30 Questions
Which type of activities may a government be involved in, according to the text?
Governmental, Business-Type, and Financial activities
What are examples of Business-Type Activities that governments engage in?
Public utilities and transportation systems
In what capacity do governments often act when dealing with parties outside the government?
Fiduciary
Which of the following is NOT a core service provided by most general purpose governments?
Data processing
What is the purpose of many Business-Type Activities engaged in by governments?
To be self-supporting by charging users for services
Which term best describes the role of a government acting as an agent or trustee for parties outside the government?
Fiduciary
What is the primary purpose of a debt service fund?
To account for financial resources segregated for principal and interest payments on general long-term debt
When would a government be required to create a debt service fund?
When having outstanding bond obligations or certain other long-term general liabilities
What distinguishes a permanent fund from a private-purpose trust fund?
The beneficiaries of the fund earnings
Why might a government choose to establish a private-purpose trust fund instead of a permanent fund?
To benefit only private individuals or organizations
In governmental accounting, what is the primary focus when accounting for governmental funds?
Tracking inflows and outflows of current financial resources
What would be an appropriate use of earnings from a permanent fund according to the text?
Supporting maintenance of public buildings
Why is accrual accounting essential for governments in the context of providing business-type services?
To determine the full cost of providing services
What primarily differentiates internal service funds from enterprise funds?
Their reporting structure
In what instances do enterprise funds account for operations?
When the costs of providing goods or services to the general public are primarily covered through user charges
Why do internal service funds exist?
To provide goods or services to other departments or agencies
What drives the periodic determination of revenues earned, expenses incurred, and net income in enterprise funds?
Capital maintenance and management control
Why is it important for governments to report on whether business-type activities are covering their full cost of operation?
To ensure transparency and accountability in financial reporting
In governmental accounting, which fund is typically used to account for departmental operating activities like the city manager’s office and finance?
General Fund
When tax or grant revenues are legally restricted for specific operating purposes like maintenance of roads or operation of a library, which fund type is generally created?
Special Revenue Fund
Which fund type is typically created to account for financial resources used in the acquisition or construction of major capital facilities?
Capital Projects Fund
In government accounting, what is the purpose of a Special Revenue Fund?
Account for tax or grant revenues legally restricted for particular operating purposes
When tax or grant revenues are embarked for a capital project, which fund type is typically created to account for these resources?
Capital Projects Fund
What is the primary reason governments engage in capital projects according to the text?
To replace existing capital assets
Which of the following should not be depreciated?
Inexhaustible assets like land
What should be done when reporting donated capital assets?
Report at their estimated fair value at the time of acquisition plus ancillary charges
Which financial statement should include depreciation expense?
Statement of revenues, expenses, and changes in fund net assets
According to Principle 8, what should be distinguished in financial reporting?
Fund long-term liabilities
In the government-wide financial statements, what measurement focus and basis of accounting should be used?
Accrual basis and economic resources measurement focus
When are revenues, expenses, gains, losses, and liabilities recognized in government-wide financial statements?
When they are incurred even if cash hasn't been exchanged yet
Test your knowledge on Debt Service Funds, which are used by governments to accumulate resources for and make payments towards long-term debt. Learn about the purpose and requirements for creating debt service funds in governmental accounting.
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