CAFR (Fund) Accounting
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CPA Financial Accounting and Reporting (FAR) › CAFR (Fund) Accounting
Which of the following would be reported as program revenues on a local government's government wide statement of activities?
Taxes levied for a specific function
Proceeds from the sale of a capital asset used for a specific function
Charges for services
Interest revenues
Explanation
For a local government's government wide statement of activities, charges for services are reported as program revenue.
Internal service funds, while being proprietary funds, are reported under which at the government wide level?
Disclosure
Governmental activities
Proprietary
Fiduciary
Explanation
When the consolidation of governmental financial statements are complete, the internal service funds are displayed under governmental activities rather than proprietary.
Golden City levies a real estate tax. In Year 1, the city expects to collect \$400,000 between January 1, Year 2, and March 15, Year 2. It expects to collect \$160,000 per month in January and February, and an additional \$80,000 in March. The city's policy is that money collectible within 60 days is considered available. How much of the revenue should be recognized in Year 1 in the fund financial statements?
\$320,000
\$400,000
\$160,000
\$0
Explanation
At the end of Year 1, the city will only recognize the revenue it expects to collect within the next 60 days. This includes January and February, so Year 1 revenue will include $160K for January + $160K for February.
The city of Hammond opened a landfill at the beginning of Year 1, which is expected to take 10 years to fill. At the end of Year 1, the land full is 8% full and the estimated current closures costs are \$150,000. At the end of Year 2, the landfill is currently 20% full and the estimated closure costs are \$200,000. The city does not charge a fee to use the landfill and thus reports it in the general fund. What amount of expenditures should be reported in Year 2 in the fund-based financial statements in connection with the closure of the landfill?
\$0
\$40,000
\$12,000
\$38,000
Explanation
Nothing is recorded for closure costs in the fund financial statements because no current economic resources were used for closing the landfill. A liability would be recorded in the government-wide statements because the focus in those statements is on both current and non-current resources.
The fire department of Forbes Township purchased a new fire truck on January 1, Year 1. Fund-based financial statements are being produced for Year 1 that include the fire department in the general fund. Which of the following statements is true?
Depreciation expense should be calculated and reported for the fire truck
Depreciation expense should be calculated and reported for the fire truck only if the modified approach is used
Recognition of depreciation expense is not appropriate
Recognition of depreciation expense is optional
Explanation
The focus of the fund financial statements is current financial resources, and recording depreciation will not impact current financial resources. Thus, the purchase of the car will be reflected in the fund statements, but the depreciation will only be recorded in the government-wide statements, which includes non-current resources as well as current resources.
If a primary government's general fund has an equity interest in a joint venture, all or a portion of this equity interest should be reported in the:
Trust fund
Custodial fund
Government wide statement of net position
Internal service fund
Explanation
The portion of the equity interest in the joint venture that represents the government's investment in the net position of the venture is recorded in the government wide statement of net position.