25. Incurring construction costs on a major general government capital project would
A. Decrease fund balance in a Capital Projects Fund.
B. Decrease cash in the General Capital Assets accounts.
C. Increase capital assets in a Capital Projects Fund.
D. Increase capital assets in the General Fund.
26. Which one of the following accounts is not found in the General Capital Assets and General
Long-Term Liabilities accounts?
A. Bonds Payable.
B. Long-Term Claims and Judgments Payable.
C. Investments.
D. Land.
27. Which one of the following accounts is not found in the General Capital Assets and General
Long-Term Liabilities accounts?
A. Cash (Restricted for capital asset purchases).
B. Buildings.
C. Equipment.
D. Textbooks and library books (of a city school).
28. A computer was purchased from unrestricted resources for a general government department.
The government paid cash for the computer at the purchase date. Which of the following is
not an effect of this transaction in the General Fund?
A. Current assets decrease.
B. Capital assets increase.
C. Current liabilities do not change.
D. Fund balance decreases.
29. All of the following transactions decrease the fund balance of a governmental fund except
A. Purchase of equipment.
B. Retirement of the principal of a short-term note.
C. Payment of salaries and wages.
D. Purchase and use of supplies.
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30. Capital outlay expenditures would be least likely in a
A. General Fund.
B. Debt Service Fund.
C. Capital Projects Fund.
D. Special Revenue Fund.
31. All of the following financial statements should be presented for a General Fund except a
A. Balance sheet.
B. Statement of revenues, expenditures, and changes in fund balance.
C. Statement of cash flows.
D. Statement of revenues, expenditures, and changes in fund balance: budget and actual.
32. In which accounting entity may a government report capital assets?
A. Capital Projects Fund.
B. Enterprise Fund.
C. General Fund.
D. Agency Fund.
33. A city adds a new door to its downtown fire station. This is considered a relatively minor
addition. Which fund would most likely be used to account for the construction expenditures
associated with the door?
A. Enterprise Fund.
B. General Fund.
C. Capital Projects Fund.
D. General Capital Assets account.
34. Which of the following funds is reported as a governmental fund even though it is not
considered to be expendable in nature?
A. Special Revenue Fund
B. Capital Projects Fund
C. Permanent Fund
D. Pension Trust Fund
35. General government financial resources that are required to be used to pay principal and
interest on general government long-term debt are accounted for in
A. A Capital Projects Fund.
B. A Debt Service Fund.
C. The General Fund.
D. A Special Revenue Fund.
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36. General government financial resources to be used to finance construction of a general
government construction project typically should be accounted for in
A. A Capital Projects Fund.
B. A Debt Service Fund.
C. The General Fund.
D. A Special Revenue Fund.
37. The fund used to account for the acquisition or construction of major capital facilities and
other capital assets is the
A. General Fund.
B. Special Revenue Fund.
C. Capital Projects Fund.
D. General Capital Assets account.
38. The receipts of a special tax levy to retire principal and pay interest on general obligation
bonds issued to finance the construction of a new fire hall should be accounted for in the
A. General Fund.
B. Special Revenue Fund.
C. Debt Service Fund.
39. General government financial resources that are required to be used to pay teacher salaries
for a special education program are typically accounted for in a
A. Capital Projects Fund.
B. Debt Service Fund.
C. Permanent Fund.
D. Special Revenue Fund.
40. Receipts from a special fishing tax committed to maintain the (no-charge) public fishing pier
should be accounted for in
A. A Special Revenue Fund.
B. The General Fund.
C. An Enterprise Fund.
41. Incurring construction costs on a major general government capital project should require
entries in a
A. Capital Projects Fund.
B. Debt Service Fund.
C. General Long-Term Liabilities account.
D. Permanent Fund.
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42. A city levies a special property tax that is legally restricted to pay off the principal and
interest on bonds issued to build the city’s new police headquarters. Which fund should be
used to account for the proceeds from the tax levy?
A. Debt Service Fund.
B. General Fund.
C. Capital Projects Fund.
D. General Long-Term Liabilities Fund.
43. A state enacts a gasoline tax that is restricted for new highway construction. Which fund
should be used to account for the proceeds from the tax?
A. Debt Service Fund.
B. General Fund.
C. Capital Projects Fund.
D. General Long-Term Liabilities Fund.
44. The General Capital Assets nonfund account would be used to account for
A. All capital assets acquired by a government entity regardless of the fund purchasing the
asset.
B. Capital assets acquired with governmental fund resources that will be used in
governmental fund activities.
C. Capital assets acquired with debt proceeds only.
D. Capital assets that are used by a variety of governmental and proprietary funds.
45. A government issues 10-year bonds to finance construction of an addition to city hall. The
bonds payable should be reported in the
A. General Fund.
B. Capital Projects Fund.
C. General Capital Asset account.
D. General Long-Term Liabilities account.
46. To account for amounts owed to general government bondholders that must be paid in the
future, a government should use
A. A Debt Service Fund.
B. The General Long-Term Liabilities account.
C. The General Fund
D. A Private-Purpose Trust Fund.
(Answer B; Moderate; LO6)
47. Assume that the City of Wakefield purchased a tract of land to be used as a public park. The
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institution. Because of the time required for facilities construction and land improvements,
the park itself will not be ready for public use for at least two years. At the date of purchase,
the city would most likely account for the transaction in
A. The General Fund and General Long-Term Liabilities accounts.
B. The Capital Projects Fund, the General Capital Assets accounts, and the General Long-
Term Liabilities accounts.
C. The Enterprise Fund.
D. The General Fund, the General Capital Assets account, and the General Long-Term
Liabilities account.
48. The operation of a municipality’s recreation facilities and sites such as ball fields,
gymnasiums, and tracks are most likely to be accounted for in a/an
A. General Fund.
B. Enterprise Fund.
C. Capital Projects Fund.
D. Internal Service Fund.
49. To account for a donation to the City where the principal is to remain intact forever and the
earnings are to be used to benefit the Boy Scout and Girl Scout organizations in the City, the
government should use what fund type?
A. Permanent Fund.
B. Special Revenue Fund.
C. General Fund.
50. Caraway County financed its new $6,000,000 courthouse by issuing general obligation
bonds. In the year financing was secured and construction began, the fund(s) and/or nonfund
fund accounts that would most likely be affected would be
A. The General Fund only.
B. The Capital Projects Fund only.
C. The General Fund, General Capital Assets Accounts, and the General Long-Term
Liability Accounts.
D. The Capital Projects Fund, General Capital Assets Accounts, and the General Long-Term
Liability Accounts.
51. General purpose external financial reports for state and local government entities do not
include which of the following?
A. Government-wide financial statements.
B. Management’s discussion and analysis.
C. Fund financial statements.
D. Transmittal Letter.
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52. The Basic Financial Statements include all of the following except
A. Government-wide financial statements.
B. Fund financial statements.
C. Combining financial statements.
D. Notes to the financial statements.
53. GAAP requirements for external financial reporting include
A. A comprehensive annual financial report.
B. Note disclosures.
C. Transmittal letter.
D. Statistical Section.
54. Basic financial statements exclude
A. Management’s discussion and analysis.
B. Government-wide financial statements.
C. Fund financial statements.
D. Notes to the financial statements.
55. Which of the following accounts is not included in a balance sheet of a governmental fund?
A. Cash.
B. Investments.
C. Equipment.
D. Salaries Payable.
56. Government-wide financial statements include
A. A statement of net position.
B. A budget-to-actual schedule.
C. A statement of cash flows.
D. A statement of revenues, expenses, and changes in net position.
57. A statement of revenues, expenditures, and changes in fund balance is required for each
A. Special Revenue Fund.
B. Internal Service Fund.
C. Private-purpose Trust Fund.
D. Enterprise Fund.
58. Which of the following would not be considered a fund financial statement?
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B. Statement of cash flows
C. Statement of activities
D. Statement of changes in fiduciary net position
59. All of the following financial statements should be presented for an Internal Service Fund
except for a
A. Statement of net position.
B. Statement of revenues, expenses, and changes in fund net position.
C. Statement of cash flows.
D. Statement of revenues, expenses, and changes in fund net position: budget and actual.
60. A statement of cash flows is required for which of the following?
A. Enterprise Fund.
B. General Fund.
C. Investment Trust Fund.
D. Agency Fund.
1. Which of the following is not a characteristic of the General Fund?
A. Is used to account for all financial resources that are not required to be accounted for in
another fund.
B. Is used by all governments that report governmental fund activities.
C. May require combining statement at year-end when a government has more than one
General Fund.
D. Is established at inception of a government and exists throughout its life.
2. A Special Revenue Fund
A. Is used to account for resources restricted or committed to expenditures for capital outlay
or debt service purposes.
B. Must be used to account for all expendable restricted or committed resources.
C. Is used to account for resources that are restricted or committed to expenditures for
specific purposes other than debt service or capital outlay.
D. Must be used to account for all nonexpendable, restricted or committed resources.
3. A school district receives a federal grant of $200,000 that is restricted to support a program
designed to teach elementary school students a foreign language. The grant pays for only
about five percent of the program costs. The remaining funds for the program come from a
special tax levy made for this purpose. The program is accounted for in one fund. Which of
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A. Special Revenue Fund.
B. Enterprise Fund.
C. General Fund.
D. Agency Fund.
4. The accounting equation for a special revenue fund is
A. Assets – Liabilities = Net Position.
B. Financial Assets + Deferred Outflows – Related Liabilities – Deferred Inflows = Fund
Balance.
C. General Capital Assets – Unmatured General Long-Term Liabilities = Net Assets.
D. Current Assets = Current Liabilities.
5. Each of the following transactions would decrease fund balance in the General Fund except
A. The purchase of capital assets.
B. The principal repayment of long-term debt.
C. Depreciation.
D. Salaries and wages.
6. Employees of the City of Calderwood are paid from the General Fund. These employees are
paid for amounts earned over a two week period. The amount due the employees is
disbursed one week later. The last payroll period in December ended December 27, 20X2.
The fiscal year ended December 31, 20X2. The employees were paid January 3, 20X3. The
salaries earned should be reported as expenditures
A. In the current year in all cases.
B. In the current year if paid within the first 60 days of the next year.
C. In the next year in all cases.
D. In either the current year or in the next year depending upon the government’s policy. The
policy must be applied consistently.
7. The city of Brittainville’s Special Revenue Fund levied $350,000 in taxes, of which 1% was
expected to be uncollectible during the current year. Also during the year, the fund collected
$7,500 of interest revenue and $50,000 was transferred from the General Fund. As a result of
these transactions fund balance will increase by
A. $407,500.
B. $404,000.
C. $357,500.
D. $354,000.
8. Ledford County levied property taxes of $10,000,000, 2% of which is expected to be
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previous years. How much should be reported as Taxes Receivable after the new levy has
been recorded?
A. $10,000,000.
B. $9,800,000.
C. $10,350,000.
D. $10,150,000.
9. General Fund expenditures for uncollectible accounts receivable should be reported in the
period that the receivable is
A. Established.
B. Written off as uncollectible.
C. Legally due and payable.
D. There are no expenditures for the write-off of uncollectible accounts.
10. A new computer, which had been estimated to cost $28,000, was received. The actual cost of
the computer was $29,400. To record this in the special revenue fund,
A. Capital assets should be debited for $29,400.
B. Expenditures should be debited for $28,000.
C. Expenditures should be debited for $29,400.
D. There is no entry in the special revenue fund. The General Capital Assets account should
be debited for $28,000.
11. If a General Fund purchases capital assets with cash, what effect will this transaction have on
the assets and fund balance, respectively, of the fund?
A. Neither assets nor fund balance will change (the increase in capital assets will offset the
decrease in cash).
B. Both assets and fund balance will increase.
C. Both assets and fund balance will decrease.
D. No effect since the purchase is recorded only in the General Capital Assets account.
12. $40,000 of General Fund expenditures had been paid for from and recorded in a Special
Revenue Fund. Upon discovery of this situation, $40,000 was paid from the General Fund to
the Special Revenue Fund. This transaction is recorded in the Special Revenue Fund by
debiting Cash and crediting
A. Expenditures.
B. Other financing sources in.
C. Transfer in.
D. Revenues.
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13. A bill that should have been paid by a Special Revenue Fund was erroneously paid by the
General Fund. The General Fund refunds the amount to the Special Revenue Fund. This
transaction is an example of an interfund
A. Transfer.
B. Services provided and used transaction.
C. Reimbursement transaction.
D. Loan.
14. $1,000,000 of General Fund cash was contributed to provide permanent capital for a newly
established municipal landfill Enterprise Fund. This transaction is an example of an interfund
A. Transfer.
B. Services provided and used transaction.
C. Reimbursement transaction.
D. Loan.
15. General Fund resources of $500,000 were contributed to a Capital Projects Fund to finance a
portion of the cost of a major capital project. This transaction is an example of an interfund
A. Transfer.
B. Services provided and used transaction.
C. Reimbursement transaction.
D. Loan.
16. General Fund resources are provided to a Capital Projects Fund to finance a portion of a
major capital project. The Capital Projects Fund is required to repay the resources that it
received from the General Fund. This transaction is an example of an interfund
A. Transfer.
B. Services provided and used transaction.
C. Reimbursement transaction.
D. Loan.
17. A government’s General Fund departments purchased electric services from the government’s
own Electric Utility Enterprise Fund. This transaction is an example of an interfund
A. Transfer.
B. Services provided and used transaction.
C. Reimbursement transaction.
D. Loan.
18. If an Enterprise Fund transfers $10,000 to the General Fund and the General Fund loans
$15,000 to an Internal Service Fund, the effect on the fund balance of the General Fund
would be
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