Wiley CPAexcel Exam Review 2014 Study Guide, Financial Accounting and Reporting

Appendix A: Financial Accounting and Reporting Sample Examination

Testlet 1

Items 1 and 2 are based on the following:

The town of Silverton applies the provisions of GASB 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, for its financial statements. As of December 31, 2010, Silverton compiled the information below for its capital assets, exclusive of infrastructure assets.

Cost of capital assets financed with general obligation debt and tax revenues	$5,000,000
Accumulated depreciation on the capital assets	1,000,000
Outstanding debt related to the capital assets	2,000,000

1. On the government-wide statement of net assets at December 31, 2010, under the governmental activities column, what amount should be reported for capital assets?

a. $5,000,000

b. $4,000,000

c. $3,000,000

d. $2,000,000

2. On the government-wide statement of net assets at December 31, 2010, under the governmental activities column, the information related to capital assets should be reported in the net assets section at which of the following amounts?

a. $5,000,000

b. $4,000,000

c. $3,000,000

d. $2,000,000

3. Tree City reported a $1,500 net increase in fund balance for governmental funds. During the year, Tree purchased general capital assets of $9,000 and recorded depreciation expense of $3,000. What amount should Tree report as the change in net assets for governmental activities?

a. $ (4,500)

b. $ 1,500

c. $ 7,500

d. $10,500

4. A not-for-profit ...