 Hello and welcome to this session. This is Professor Farhad and this session we would look at previously used CPA questions that were recently released by the AI CPA. Those questions are the real deal. Those questions appeared on an actual CPA exam in the past. They may or may not appear in the future but the concept and the topic will appear in a different format. As always I would like to remind you to connect with me on LinkedIn if you haven't done so. YouTube is where you would need to subscribe. I have 1500 plus accounting, auditing, tax and finance lectures. This is a list of all the courses that I covered including CPA questions. On my website you will have access to additional resources such as notes, PowerPoint slides, true, false, multiple choice, exercises and 2000 plus CPA questions. I also have the CPA questions released by the AI CPA in a PDF format just as you can get it from the AI CPA. Let's take a look at this question and always in blue what I have is the the course and the chapter that if you want to go back to my website or to my YouTube to learn about the topic a little bit more. The first question is about remembering and understanding. It means it should you know you should be able to answer that question quickly. It's something that you need to memorize basically. The statement of activities in the governmental wide financial statements include which of the following basically. A separate column for governmental activities yes it does, business type of activities yes it does and discreetly presented component unit if they are available yes. So yes the government wide financial statement have governmental activities column, business activity columns and discreetly presented. Okay let's look at the separate column for each major governmental fund and not at all we don't do that on the government wide financial statement. Separate column for each non major governmental fund no governmental fund they don't appear like that on the government wide financial statement. A separate section at the bottom of the statement that shows program and general revenues might but that's not what it shows. The comprehensive answer is a separate column for governmental activities business activities and discreetly presented component. It's something that you need to know and memorize. Let's take a look at this question. Best county's capital project fund had the following proceeds during the year. Transfer from the general fund 100,000 federal capital grant 75,000 special assessment for capital improvement 300,000. What amount of revenues should best count the report in its capital project fund at the end of the year. So capital project fund is the funds that they're using for new capital project the building the account for these activities in the capital project fund. Well the transfer from the from the general fund this is not a capital project fund we don't account it's not considered part of the capital project fund. The federal federal capital grant yes it's a grant by the government specifically for that that's 75,000 that's included. Special assessment for capital improvement that's also included in the capital project fund so both of those will be included 375,000. This topic is covered in chapter 10 briefly and in chapter six I talk a lot about the capital project fund. Let's take a look at this question. Large city does not use modified approach to account for roads. At the beginning of the current year the city spent 800,000 on new roads the roads have 20 year use for life. What amount should large city report as an expense related to the new roads and the statement of activities? What does that mean if they don't use the modified approach it means they're going to depreciate this and if they're going to depreciate it they're going to show 40,000 of expenses 40,000 of expenses remember they don't use the modified approach. Let's take a look at this question. Zartown levied property taxes of half a million of which one percent is expected to be incollectible. During the year Zartown collected 450,000. What amount of property tax revenue should Zartown report in its governmental wide financial statement? Well if you levied 500,000 one percent is 5,000 so you the revenue is 495,000 this is what you would report on your government wide financial statement given this information. Therefore the answer is C495,000 you don't use 450,000 this is cash you don't report the full amount and obviously you don't report zero so it's net of the incollectible. Let's take a look at this last question. In the current year Polar City paid $5,000 interest and $25,000 and $20,000 principal on its outstanding general obligation bond. The payment was made from the debt service fund using cash transfer earlier the same year from the general fund. How should the city report the expenditure? Well we have a general fund we have debt service fund and we have permanent fund. The first thing you would have to say is it's definitely the permanent fund has nothing to do with it therefore we could eliminate B because under B we have $20,000 under the permanent fund well that's not very helpful we still have three options okay. Now here's what you need to know interest and principal payment. Interest and principal payment although the money was transferred from the general fund interest and principal payment they're accounted for under the debt service fund you have to know this therefore the full amount is reported under the expenditure is reported under the debt service fund nothing under the general fund although the money was transferred but when we transfer them out of the general fund it's a transferred out not an expenditure they go into the debt service fund and when we pay when we pay when we write the check from the debt service fund the $25,000 this is where we record the expenditure. Again I invite you to go to my chapter six if you want to learn more about the debt service fund and I believe those are the 50 questions that were recently released by the AICPA in the next session I don't know which section am I starting is it audit is it drag or is it BEC I will cover the other questions that were released by the AICPA as always I would like to remind you to invest in your career study for the exam one way to do it one resource is my website subscribe it's worth it you study once and it's a reasonable subscription monthly subscription you can cancel any time the minimum is what month one month study hard I'm here to help you and support you good luck