Quiz 1: (5 x 1 = 5 Marks)

Q1. Which of the following is not an objective of financial reporting by state and local governments?
A. To assist users in assessing the adequacy of systems and controls.
B. To assist users in assessing financial condition and results of operations.
C. To assist financial report users in comparing actual financial results with the legally adopted
budget.
D. To assist in determining compliance with finance-related laws, rules, and regulations.
Q2. One characteristic that distinguishes other financing sources from revenues is that other financing
sources:
A. Arise from debt issuances or interfund transfers in.
B. Increase fund balances when they are closed at year-end.
C. Provide financial resources for the recipient fund.
D. Have a normal credit balance.
Q3. The Town of Loveland levied property taxes in the amount of $1,600,000. The town estimates that
1 percent will be uncollectible. The journal entry to record the tax levy will include
A. A debit to Cash for $1,584,000.
B. A credit to Revenues for $1,584,000.
C. A debit to Allowance for Uncollectible Current Taxes for $16,000.
D. A debit to Estimated Revenues for $1,600,000.
Q4. The City of Oak Park constructed a new storage facility using the city's own public works
employees. Construction costs were incurred in the amount of $900,000, plus $25,000 in interest
on short-term notes used to finance construction. What amount should be capitalized in the
government-wide statements?
A. $900,000.
B. $925,000.
C. $875,000.
D. $0.
Q5. Carroll City levies $200,000 of property taxes for its current fiscal year. One percent of the tax
levy is expected to be uncollectible. The city collects $170,000 of its taxes during the year and
another $25,000 during the first two months of the following year. In addition, the city collected
$3,000 of prior year taxes during the first two months of the current fiscal year and another $2,000
during the remainder of the current fiscal year. What amount of property tax revenues should the
city report in the governmental financial statements for the current fiscal year?
A. $200,000.
B. $198,000.
C. $197,000.
D. $195,000.

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TEST 2: Section A (3 x 4 marks = 12 marks)
Q1. What is the difference between using the modified approach to accounting for infrastructure assets
and depreciating infrastructure assets?
Q2. Explain the difference between the accrual and modified accrual bases of accounting. Which funds
and government-wide activities use each focus and each basis?
Q3. In many cases, property taxes comprise a significant source of revenue and cash receipts for a
government. If property tax cash collections typically occur during one or two collection periods,
how do governments manage working capital needs?
Section B (8 marks)
Q4. The property tax levy for FY2017 was recorded. Net assessed valuation of taxable property for the
year was $43,000,000, and the tax rate was $5 per $100. It was estimated that 3 percent of the levy
would be uncollectible. Determine the amount of estimated property tax revenues for FY2017.
Show all computations in good form. (3 marks)
Q5. During the current year, a capital projects fund completed a new public safety building that was
started in the prior year. The total cost of the project was $11,890,000. Financing for the project
came from a $9,000,000 bond issue that was sold in the prior year, and from a $890,000 federal
capital grant received in the current year. Current year expenditures for the project totaled
$2,322,000. The full cost is attributed to the building since it was constructed on city-owned
property. Record the entries in general journal of the concerned fund and at government-wide
level. (5 marks)

Section C (10 marks)

Q6. The Countys budget calls for property tax revenues for the fiscal year ending December 31, 2015
of $2,670,000. County records indicate that, on average, 4percent of taxes levied are not collected.
The Countys tax assessor has assessed the value of taxable property located in the village at
$139,062,500.
Required:
a. Calculate to the nearest penny what tax rate per $100 of assessed valuation is required to
generate a tax levy that will produce the required amount of revenue for the year.
b. Record the tax levy for 2015 in the general fund and as well as at the government-wide level.
c. By December 31, 2015, $2,539,000 of the current property tax levy had been collected. Record
the amounts collected and reclassify the uncollected amount as delinquent. Interest and
Penalties of 8percent were immediately due on the delinquent taxes, but the finance director
estimates that 9percent will not be collectible. Record the interest and penalties receivable in
the general fund and at the government-wide level. (Round all amounts to the nearest dollar).
d. At the end of the next fiscal year (December 31, 2016), the County had collected $53,000 in
delinquent taxes and $4,800 in interest and penalties on the delinquent taxes. Record the
interest and penalties collected both at the general fund and at the government-wide levels.

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