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The CPA Examination Review Practice website helps you prepare for the CPA exam. This website enhances your problem-solving skills by testing your knowledge of concepts and skills related to AICPA content requirements. The immediate feedback in the website creates opportunities to improve specific areas, reinforcing information that you will use throughout your program.

CPA Examination Review Practice Assignment

Instructions

1) Access Wiley CPA through the link on the student website. 2) Start the Wiley CPA Examination Review. 3) Select New Test next to Financial Accounting and Reporting.

a) Select Study option and hit Next. b) Create an Answer file name of your choice in the Answer file name field. This is the name of the
file in which your answers are stored. Select Create custom test. Note. If you want to access a previous file, click Resume on the Wiley CPA Examination Review Home page next to the name of the test you want to continue. If you resume an existing test, you can access the exam in either Study or Exam mode. Once you select an option and hit Next, the test begins.

4) By default, 90 multiple choice questions appear in the How many multiple choice questions would you like field. Choose 0. 5) By default, 7 simulations questions appear in the How many simulation questions would you like field. Choose 0. 6) By default, the Additional selection criteria field is set to All questions. Make sure that All questions appears in the Additional section criteria field. 7) Highlight Governmental under Which section(s) would you like questions from?

a) Click the Add additional questions manually box and hit Next. (1) Click on a category in the Available Questions window to open that section. Click on
Governmental. (2) Select a question; for example, GOV-0001. (3) Click >>>. (4) Add all of the questions from the Governmental folder. (5) Close the Governmental folder by clicking the name of the folder in the Available Questions section.

b) Click Next to generate the exam. c) Click Next to start your study exam.
d) Answer each question carefully. As soon as you respond, the system will register your response as your answer and provide immediate feedback. e) After reading the feedback, click Next.

8) Once you are finished, the program will ask you if you want to view your reports. a) Click OK to access your results. b) Click Results by Module to show your results. c) Take a screenshot of your results page, by clicking Ctrl + Alt + Print Screen, and paste it, by
clicking Ctrl + V, into a Microsoft Word document.

9) Click Home the house icon inside of a computer screenat the top of the screen to return to the
websites homepage.

a) Before you leave this screen, you will be asked if you want to return to the Home screen. b) Click OK. Your answers will be saved under the answer file name you created when you began
the program. Note. You may review the user manual for additional help and explanations for the CPA Examination Review by completing the following:

1) Click the Help feature at the top of the window. 2) Click Contents.
3) Select the section you want to review.

Rubric Proble m 5-7 a 5-7 b 5-7 c 5-10 a 6-3 6-10 a

Points Available 1.5 0.5 0.5 1 0.5 1

Deducti on

Points Earned 1.5 0.5 0.5 1 0.5 1

6-10 b 6-10 c 6-10 d 6-10 e 7-6 a Total

1 1 1 0.5 1.5 10 0

1 1 1 0.5 1.5 10

57. The Village of Harris issued $5,000,000 in 6 percent general obligation, taxsupported bonds on July 1, 2011, at 101. A fiscal agent is not used. Resources for principal and interest payments are to come from the General Fund. Interest payment dates are December 31 and June 30. The first of 20 annual principal payments is to be made June 30, 2012. Harris has a calendar fiscal year. 1. A capital projects fund transferred the premium ($50,000) to the debt service fund. 2. On December 31, 2011, funds in the amount of $150,000 were received from the General Fund and the first interest payment was made. 3. The books were closed for 2011. 4. On June 30, 2012, funds in the amount of $350,000 were received from the General Fund, and the second interest payment ($150,000) was made along with the first principal payment ($250,000). 5. On December 31, 2012, funds in the amount of $142,500 were received from the General Fund and the third interest payment was made ($142,500). 6. The books were closed for 2012. a. Prepare journal entries to record the events above in the debt service fund. b. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the debt service fund for the year ended December 31, 2011. c. Prepare a Statement of Revenues, Expenditures, and Changes in Fund Balance for the debt service fund for the year ended December 31, 2012.

510. On July 1, 2011, a five-year agreement is signed between the City of Genoa and the Computer Leasing Corporation for the use of computer equipment not associated with proprietary funds activity. The cost of the lease, excluding executory costs, is $12,000 per year. The first payment is to be made by a capital projects fund at the inception of the lease. Subsequent payments, beginning July 1, 2012, are to be made by a debt service fund. The present value of the lease payments, including the first payment, is $54,552. The interest rate implicit in the lease is 5 percent. a. Assuming the agreement meets the criteria for a capital lease under the provisions of SFAS No. 13, make the entries required in (1) the capital projects fund and (2) the debt service fund on July 1, 2011, and July 1, 2012.

63. Why might it be desirable to operate enterprise funds at a profit?

610. The Town of Frostbite self-insures for some of its liability claims and purchases insurance for others. In an effort to consolidate its risk management activities, the Town recently decided to establish an internal service fund, the Risk Management Fund. The Risk Management Funds purpose is to obtain liability coverage for the Town, to pay claims not covered by the insurance, and to charge individual departments in amounts sufficient to cover currentyear costs and to establish a reserve for losses. The Town reports proprietary fund expenses by object classification using the following accounts: Personnel services (salaries), Contractual services (for the expired portion of prepaid service contracts), Depreciation, and Insurance Claims. The following transactions relate to the year ended December 31, 2012, the first year of the Risk Management Funds operations. 1. The Risk Management Fund is established through a transfer of $500,000 from the General Fund and a long-term advance from the water utility enterprise fund of $250,000. 2. The Risk Management Fund purchased (prepaid) insurance coverage through several commercial insurance companies for $200,000. The policies purchased require the Town to self-insure for $25,000 per incident. 3. Office Equipment is purchased for $10,000. 4. $450,000 is invested in marketable securities. 5. Actuarial estimates were made in the previous fiscal year to determine the amount necessary to attain the goal of accumulating sufficient funds to cover current-year claims and to establish a reserve for losses. It was determined that the General Fund and water utility be assessed a fee of 6 percent of total wages and salaries (Interfund premium). Wages and salaries by department are as follows:
Public Safety 5,000,000 General Administrative Operations 1,500,000 Education 1,500,000 Water Utility 2,500,000 Total 10,500,000

6. Cash received in payment of interfund premiums from the General Fund totaled $275,000 and cash received from the Water Utility totaled $100,000. 7. Interest and dividends received totaled $27,000. 8. Salaries for the Risk Management Fund amounted to $200,000 (all paid during the year). 9. Claims paid under self-insurance totaled $150,000 during the year. 10. The office equipment is depreciated on the straight-line basis over 5 years. 11. At year-end, $190,000 of the insurance policies purchased in January had expired. 12. The market value of investments at December 31 totaled $456,000 (Hint: credit Net Increase in Fair Market Value of Investments ). 13. In addition to the claims paid in entry 9 above, estimates for the liability for the Towns portion of known claims since the inception of the Towns self-insurance program totaled $90,000. Required: a. Prepare the journal entries (including closing entries) to record the

transactions. b. Prepare a Statement of Revenues, Expenses, and Changes in Fund Net Assets for the year ended December 31, 2012, for the Risk Management Fund. c. Prepare a Statement of Net Assets as of December 31, 2012, for the Risk Management Fund. d. Prepare a Statement of Cash Flows for the year ended December 31, 2012, for the Risk Management Fund. Assume $10,000 of the transfer from the General Fund was for the purchase of the equipment. Further, assume the remainder of the transfer from the General Fund and all of the advance from the enterprise fund are to establish working capital (noncapital related financing). e. Comment on whether the interfund premium of 6 percent of wages and salaries is adequate.

76. On July 1, 2011, the City of Belvedere accepted a gift of cash in the amount of $3,000,000 from a number of individuals and foundations and signed an agreement to establish a private-purpose trust. The $3,000,000 and any additional gifts are to be invested and retained as principal. Income from the trust is to be distributed to community nonprofit groups as directed by a Board consisting of city officials and other community leaders. The agreement provides that any increases in the market value of the principal investments are to be held in trust; if the investments fall below the gift amounts, then earnings are to be withheld until the principal amount is reestablished. a. The following events and transactions occurred during the fiscal year ended June 30, 2012. Record them in the Belvedere Community Trust Fund. (1) On July 1, the original gift of cash was received. (2) On July 1, $2,000,000 in XYZ Company bonds were purchased at par plus accrued interest. The bonds pay an annual rate of 6 percent interest semiannually on April 1 and October 1. (3) On July 2, $950,000 in ABC Company common stock was purchased. ABC normally declares and pays dividends semiannually, on January 31 and July 31. (4) On October 1, the first semiannual interest payment was received from XYZ Company. Note that part of this is for accrued interest due at the time of purchase; the remaining part is an addition that may be used for distribution. (5) On January 31, a cash dividend was received from ABC Company in the amount of $38,000. (6) On March 1, the ABC stock was sold for $960,000. On the same day, DEF Company stock was purchased for $965,000. (7) On April 1, the second semiannual interest payment was received from XYZ Company. (8) During the month of June, distributions were approved by the Board and paid in cash in the amount of $104,000. (9) Administrative expenses were recorded and paid in the amount of $7,500. (10) An accrual for interest on the XYZ bonds was made as of June 30, 2012.

(11) As of June 30, 2012, the fair value of the XYZ bonds, exclusive of accrued interest, was determined to be $2,002,000. The fair value of the DEF stock was determined to be $960,000. (12) Closing entries were prepared.