1) The Town of Freeport collected $3,000 of prior year property taxes six months

Question

1) The Town of Freeport collected $3,000 of prior year property taxes six months after year-end. Which of the following would not be part of the entry to record collection of delinquent taxes in the General Fund?

A. A debit to Cash for $3,000.

B. A debit to Deferred Inflows of Resources—Unavailable Revenues for $3,000.

C. A credit to Revenues for $3,000.

D. A debit to Taxes Receivable—Delinquent for $3,000.

2) When equipment is purchased with General Fund resources, which of the following accounts should be debited in the governmental activities journal?

A. Expenditures.

B. Equipment.

C. Encumbrances.

D. No entry should be made in the governmental activities journal.

Explanation / Answer

1) A. A debit to taxes receivable - Delinquent for $3,000

On Collection of delinquent taxes the journal entry will be: Debit to cash for $3,000 & Credit to revenues (delinquent taxes recovered) for $3,000.

2) B. Equipment.

On purchase of equipment, equipment account will be debited in the governmental activities journal since, equipment is an asset.

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