A.Inasmuch As the Association Is on a Cash Basis of Accounting, When Would It Recognize

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Chapter 2

2-1

a.Inasmuch as the association is on a cash basis of accounting, when would it recognize as an expenditure the full cost of acquiring a fixed asset?

Similarly, if the association is on a cash basis, would it give fund recognition to liabilities? If not, then when it borrowed funds what must be the credit that offsets the debit to cash?

b. Since the association is on a cash basis, what must be the only asset in its general fund? Do the total assets in the general fund equal $83,800? Does the excess of revenues over expenditures equal $59,800 (prior to adding the proceeds from borrowing.

c. Does the increase in net assets per the statement of activities equal $85,400 – an amount also equal to the net assets on the statement of net assets?

2-2

a.Both the capital projects and the debt service funds are government funds. Does the capital projects fund report fixed assets (including construction in process)? Does the debt service fund report long-term debt? If not what is the appropriate debit when assets are acquired or constructed or the credit when long-term debt is incurred?

b.Do government-wide statements report fixed assets and long-term liabilities? Are they consolidated?

2-3

a. Can you simply add the two columns together or must certain intragovernment accounts be eliminated? Do total assets equal $102,558?

2-4

a. Does your balance sheet reflect the following?

Total

CashAssets

General fund$ 400 $1,600

Capital projects fund 150 600

Debt service fund 50 200

Are total assets, and total fund balance, equal to $2,400?

2-5

a. Do total assets equal $3,636?

b. How much in unrestricted financial resources does the town have available for operating purposes?

c. Would such a statement provide sufficient detail to enable a reader to distinguish between unrestricted and restricted resources?

2-6

a. What is the major rationale for fund accounting?

b. What are the main types of funds discussed in the text?

2-7

a. If the service were on a cash basis, what would be its only asset? If it were on a full accrual basis, what types of assets would you expect to find?

b. To be considered restricted assets, what specific party must impose the restrictions?

c. What are some of the key objectives of governmental accounting and reporting?

2-8

a. What type of assets are associated with the cash basis of accounting; with the full accrual basis of accounting?

b.Does the balance sheet include assets other than cash?

c. What determines whether a not-for-profit’s assets are considered restricted? Who must impose the restrictions?

dWhat type of restriction characterizes an endowment fund?

2-9

bAre total assets (all funds combined) $44.

cIs the excess of revenues over expenditures for all funds combined $7. Is the net increase in fund balance for the internal service fund (including the transfer from the general fund) $4?

d. Is the increase in net assets per the statement of activities $37? Are total assets $68?