24. If a Self-Insurance Internal Service Fund pays claims of $5,000 during the month, the fund
will report
A. Expenses of $5,000.
B. Transfers out of $5,000.
C. Nonoperating expenses of $5,000.
D. A decrease in prepaid assets of $5,000.
25. If a government has more than one Internal Service Fund, they are reported in the basic
financial statements
A. In separate columns for each fund.
B. In separate columns for each major Internal Service Fund.
C. As a single column by fund type.
D. Not included in the basic financial statements.
26. An Internal Service Fund would report which of the following items on its balance sheet
A. Restricted fund balance.
B. Unrestricted net position.
C. Assigned fund balance.
D. Capital contributions.
27. A self-insurance Internal Service Fund may not include which of the following in its charges
to other funds?
A. A reasonable provision for profit over a period of time.
B. Charges based on actuarial or other acceptable estimates of costs.
C. A reasonable provision for expected future catastrophic losses.
D. An amount equal to current year costs.
28. Governments that centralize their risk financing activities should not account for this activity
in which type of fund?
A. General Fund.
B. Internal Service Fund.
C. Enterprise Fund.
D. Special Revenue Fund.
29. A self-insurance activity that is accounted for in an Internal Service Fund pays $365,000 in
claims during the year. Because the Internal Service Fund is a proprietary fund, the claims
will be reported on the statement of revenues, expenses, and change in net position as
A. An operating expense.
B. A non-operating expense.
C. A contra-revenue to premiums charged.
D. An other financing use.
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30. In an Internal Service Fund, the expectation is that
A. Each year’s revenues should equal each year’s expenses because the revenues are simply
an allocation of that year’s expenses.
B. Each year’s revenues should equal each year’s expenditures because the revenues are
simply an allocation of that year’s expenditures.
C. Accumulated revenues over time should approximately equal the accumulated expenses
over time.
D. Expenses will exceed revenues because depreciation expense is reported in an Internal
Service Fund.
1. An other postemployment benefit plan where assets have been placed in trust would be
reported as
A. A Permanent Fund.
B. An Agency Fund.
C. Part of the General Fund.
D. As a Pension and Other Employee Benefit Trust Fund.
2. Which types of funds are classified as fiduciary funds?
A. Pension trust, private-purpose trust, and Investment Trust Funds.
B. Pension trust, permanent trust, and Agency Funds.
C. Pension trust, private-purpose trust, investment trust, and Agency Funds.
D. Expendable trust, nonexpendable trust, pension trust, and Investment Trust Funds.
3. The accounting parameters established by GASB Statement No. 25 do not apply to amounts
reported in which of the following?
A. Schedule of funding progress.
B. Statement of changes in plan net position.
C. Statement of plan net position.
D. Statement of cash flows.
4. Even though each of the following funds involve a form of fiduciary responsibility, the fund
that is not reported as a fiduciary fund for GAAP reporting purposes is a (an)
A. Investment Trust Fund.
B. Permanent Fund.
C. Private-purpose Trust Fund.
D. Pension Trust Fund.
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5. Which of the following activities would most likely be accounted for in an Agency Fund that
would be reported in the external financial statements?
A. Tax collections by a county on behalf of local municipalities.
B. Interfund loan payments and disbursements.
C. A Federal pass-through grant.
D. Special assessments for debt on which the government is not obligated in any manner.
6. Generally accepted accounting principles require the use of an Investment Trust Fund
A. For governments that have any investment activity.
B. For governments that sponsor external investment pools.
C. For governments that are investing in investments that carry high risk.
D. For governments that pool their cash for investment purposes.
7. A county provides health insurance coverage for retirees up until they reach the age of 65.
This type of plan is known as
A. A simple pension plan.
B. A deferred compensation plan.
C. An other postemployment benefit plan.
D. A permanent plan.
8. The principal of a Private-Purpose Trust Fund
A. Must be nonspendable in nature.
B. Must be spendable in nature.
C. Must never fall below a pre-determined threshold that is determined by generally
accepted accounting principles.
D. May be spendable or nonspendable in nature.
9. A Pension Trust Fund that is provided by a government solely for the benefit of its employees
is known as a
A. Single-employer plan.
B. Cost-sharing plan.
C. Defined contribution plan.
D. Defined benefit plan.
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10. An Agency Fund is used to account for debt service on special assessment bonds
A. That are not backed by the full faith and credit of the governmental unit.
B. That are not backed by the full faith and credit of the governmental unit unless the
government guarantees the indebtedness.
C. On which the government is not obligated in any manner.
D. With terms exceeding 10 years.
11. Pass-through grants are reported in an Agency Fund of the primary recipient
A. In all cases.
B. Unless the primary recipient holds the resources longer than one year prior before paying
the subrecipients.
C. Only if the primary recipient has no direct financial involvement in the grant program.
D. Only if the primary recipient has no administrative or direct financial involvement in the
grant program.
12. A government receives a donation of $300,000 to establish an endowment fund whose
income is to be used to support scholarships for local high school students. The school
district is not part of the government. The government should report this activity in which
type of fund?
A. Permanent Fund
B. Private-Purpose Trust Fund
C. Investment Trust Fund
D. Agency Fund
13. A Pension Trust Fund will be reported in the government-wide financial statements within
A. The governmental activities column.
B. The business-type activities column.
C. The discrete component unit presentations.
D. The Pension Trust Fund is not reported at the government-wide level.
14. The General Fund’s share of its contribution to a Pension Trust Fund on behalf of the its
employees would be reported by the General Fund as
A. A transfer out.
B. An other financing source.
C. An expenditure.
D. An other financing use.
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15. A county uses an agency fund to collect property taxes for both itself and on behalf of the
three municipalities within its borders. If the county collected $7,000 of municipal taxes
during the month, what would be reported in the agency fund?
A. Revenues of $7,000.
B. Revenues of $7,000, offset by expenses of $7,000.
C. An increase in equity in the agency fund of $7,000.
D. An increase in assets of $7,000 and an increase in liabilities of $7,000.
16. A Scholarship Private-Purpose Trust Fund of a local school board pays tuition of $10,000 on
behalf of scholarship recipients. What journal entry would be made to record this transaction
in the trust fund?
Debit Credit
A
.
Tuition Expenses
Cash
$10,000
$10,000
B. Transfers to Other Governmental Units
Cash
$10,000
$10,000
C. Deductions – Tuition
Cash
$10,000
$10,000
D
.
Trust Revenue
Cash
$10,000
$10,000
17. The General Fund transfers $75,000 of employer pension contributions to the Pension Trust
Fund. The Pension Trust Fund should
A. Report revenues of $75,000.
B. Report transfers of $75,000.
C. Report expenses of $75,000.
D. Report additions of $75,000.
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18. The General Fund transfers $25,000 withheld from employee’s gross pay during the last
quarter to the Pension Trust Fund. Which of the following statements regarding this
transaction is true?
A. The General Fund will reduce a liability and the Pension Trust Fund will record
additions.
B. The General Fund will report expenditures and the Pension Trust Fund will record
revenues.
C. The General Fund will report expenditures and the Pension Trust Fund will record
additions.
D. The General Fund will reduce a liability and the Pension Trust Fund will record revenues.
19. Which of the following accounts would typically be reported in an agency fund?
A. Due to Other Governments.
B. Taxes Receivable.
C. Restricted Net Position.
D. Due from the General Fund.
20. Which of the following statements are required for a Tax Agency Fund?
A. Statement of revenues, expenditures and changes in net position
B. Statement of revenues, expenses, and changes in net position
C. Statement of cash flows
D. Statement of changes in assets and liabilities.
21. At year end, a county tax agency fund’s only asset was $500,000 in cash. The cash was
collected on behalf of the following entities:
County–$300,000
School district–$150,000
Fire district–$50,000
In the county basic financial statements, the tax Agency Fund should report what amount of
assets and liabilities?
A. $200,000.
B. $300,000.
C. $450,000.
D. $500,000.
22. In a Tax Agency Fund, revenues must be recognized
A. When measurable and available.
B. On the cash basis.
C. At net realizable value of the taxes receivable.
D. Revenues are not reported for Agency Funds.
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23. The local school board received a donation of $1,000,000 to establish a scholarship fund for
graduating students. The scholarship is accounted for in a Private-Purpose Trust Fund. The
fund would report
A. Additions of $1,000,000.
B. Revenues of $1,000,000.
C. A transfer of $1,000,000.
D. Capital contributions of $1,000,000.
24. A Private-Purpose Trust Fund has investments totaling $1,500,000. As of the end of the fiscal
year, the fair market value of these investments increased by $125,000 from the previous
year. The Private-Purpose Trust Fund would
A. Report revenues of $125,000.
B. Report additions of $125,000.
C. Report a transfer of $125,000.
D. Not report any change until the investments are sold.
25. If an Enterprise Fund transfers employer contributions to the Pension Trust Fund, which of
the following best describes the effect of the transaction on each fund?
A. The Enterprise Fund will report expenses and the Pension Trust Fund will report
revenues.
B. The Enterprise Fund will report deductions and the Pension Trust Fund will report
additions.
C. The Enterprise Fund will report expenses and the Pension Trust Fund will report
additions.
D. The Enterprise Fund will report expenditures and the Pension Trust Fund will report
revenues.
26. A local citizen donated land to the city’s Private-Purpose Trust Fund. The land has a fair
market value of $50,000 but the donor’s basis was $45,000. The trust fund will report
A. Additions of $50,000.
B. Additions of $45,000.
C. Capital contributions of $50,000.
D. Capital contributions of $45,000.
27. The municipalities for whom the county collects property taxes paid $5,000 in administrative
fees to county to cover collection costs. The county will report
A. Revenues of $5,000 in the General Fund.
B. Revenues of $5,000 in the Agency Fund.
C. Other financing sources of $5,000 in the General Fund.
D. Other financing sources of $5,000 in the Agency Fund.
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28. Additions reported in the statement of changes in plan net position of a pension plan
commonly include all of the following except
A. Actuarial gains from revision of actuarial assumptions.
B. Employer contributions.
C. Net appreciation in the fair value of investments.
D. Employee contributions.
29. Which of the following is not reported in the schedule of funding progress for a defined
benefit pension plan?
A. Actuarial value of assets.
B. Actuarial accrued liability for future benefits.
C. Covered payroll.
D. Percentage of annual required contribution actually contributed.
30. Which of the following are reported for a private-purpose trust fund?
A. Expenditures
B. Expenses
C. Deductions
D. Decreases to nonspendable fund balance.
31. A government receives a donation of $300,000 to establish a Private-Purpose Trust Fund.
The donation should be reported as
A. Revenues.
B. Other financing sources.
C. Additions.
D. Special items.
32. A government establishes an Investment Trust Fund. During the year, it receives $500,000
from other separate legal entities to invest. The Investment Trust Fund should report this
activity in the statement of changes in net position as
A. Revenues.
B. Other financing sources.
C. Additions.
D. Should not be reported.
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33. Which financial statements are required for a private purpose trust fund?
A. Statement of net position and statement of revenues, expenses and changes in net
position.
B. Statement of net position, statement of revenues, expenses, and changes in retained
earnings, and statement of cash flows.
C. Statement of net position and statement of changes in net position.
D. Statement of net position, statement of changes in net position, and statement of cash
flows.
34. Equity in a fiduciary fund is referred to as
A. Net position.
B. Fund balance.
C. Retained earnings.
D. Contributed Capital.
1. When preparing external financial statements that are in accordance with generally accepted
accounting principles, the minimum financial report will include
A. Basic financial statements, management’s discussion and analysis, and other required
supplementary information.
B. A comprehensive annual financial report.
C. Basic financial statements only.
D. Only the financial section of a comprehensive annual financial report.
2. The minimum requirements for general purpose external financial reporting does not include
A. Fund financial statements.
B. A transmittal letter.
C. Management’s discussion and analysis.
D. Required supplementary information.
3. Governmental activities in the government-wide financial statements would potentially
report the following equity classifications except
A. Restricted net position.
B. Restricted fund balance.
C. Unrestricted net position.
D. Net investment in capital assets.
4. The fund financial statements included in the basic financial statements include separate
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A. Fiduciary funds.
B. Governmental funds.
C. Proprietary funds.
D. Discretely presented component units.
5. A budgetary comparison schedule is required for
A. The General Fund and all major governmental funds with legally adopted annual budgets.
B. The General Fund and all major Special Revenue Funds with legally adopted annual
budgets.
C. The General Fund only.
D. All governmental funds.
6. In the proprietary fund statements, a government should include a separate column for
A. Each major Enterprise Fund only.
B. Each major Enterprise Fund, nonmajor Enterprise Funds in the aggregate, and Enterprise
Funds total only.
C. Each major Enterprise Fund, nonmajor Enterprise Funds in the aggregate, Enterprise
Funds total, and Internal Service Funds in the aggregate.
D. Each major Enterprise Fund, nonmajor Enterprise Funds in the aggregate, Enterprise
Funds total, Internal Service Funds in the aggregate, and Proprietary Funds total.
7. Which financial statement may be presented as required supplementary information?
A. Government-wide statement of cash flows.
B. General Fund and major Special Revenue Funds statement of revenues, expenditures, and
changes in fund balances–budget and actual.
C. Proprietary fund statement of cash flows.
D. Discretely presented component units statement of net position.
8. In the fund financial statements, a government should include a separate column for all of the
following except
A. Each major Enterprise Fund.
B. Each major Internal Service Fund.
C. Each major Capital Projects Fund.
D. Each major Permanent Fund.
9. Which governmental fund must always be reported in a separate column in the governmental
fund financial statements?
A. Capital Projects Fund.
B. Debt Service Fund.
C. General Fund.
D. Special Revenue Fund.
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