fund is used to account for and report on all financial resources not accounted for in another fund. The General Fund is used to account for and report on the basic day-to-day operating services provided by governments.

Question 20

A city or county always will have
 $\begin{array}{cc} 
& \text { One or more } \
\text { A General Fund } & \text { Special Revenue Funds }
\end{array}$
A)$\begin{array}{cc} && \text { yes } &&&&&&&& \text { no } \\end{array}$
B)$\begin{array}{cc}  && \text { no } &&&&&&&& \text { yes } \\end{array}$
C)$\begin{array}{cc} && \text { no } &&&&&&&& \text { no } \\end{array}$
D)$\begin{array}{cc} && \text { yes } &&&&&&&& \text { yes }
\end{array}$

Accepted Answer

The answer of A city or county always will have
...

Quiz 4: An Introduction to General and Special Revenue Funds