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1) A fire protection district is anexample of specialpurpose local government.
2) The residual classification for governmental funds other than the General Fund is
Assigned.
3) When closing the General Fund and Special Revenue Funds of a state or local
governmental unit, the balance of the operating statement accounts and the balances of
the budgetary accounts are closed
4) The purpose of fund accounting is to segregate those financial resources that have
constraints or limitations on their use to demonstrate compliance with those limitations.
5) Most public colleges and universities choose to report as general-purpose entities
engaged in only business-type activities.
6) Public colleges and universities are subject to the standards issued by the FASB.
7) Expenditures for claims and judgments and landfill post-closure care costs of
governmental funds should be recognized to the extent that the liabilities are going to
be paid with available resources.
8) If a health care organization is owned or controlled by a government, it is typically
considered a special-purpose entity engaged only in businesstype activities and would
use proprietary fund accounting.
9) The equity section of governmentally-owned hospitals includes net investment in
capital assets, restricted, and unrestricted.
10) Budgets are typically recorded for Capital Projects Funds.
11) Governmental accounting standards require the statistical section.
12) The Village of Watkins Glenn operated an educational program for at-risk middle
school children. Businesses and nonprofit organizations sponsor the children and pay
the registration fee.
The following cash receipts were collected:
Registration240,000
Cash loan from bank 49,000
The following cash disbursements were made:
Payroll taxes 20,250
Labor 70,900
Insurance 8,650
Interest 2.300
Purchase school bus67,000
Required:
A.Prepare the journal entries to record revenues and disbursements if the city treats the
program as an enterprise fund
B.Prepare the journal entries to record revenues and disbursements if the city treats the
program as a special revenue fund
13) A skilled carpenter repaired the roof of the administrative building for a private
not-for-profit free of charge. The not-for-profit would have had to pay $2,000 for this
service if not donated. What entry should the not-for-profit make?
A)No entries are required for this event
B)Supporting Service expense$2,000
Contribution revenue$2,000
C)Capital Expenditures$2,000
Contribution revenue$2,000
D)Building$2,000
Contribution revenue$2,000
14) Which of the following is True regarding financial reporting of governmental
funds?
A)The Fund Balance of governmental funds reports fund balance as reserved and
unreserved
B)Governmental funds include the General Fund, special revenue funds, capital
projects funds, debt service funds, and permanent funds
C)Both (A) and (B) are True
D)Neither (A) nor (B) is True
15) Assume estimated revenues exceed appropriations. When the budget for the General
Fund is recorded, the journal entry will include:
A)a credit to Budgetary Fund Balance
B)a credit to Estimated Revenues Control
C)a debit to Appropriations Control
D)a credit to Budgetary Fund Balance -- Reserve for Encumbrances
16) Under the terms of the Single Audit Act and its amendments, what percentage of
federal awards expenditures must be selected for audit?
A)50%; or 0% if organization is deemed to be Low Risk Auditee
B)50%; or 25% if organization is deemed to be Low Risk Auditee
C)100%; or 25% if organization is deemed to be Low Risk Auditee
D)100%; or 50% if organization is deemed to be Low Risk Auditee
17) This fund accounts for activities that produce goods or services to be provided to
other departments or other governmental units.
A) Enterprise fund
B) Internal Service fund
C) Special Revenue fund
D) Debt Service fund
18) Which of the following is not a fiduciary fund type?
A)Agency
B)Expendable trust
C)Private-purpose trust
D)Investment trust
19) Which of the following is True regarding agency funds?
A)Agency funds report assets and liabilities, but not net position, revenues or expenses
B)Agency funds are often used to account for property tax collections by county
governments for other governments
C)Both of the above
D)Neither of the above
20) Private health care organizations follow _____ standards while governmentally
owned health care organizations follow _____ standards.
A) GASB; FASB
B) FASB; GASB
C) FASB; FASAB
D) GASB; FASAB
21) Investor owned health care organizations have the following equity section
accounts:
A) Paid in capital and retained earnings
B) Restricted and unrestricted net assets
C) Unrestricted, temporarily restricted, and permanently restricted net assets
D) Net Investment in Capital Assets, Restricted, and Unrestricted Net Position
22) The Revenues account of a government is credited when:
A)the budget is recorded in the accounts
B)property taxes are collected
C)property taxes are levied
D)budgetary accounts are closed at the end of the year
23) Which of the following should be accounted for in a permanent fund?
A)A gift of $1,000,000 to a city, to be invested permanently, with the proceeds to be
used to maintain the city war memorials
B)A gift of $100,000 to a school board, to be given out $10,000 a year to the class
valedictorian as a college scholarship
C)A gift of $100,000 to a city, to be expended next year to purchase books for the city
library
D)A gift of $1,000,000 to a city, to be invested permanently, with the proceeds to be
used to distribute to one or more nonprofit groups
24) The journal entry to record the re-establishment of encumbrances that were
outstanding at the close of the prior period would include:
A)A credit to Budgetary Fund Balance Reserve for Encumbrances
B)A debit to Budgetary Fund Balance Reserve for Encumbrances
C)A credit to Encumbrance Control
D)A and B would both be included in the journal entry
25) Which financial statements are required for proprietary funds?
A) Statement of Net Position; Statement of Revenues, Expenses, and Changes in fund
Net Position; Statement of cash flows
B) Budgetary comparison schedule; Statement of revenues, expenditures, and changes
in fund balance; Statement of Net Position
C)Statement of Net Position; Statement of revenues, expenditures, and changes in fund
balances; Statement of cash flows
D)Statement of Net Position; Statement of Revenues, Expenses, and Changes in fund
net position
26) $60,000 of property tax owed to the city of Akron will not be collected within 60
days after year end. The year-end journal entry to record this information would include
a:
A) A credit to Revenues Control
B) A debit to Deferred Inflows Property Taxes
C) A credit to Income Taxes Receivable
D)A debit to Revenues Control
27) In addition to the government-wide statements, governments are required to prepare
fund financial statements for which of the following category of funds?
A)Proprietary funds
B)Governmental type funds
C)Fiduciary funds
D)All of the above
28) A donor pledged $200,000 to the fund raising drive of a local government to assist
its police officers in obtaining the latest technology. The pledge was made on July 16,
2014, but was conditioned on the government raising an additional $200,000 from other
donors. By the fiscal year-end of June 30, 2015, the local government had raised only
$5,000 from other donors. What entry would be made for the initial pledge by the local
government during the year ended June 30, 2015?
A)No entry is required until the condition is fully met
B)Debit a receivable and credit deferred inflows
C)Debit a receivable and credit Fund Balance
D)Debit a receivable and credit revenue
29) What is the principal advantage of having 501(c) (3) status to an organization that
receives substantial support from outside contributors?
A)The organization does not have to pay federal income tax
B)Donors to the organization may deduct their contributions as charitable donations
C)The organization does not have to pay state sales taxes on purchases
D)All of the above
30) The Governmental Accounting Standards Board has established rules for
determining when a government should include another entity in its financial
statements.
a)Distinguish between a primary government and a component unit. Include one
example of each.
b)GASB permits two methods of reporting component units in the financial reporting
entity. Describe the two methods and indicate when each should be used.
c)The City of X is deciding whether or not to include a transit system in its financial
report and how the transit system would be reported if a positive decision were made.
The transit system is a legally separate entity, has its own governing board, not
appointed by the city, has a different auditor, and issues its own financial report. The
city has signed an agreement that, for the next ten years (the life of a bond issue related
to transit operations), and it will make up the deficit of the transit system. During the
last two years, the deficit has been $10 million, approximately 50% of the amount
reported as a profit of its other enterprise operations. Make recommendations to the
city, including whether or not to include the transit system and, if so, how to report it.
31) Which of the following would not be True regarding internal service funds?
A)Internal service funds use the economic resources measurement focus and accrual
basis of accounting
B)Examples of internal service funds would include self-insurance funds, motor pool
funds, and print shop funds
C)In the government-wide financial statements, internal service funds are most
commonly reported in the business-type activities column
D)None of the above; all are True
32) Which of the following projects would normally be accounted for in a capital
projects fund?
A)The construction of a police station addition
B)The construction of a parking garage operated as an enterprise fund
C)Payment of interest on bonds issued to finance the construction of a new city hall
D)Both A and B would be accounted for in a capital projects fund
33) The GASB has the authority to establish accounting and financial reporting
standards for:
A)State governments
B)Private not-for-profits
C)Federal government
D)None of the above
34) A transfer from the General Fund to a debt service fund to make annual payments
on principal and interest would be recorded in the debt service fund as a (an):
A)Other Financing Source
B)Revenue
C)Direct addition to Fund Balance
D)Other Financing Use
35) Which part of the financial section of the CAFR is considered Required
Supplementary Information?
A) Auditors Report
B) Managements Discussion and Analysis
C) Government-Wide Financial Statements
D) Fund Financial Statements
36) Which of the following is a required statement for a governmental hospital?
A)Statement of Changes in Fund Balance
B)Statement of Revenues and Expenditures
C)Statement of Functional Expense
D)Statement of Cash Flows
37) The _______ sets the accounting and financial reporting standards for both state
and local governments and public not-for-profits.
A) FASAB
B) FASB
C) GASB
D)
38) In its Statement of Net Position, a government reported:
assets of $100 million, including $30 million in capital assets (net), and
liabilities of $40 million, including long-term debt of $15 million, all related to capital
asset acquisition.
The government also reported $10 million of net assets were restricted for payment of
debt service. The government's Unrestricted Net Position would be reported as:
A)$15 million
B)$25 million
C)$30 million
D)$35 million
39) Which of the following is an environmental difference between governments and
for-profit business enterprises?
A) Relationship with stakeholders
B) Donor restricted assets
C) Fiduciary responsibilities
D) Both B and C
40) Reclassifications from permanently restricted net assets to temporarily restricted net
assets would occur only under which of the following circumstances?
A) Time restrictions placed on the permanently restricted net assets have been
met
B) Purpose restrictions placed on the permanently restricted net assets have
been met
C) Either of the above criteria (A and B) have been met
D) Permanently restricted net assets would not be reclassified to temporarily
restricted net assets
