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WGU PRACTICE QUESTIONS C252 CHAPTER 10/32 QUESTIONS AND ANSWERS (A+)
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WGU PRACTICE QUESTIONS C252 CHAPTER 10/32 QUESTIONS AND ANSWERS (A+)
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WGU PRACTICEQUESTIONS C252
CHAPTER 10/32
QUESTIONS AND
ANSWERS (A+)
1. The use of an Enterprise Fund is required by
generally accepted accounting principles in each
of the following situations except
a. When user fees are charged for the majority of
the activity's operations.
b. When an activity is financed with debt that is
secured solely by the pledge of revenues.
c. When laws and regulations require that the
activity's costs be recovered with fees and
charges.
d. When pricing policies of the activity establish
fees and charges are designed for cost recovery. -
√Answer>When user fees are charged for the
majority of the activity's operations.
-2. Which of the following statements is false
concerning interest capitalization?
a. Generally accepted accounting principles
require the capitalization of certain types of
interest in Enterprise Funds.
,b. Interest cost should not be capitalized for asset
acquisitions financed by restricted gifts or grants.
c. Interest capitalization is computed differently for
tax-exempt versus taxable debt.
d. Interest capitalization is not allowed in
Enterprise Funds. - √Answer>Interest
capitalization is not allowed in Enterprise Funds.
-3. When accounting for inventory in an Enterprise
Fund, which method should be used for external
financial reporting?
a. Acquisition method.
b. Allocation method.
c. Consumption method.
d. Purchases method. - √Answer>Consumption
method.
-4. A city Enterprise Fund received an operating
grant during the fiscal year. The Enterprise Fund
will report this grant on the statement of revenues,
expenses, and changes in net position as
a. Operating revenues.
b. non-operating revenues.
c. other financing sources.
d. other financing uses. - √Answer>non-operating
revenues.
-5. The city, which has a December 31 year end,
was awarded a $400,000 federal grant for a
system hardware upgrade to meet FCC
, requirements. The grant was awarded and
distributed to the fund in June 20X7. However, the
capital project is not expected to be completed
until June 20X8. As of December 31, 20X7, the
Cable Enterprise Fund should
a. Report nonoperating revenues of $400,000.
b. Report nonoperating revenues of $200,000.
c. Report a capital contribution of $400,000.
d. Report a capital contribution of $200,000. -
√Answer>Report a capital contribution of
$400,000.
-6. Refunding bonds were issued by an Enterprise
Fund with a face value of $15,000,000 at a 1%
discount. Issuance costs were $225,000. The
entry to record the issuance of the refunding
bonds would be
a.
DR Cash $14,625,000
DR Expenditures 225,000
DR Other Financing Uses-Discount 150,000
CR Other Financing Sources-Bonds 15,000,000
b.
DR Cash $14,625,000
DR Expenditures 225,000
CR Other Financing Sources-Bonds 14,850,000
c.
DR Cash $14,625,000
DR Unamortized Deferred Charges/Discount
375,000
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