ExpertHard1 markMultiple Choice
CPA · Question 15 · Area I: Financial Reporting
Harbor City's General Fund had the following transactions during the fiscal year:<br/>- Property tax revenue (measurable and available): $2,500,000<br/>- Federal grant received for road maintenance: $400,000<br/>- Bond proceeds from general obligation bonds: $1,200,000<br/>- Transfer to Debt Service Fund: $150,000<br/><br/>What amount should Harbor City report as revenues in its General Fund for the fiscal year?
Harbor City's General Fund had the following transactions during the fiscal year:<br/>- Property tax revenue (measurable and available): $2,500,000<br/>- Federal grant received for road maintenance: $400,000<br/>- Bond proceeds from general obligation bonds: $1,200,000<br/>- Transfer to Debt Service Fund: $150,000<br/><br/>What amount should Harbor City report as revenues in its General Fund for the fiscal year?
Answer options:
A.
$2,500,000
B.
$2,900,000
C.
$4,100,000
D.
$4,250,000
How to approach this question
Under GASB, identify true revenues (taxes, grants for operations, fees) versus other financing sources (bond proceeds, transfers). Only revenues increase fund balance through the revenue recognition process.
Full Answer
B.$2,900,000✓ Correct
Under GASB standards, governmental fund revenues include taxes, intergovernmental grants for operations, and fees. Bond proceeds are classified as 'other financing sources' rather than revenues. Transfers between funds are neither revenues nor expenditures but are reported separately.
Common mistakes
Including bond proceeds as revenue, including transfers as revenue, or omitting legitimate revenue sources like grants
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