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    Governmental/Not-for-profit Accounting Basis

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    Exercise 4-1
    1. Under the modified accrual basis of accounting, revenues
    cannot be recognized
    a. Until cash has been collected
    b. Unless they will be collected within sixty days of
    year-end
    c. Until they are subject to accrual
    d. Until they are measurable and available

    2. Available (as in measurable and available) means
    a. Available to finance expenditures of the current
    period
    b. Subject to accrual
    c. Collectible
    d. Available for appropriation

    3. Property taxes are an example of
    a. An imposed exchange transaction
    b. An imposed nonexchange transaction
    c. A derived transaction
    d. A government-mandated nonexchange transaction

    4. To be considered available, property taxes must
    have been collected either during the governments
    fiscal year or within
    a. The time it takes for the government to liquidate
    its obligations from the prior year
    b. Thirty days of year-end
    c. Sixty days of year-end
    d. The following fiscal year

    5. For its fiscal year ending September 30, 2007, Twin
    City levied $500 million in property taxes. It collected
    taxes applicable to fiscal 2007 as follows (in millions):
    June 1, 2006, through September 30, 2006 $ 20
    October 1, 2006, through September 30,
    2007 440
    October 1, 2007, through November 30,
    2007 15
    December 2007 4
    The city estimates that $10 million of the outstanding
    balance will be uncollectible. For the fiscal year ending
    September 30, 2007, how much should Twin City
    recognize in property tax revenue (in millions) in its
    general fund?
    a. $440
    b. $460
    c. $475
    d. $490

    6. Assume the same facts as in the previous example. How
    much should Twin City recognize in property tax revenue
    (in millions) in its government-wide statement of
    activities?
    a. $440
    b. $460
    c. $475
    d. $490

    7. Central City was awarded two state grants during its
    fiscal year ending September 30, 2007: a $2 million
    block grant that can be used to cover any operating
    expenses incurred during fiscal 2008, and a $1 million
    grant that can be used any time to acquire equipment
    for its police department. For the year ending September
    30, 2007, Central City should recognize in grant
    revenue in its funds statements (in millions)
    a. $0
    b. $1
    c. $2
    d. $3

    8. Assume the same facts as in the previous example. How
    much should the city recognize in grant revenue in its
    government-wide statements?
    a. $0
    b. $1
    c. $2
    d. $3

    9. Assuming that a government will collect its sales taxes
    in sufficient time to satisfy the available criterion, it
    would ordinarily recognize revenue from sales taxes in
    its governmental fund statements
    a. When the underlying sales transaction takes place
    b. On the date the merchant must remit the taxes to
    the government
    c. On the date the merchant must file a tax return
    d. When the taxes are received by the government

    10. Assuming that a government will collect its sales taxes
    in sufficient time to satisfy the available criterion, it
    would ordinarily recognize revenue from sales taxes in
    its government-wide statements
    a. When the underlying sales transaction takes place
    b. On the date the merchant must remit the taxes to
    the government
    c. On the date the merchant must file a tax
    return
    d. When the taxes are received by the government

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